Complementary Fund to Vanguard Lifestrategy 100

fiisch

As it says on the tin - what funds would you suggest to complement Vanguard LifeStrategy100?

Backstory - I've been investing in the Lifestrategy Fund for about 5 years in both my ISA and SIPP (I was contracting for some years so I have a SIPP alongside my workplace pension), and it's served me very well.

We're looking to start funding my wife's ISA - mainly to keep things balanced, and because we're hopeful that we'll soon be in a position to max out my ISA and have some change left over.  I've selected a separate platform (AJ Bell instead of HL for my own), and it feels prudent to invest in a different fund for a bit of added diversification (although I appreciate Vanguard is already fairly diverse).

I've had a look through the funds but I'm going name-blind - are there any funds/ETFs you've chosen to complement Vanguard, or any you'd suggest I delve into a bit further?

TIA!

eskbanker

'Complementary' in what way?  Are you trying to fill gaps in coverage or simply wanting another vaguely similar fund from a different fund manager?  VLS100 is similar to a global equity tracker but Vanguard's preference for a high UK content differentiates it from a fully cap-weighted tracker, so is that something you want in a second fund?  If not you might wish to consider something like HSBC FTSE All World, which is also significantly cheaper....

InvesterJones

HSBC FTSE All World would be a good alternative to LS100, since the correlation/overlap is very high (albeit different weightings). To add diversity you'd probably want to look at gaps/alternative asset types such as small caps, property, commodities, bonds etc. 

If you want the same kind of fund again but a bit different, per eskbanker above, something like HSBC FTSE All World is already slightly more diverse in those respects, even more diverse are funds like HSBC global strategy dynamic (~20% bonds) or if wanting to stay with vanguard (go on their platform for cheap fees if so) then Vanguard Global All cap has less of a UK bias than their Lifestrategy funds and includes small cap funds.

JohnWinder

It seems you’re already up on a lot of this, but it’s harder to offer suggestions than it might be because I can’t tell whether you want to diversify beyond stocks, or beyond Vanguard, or what ‘keeping things balanced’ means.
If you narrow down your choices in a systematic way you may not have to go ‘name blind’, or if you get to that stage there’s perhaps no significant difference between the remaining fund choices.
You might get something out of these books: Ferri’s All about Asset Allocation; Hale’s Smarter Investing; or Bernstein’s The Intelligent Asset Allocator. Or you can read the early pages of Bernstein’s new edition of The Four Pillars of Investing here http://efficientfrontier.com/t4poi/T4POI-sample.pdf  Good hunting.

Exodi

eskbanker said:

'Complementary' in what way?  Are you trying to fill gaps in coverage or simply wanting another vaguely similar fund from a different fund manager?  VLS100 is similar to a global equity tracker but Vanguard's preference for a high UK content differentiates it from a fully cap-weighted tracker, so is that something you want in a second fund?  If not you might wish to consider something like HSBC FTSE All World, which is also significantly cheaper....

^ This x100. I don't think there are many fans of VLS100 on this forum, I personally feel it was only included to complete the set of VLS20, VLS40, VLS60 and VLS80.

Most feel it would makes more sense to invest in a proper global tracker (like HSBC FTSE All World as above, or if limited to Vanguard funds, VWRL or their FTSE Global All Cap) with proper UK weighting (Vanguard has a home bias on their 'active' funds, meaning the UK represents ~25% of VLS100, instead of the ~4% the UK represents in global market capitalisation).

Now the OP may be fully aware that UK is over-weighted and is happy with this, but there are many who are completely oblivious to this (I was).

Also, unless you are referring to non-equity asset classes, the question of 'what fund to complement a global equity fund' doesn't really make much sense to me - global equity funds are aimed at being all encompassing.

I'm with eskbanker - a better diversified fund that's also cheaper? What's not to love.

JohnWinder

Most feel it would makes more sense to invest in a proper global tracker (like HSBC FTSE All World as above, or if limited to Vanguard funds, VWRL or their FTSE Global All Cap) with proper UK weighting

You have a strong theoretical basis for that, with the efficient market theory, but other considerations include how securities are taxed at home and abroad (for those elsewhere), as well as which currency you spend in and receive dividends in. Put it all together ….
French of Nobel fame says: ‘Home country bias is per se not a bad thing….Canada is 3 or 4% of the world equity portfolio. A home country bias from that perspective would say Canadians have more than 3 or 4% of their portfolio invested in Canadian stock. If that's how we're going to define home country bias and we say, okay, 7% in Canadian stock is a home country bias. That sounds great to me, no problem whatsoever.’ https://rationalreminder.ca/podcast/100   So it’s a matter of degree I suppose.
Here’s another analysis with a lot of data: ‘The author believes that this study makes a convincing case to seek a high exposure to global (or international) equities, while keeping a tilt towards domestic equities. Some readers might perceive otherwise, but should by now have more factual material to refine their thinking and possible temptations of home country bias.’ https://www.bogleheads.org/blog/2020/03/02/50-years-of-investing-in-the-world-part-3/
Vanguard have their own analysis: ‘In each market we examined, our analysis indicated that volatility was reduced most with an allocation to international equities of between 40% and 50%.’         https://corporate.vanguard.com/content/dam/corp/research/pdf/Global-equity-investing-The-benefits-of-diversification-and-sizing-your-allocation-US-ISGGEB_042021_Online.pdf
The answer is not all cut and dried.

Exodi

JohnWinder said:

Most feel it would makes more sense to invest in a proper global tracker (like HSBC FTSE All World as above, or if limited to Vanguard funds, VWRL or their FTSE Global All Cap) with proper UK weighting

You have a strong theoretical basis for that, with the efficient market theory, but other considerations include how securities are taxed at home and abroad (for those elsewhere), as well as which currency you spend in and receive dividends in. Put it all together ….
French of Nobel fame says: ‘Home country bias is per se not a bad thing….Canada is 3 or 4% of the world equity portfolio. A home country bias from that perspective would say Canadians have more than 3 or 4% of their portfolio invested in Canadian stock. If that's how we're going to define home country bias and we say, okay, 7% in Canadian stock is a home country bias. That sounds great to me, no problem whatsoever.’ https://rationalreminder.ca/podcast/100   So it’s a matter of degree I suppose.
Here’s another analysis with a lot of data: ‘The author believes that this study makes a convincing case to seek a high exposure to global (or international) equities, while keeping a tilt towards domestic equities. Some readers might perceive otherwise, but should by now have more factual material to refine their thinking and possible temptations of home country bias.’ https://www.bogleheads.org/blog/2020/03/02/50-years-of-investing-in-the-world-part-3/
Vanguard have their own analysis: ‘In each market we examined, our analysis indicated that volatility was reduced most with an allocation to international equities of between 40% and 50%.’         https://corporate.vanguard.com/content/dam/corp/research/pdf/Global-equity-investing-The-benefits-of-diversification-and-sizing-your-allocation-US-ISGGEB_042021_Online.pdf
The answer is not all cut and dried.

Perhaps I shouldn't have been as careless with my wording - particularly 'most'.

My point was to draw attention to the home bias, rather than challenge it, but I somewhat drifted off the original assignment.

Nonetheless, if someone were to deliberately favour a high UK bias, UK trackers are expectedly some of the cheapest, so it would still make little sense to pay 0.22% OCF for the 25% UK bias in VLS100, when they could invest in (just continuing to use Vanguard as an example, but obviously other fund providers exist) FTSE Developed World ex-U.K at 0.14% OCF, FTSE 100/All Share Index Unit Trust at 0.06% OCF and Emerging Markets Stock Index Fund at 0.23% OCF.

That would be around half the OCF for effectively the same thing.

boingy

Exodi said:

 FTSE 100/All Share Index Unit Trust at 0.6% OCF 

You might want another 0 in that. 

Exodi

boingy said:

Exodi said:

 FTSE 100/All Share Index Unit Trust at 0.6% OCF 

You might want another 0 in that. 

HAHA! Yes, could you imagine... edited.

Albermarle

(although I appreciate Vanguard is already fairly diverse).

To add to some previous comments in a simple way.

Vanguard LS100 is diverse in that it invests in thousands of different companies in different countries ( although some similar funds are arguably a bit more diverse)

Vanguard LS100 is not diverse in that it only holds equities. No gilts,  bonds, property, gold, infrastructure, cash etc 

So you need to be clear in what you mean by diverse, balanced etc 

GeoffTF

Exodi said:

JohnWinder said:

Most feel it would makes more sense to invest in a proper global tracker (like HSBC FTSE All World as above, or if limited to Vanguard funds, VWRL or their FTSE Global All Cap) with proper UK weighting

You have a strong theoretical basis for that, with the efficient market theory, but other considerations include how securities are taxed at home and abroad (for those elsewhere), as well as which currency you spend in and receive dividends in. Put it all together ….
French of Nobel fame says: ‘Home country bias is per se not a bad thing….Canada is 3 or 4% of the world equity portfolio. A home country bias from that perspective would say Canadians have more than 3 or 4% of their portfolio invested in Canadian stock. If that's how we're going to define home country bias and we say, okay, 7% in Canadian stock is a home country bias. That sounds great to me, no problem whatsoever.’ https://rationalreminder.ca/podcast/100   So it’s a matter of degree I suppose.
Here’s another analysis with a lot of data: ‘The author believes that this study makes a convincing case to seek a high exposure to global (or international) equities, while keeping a tilt towards domestic equities. Some readers might perceive otherwise, but should by now have more factual material to refine their thinking and possible temptations of home country bias.’ https://www.bogleheads.org/blog/2020/03/02/50-years-of-investing-in-the-world-part-3/
Vanguard have their own analysis: ‘In each market we examined, our analysis indicated that volatility was reduced most with an allocation to international equities of between 40% and 50%.’         https://corporate.vanguard.com/content/dam/corp/research/pdf/Global-equity-investing-The-benefits-of-diversification-and-sizing-your-allocation-US-ISGGEB_042021_Online.pdf
The answer is not all cut and dried.

Perhaps I shouldn't have been as careless with my wording - particularly 'most'.

My point was to draw attention to the home bias, rather than challenge it, but I somewhat drifted off the original assignment.

Nonetheless, if someone were to deliberately favour a high UK bias, UK trackers are expectedly some of the cheapest, so it would still make little sense to pay 0.22% OCF for the 25% UK bias in VLS100, when they could invest in (just continuing to use Vanguard as an example, but obviously other fund providers exist) FTSE Developed World ex-U.K at 0.14% OCF, FTSE 100/All Share Index Unit Trust at 0.06% OCF and Emerging Markets Stock Index Fund at 0.23% OCF.

That would be around half the OCF for effectively the same thing.

Vanguard Emerging Markets Stock Index Fund tracks the MSCI index, VFEM tracks the FTSE index and is a better partner for Vanguard Developed World ex UK. VEVE is cheaper than Vanguard Developed World ex UK at 0.12%. VUKE, on the other hand is more expensive than the FTSE 100/All Share units trusts. ETFs avoid percentage fees on many platforms.