LifeStrategy 20% Accumulation

Prism

DennisTenus said:

Prism said:

PragueAddick said:

JohnWinder said:

Which bit of the marketing unhappied you, and by whom?

They allowed the advisor community to present it as a safe option, an ideal "ballast" for a SIPP, one of two ways in which I deployed it. Because the 20% is part of a suite of LS products up to "100%" the clear implication Vanguard themsleves made was that the 20% was the safest option.

Yes I know the risk factor figure says otherwise.

Thing is, risk level just means predictability of returns, which usually means less volatility and less of a drop during a crash. Bonds did fall less than equities last year (2022), however equities have recovered significantly since then. 

I think most people would agree that an almost 15% drop is not "less of a drop" and very significant and I didn't invest at the top either.

If I don't need the money at the moment is it best I sit tight and hope that it does recover in the coming however many years?

Well, I did say usually, last year was a bit of an extreme.

A accumulation bond heavy fund like LS20 will recover to its previous high eventually but nobody knows when. All of those income payments from the bonds will be reinvested back in, which will grow the value. However nobody knows what will happen to interest rates over the coming years so its impossible to say how quickly that will happen.

Besides, how ever difficult it is to do, I would try and forget about the idea of recovering a particular value. That number has come and gone. LS20 over the coming years is likely to provide a better return than cash and savings but as usual there is the risk that it might not.

masonic

DennisTenus said:

Prism said:

PragueAddick said:

JohnWinder said:

Which bit of the marketing unhappied you, and by whom?

They allowed the advisor community to present it as a safe option, an ideal "ballast" for a SIPP, one of two ways in which I deployed it. Because the 20% is part of a suite of LS products up to "100%" the clear implication Vanguard themsleves made was that the 20% was the safest option.

Yes I know the risk factor figure says otherwise.

Thing is, risk level just means predictability of returns, which usually means less volatility and less of a drop during a crash. Bonds did fall less than equities last year (2022), however equities have recovered significantly since then. 

I think most people would agree that an almost 15% drop is not "less of a drop" and very significant and I didn't invest at the top either.

If I don't need the money at the moment is it best I sit tight and hope that it does recover in the coming however many years?

15% is a lot less than the 80% equities have been capable of falling in the extreme. When you bought, you would have locked in a long term return of about 2% from the bonds component. That will still be the case, but made up of a short term drop followed by a higher annual income trail.

Linton

DennisTenus said:

Prism said:

PragueAddick said:

JohnWinder said:

Which bit of the marketing unhappied you, and by whom?

They allowed the advisor community to present it as a safe option, an ideal "ballast" for a SIPP, one of two ways in which I deployed it. Because the 20% is part of a suite of LS products up to "100%" the clear implication Vanguard themsleves made was that the 20% was the safest option.

Yes I know the risk factor figure says otherwise.

Thing is, risk level just means predictability of returns, which usually means less volatility and less of a drop during a crash. Bonds did fall less than equities last year (2022), however equities have recovered significantly since then. 

I think most people would agree that an almost 15% drop is not "less of a drop" and very significant and I didn't invest at the top either.

If I don't need the money at the moment is it best I sit tight and hope that it does recover in the coming however many years?

A 15% fall is pretty small compared with the falls VLS80 could be capable of.  Even VLS40 could have a 20% fall in a bad but not unprecedented crash.

Presumably you invested in VLS20 for good reasons.  If those reasons are still valid VLS20 is likely to be even more appropriate since the chance of a large fall is less than when you originally bought it and its interest generated is much higher as a % of the investment size.

But I suggest you dont look back thinking in terms of recovering what you lost.  Better to accept where you are now and look forward.  

PragueAddick

JohnWinder said:

They allowed the advisor community to present it as a safe option, an ideal "ballast" for a SIPP, one of two ways in which I deployed it. Because the 20% is part of a suite of LS products up to "100%" the clear implication Vanguard themsleves made was that the 20% was the safest option’

I feel your pain. But to be annoying, I doubt Vanguard has any control over what the advisor community says to clients; and ‘safest’ of several options doesn’t make it ‘safe’, like the cleanest of several toilets is not something you’d like to eat your lunch off. What to do? Bone up on personal investing so you can look under the bonnet of funds like Vanguard’s and make your own judgment about how risky they are, and so you are not reliant on advisors who neither have your interest as their primary concern the way you do nor know you as well as you know yourself. Smarter Investing by Tim Hale is a good book. The stakes are too high not to take as much control of it yourself as you’re capable of. Good luck.
Lastly, you could well be right about VLS20 and NSI for the next year. But VLS20 with stocks and 8 year duration bond funds is an investment for 10 years plus; NSI less so. Horses for courses.

You're not annoying However, two points, if I may. One, while it's true Vanguard don't have direct control over the advisor community's narratives, they seemed perfectly happy not to correct it, while the money rolled in, on both sides of the Atlantic. They're no worse than anyone else, but when I read their marketing blurb on their own site now, I just bristle a bit. Two your, -good - advice about looking under the bonnet touches on another hobby-horse of mine; it's actually very time consuming to do it, if it's possible at all, in respect of funds. I use the H-L platform and the best you will get about a fund is the top 10 investments by %. With the Vanguard LS it's true that I have a different problem, I don't have the knowledge to interrogate the non-equity components of their LS funds. Then again though, 2 years ago, who saw it coming, that bonds equities and bonds would break their apparently eternal inverse relationship? So even if I'd understood in more detail the gilts/treasuries etc, would I have avoided the fund? And where else would I have gone for a safe ballast in my SIPP? It's a money market fund now, but 2 years ago that wasn't a sensible option.

Ah, well, the thing is I'm pushing 70 now, and I've already held those Vanguard funds for around 7 of a 10 year horizon. I'm generally de-risking now. Possibly I might buy an annuity with my SIPP soonish, so the money market fund replacing LS20 looks a decent choice for me in that context. Younger posters should have a different approach.Would that I could hold NSI bonds inside a SIPP wrapper.

dunstonh

 One, while it's true Vanguard don't have direct control over the advisor community's narratives, they seemed perfectly happy not to correct it, while the money rolled in, on both sides of the Atlantic. 

And how do you think that advisers influence the ESMA? and for what gain?

 I use the H-L platform and the best you will get about a fund is the top 10 investments by %.

Probably as HL don't want to pay for improved data.    The greater the drill down, the greater the cost.    Trustnet is free of charge for consumers but gives limited data. Their commercial version will drill down and show all holdings, providing the fund house publishes that data.   The commercial version for platforms comes with different levels of data supply which allows the platform to decide how much it pays for how much is supplied.

DennisTenus

masonic said:

DennisTenus said:

Prism said:

PragueAddick said:

JohnWinder said:

Which bit of the marketing unhappied you, and by whom?

They allowed the advisor community to present it as a safe option, an ideal "ballast" for a SIPP, one of two ways in which I deployed it. Because the 20% is part of a suite of LS products up to "100%" the clear implication Vanguard themsleves made was that the 20% was the safest option.

Yes I know the risk factor figure says otherwise.

Thing is, risk level just means predictability of returns, which usually means less volatility and less of a drop during a crash. Bonds did fall less than equities last year (2022), however equities have recovered significantly since then. 

I think most people would agree that an almost 15% drop is not "less of a drop" and very significant and I didn't invest at the top either.

If I don't need the money at the moment is it best I sit tight and hope that it does recover in the coming however many years?

15% is a lot less than the 80% equities have been capable of falling in the extreme. When you bought, you would have locked in a long term return of about 2% from the bonds component. That will still be the case, but made up of a short term drop followed by a higher annual income trail.

For interest, would something like the MSCI World ETF be capable of failing an extreme amount? I assume that is possible because its overweight US stocks?

masonic

DennisTenus said:

masonic said:

DennisTenus said:

Prism said:

PragueAddick said:

JohnWinder said:

Which bit of the marketing unhappied you, and by whom?

They allowed the advisor community to present it as a safe option, an ideal "ballast" for a SIPP, one of two ways in which I deployed it. Because the 20% is part of a suite of LS products up to "100%" the clear implication Vanguard themsleves made was that the 20% was the safest option.

Yes I know the risk factor figure says otherwise.

Thing is, risk level just means predictability of returns, which usually means less volatility and less of a drop during a crash. Bonds did fall less than equities last year (2022), however equities have recovered significantly since then. 

I think most people would agree that an almost 15% drop is not "less of a drop" and very significant and I didn't invest at the top either.

If I don't need the money at the moment is it best I sit tight and hope that it does recover in the coming however many years?

15% is a lot less than the 80% equities have been capable of falling in the extreme. When you bought, you would have locked in a long term return of about 2% from the bonds component. That will still be the case, but made up of a short term drop followed by a higher annual income trail.

For interest, would something the MSCI World ETF be capable of failing an extreme amount? I assume that is possible because its overweight US stocks?

In the 1973-4 crash, the UK's then FT 30 fell 73%, which was worse than the US Dow (only 45%). In the great depression, the Dow fell around 90%. While the biggest crashes are global, different countries can be hit harder than others depending on the circumstances. That's one reason why single country investing is higher risk than global diversification. The other is stagnation in the stock market you are biased towards.

Linton

In the tech crash of 2000/2001 the FTSE World Index fell by close to 50%.

Qyburn

Linton said:

A 15% fall is pretty small compared with the falls VLS80 could be capable of.  Even VLS40 could have a 20% fall in a bad but not unprecedented crash.  

As far as I can see VLS20, VLS80 and even VLS100 fell by pretty much the same amount during 2022, around 16%.  Same for HSBC where "cautious" lost about the same as "adventurous".

JohnWinder

it's actually very time consuming to do it, if it's possible at all, in respect of funds. I use the H-L platform and the best you will get about a fund is the top 10 investments by %. With the Vanguard LS it's true that I have a different problem, I don't have the knowledge to interrogate the non-equity components of their LS funds. Then again though, 2 years ago, who saw it coming, that bonds equities and bonds would break their apparently eternal inverse relationship?’

Time consuming? Yes, but once done, never again. To give Vanguard their credit, where H-L could lift their game, Vanguard list every one of the stocks held in a fund with 1000 stocks, along with sector, countries etc breakdown. They’re just a bit more transparent; add it to the list of ‘what’s so good about Vanguard?’ that a recent Kool-Aid question asked. There's a place for a Vanguard robo-advisor. That'll set the cat amongst the pigeons.
Don’t have the knowledge? If you’re smart enough which you are, and don’t have the distractions of a normal balanced life, you can get the knowledge. After Hale’s book, try Thau’s The Bond Book.
Eternal inverse relationship? We wish. ‘Before 2021 the correlation (between bonds and stocks) had been negative for about twenty years…but it had been positive for about thirty years before that,’
https://www.bogleheads.org/forum/viewtopic.php?p=7065803&sid=52771f9a7871c77b341cbc5bd0ee63a3#p7065803

Here’s the search strategy for separating the chaff from the questionable: ‘what she said’ site: bogleheads.org.

So even if I'd understood in more detail the gilts/treasuries etc, would I have avoided the fund? And where else would I have gone for a safe ballast in my SIPP? It's a money market fund now, but 2 years ago that wasn't a sensible option.‘

Agree. Hence the attraction of an annuity vs an at risk portfolio. There are few guarantees in investing, except perhaps government bonds held to maturity. To get investing rewards we have to take risk, sadly taking the risk doesn’t mean the reward must follow. Comforting to know some history even if it doesn’t reduce the pain.