ISA fund recommendation?

Londonlisa12

With the new tax year approaching and with it another £20K of ISA allowance , I am undecided where I put it apart from knowing it will come from fixed rate bond cash and go into a fund.At the moment I am very cash heavy 60% to 40% over 2 funds which is made up of a combination of Vanguard life strategy 40 and 60 {50% / 50.%} so in effect VLS 50.

I know VLS is very much weighted to the UK and I think US so want a fund  that  balances this out a bit more globally. I hold these on the iweb platform, and  would prefer something that is available there.I am prepared to hold everything for at least 8 years with medium risk 

Anyone have any recommendations considering my present holdings? 

Thank you.

JohnWinder

You’re right about UK and VLS, and there are reasonably held views on both sides of the argument about holding a higher percentage in UK stocks than UK stocks are represented in global terms.
US stocks and VLS are a different kettle of fish. Because VLS substantially overweights UK stocks, all other countries' stocks are under-represented compared to their global weighting. Yes, there is a lot more in US stocks in VLS than other nations' stocks but that doesn’t make it ‘out of balance’ for US stocks. It’s the same as beer which is 95% water, but that’s not out of balance with the alcohol that’s with it - that’s just what beer is.
Similarly, holding a globally diversified portfolio of stocks is to hold about as much in US stocks as US stocks are as a proportion of global stocks. This is because the wisdom of all investors has decided that US stocks should have that much money poured into them that they outweigh any other country’s, and the safest bet for any investor is to go along with the market view. Of course, you can hold a different view, perhaps someone might think US stocks are over priced compared to the rest, but is that the sort of investor you are to know that much so well?

Linton

Londonlisa12 said:

With the new tax year approaching and with it another £20K of ISA allowance , I am undecided where I put it apart from knowing it will come from fixed rate bond cash and go into a fund.At the moment I am very cash heavy 60% to 40% over 2 funds which is made up of a combination of Vanguard life strategy 40 and 60 {50% / 50.%} so in effect VLS 50.

I know VLS is very much weighted to the UK and I think US so want a fund  that  balances this out a bit more globally. I hold these on the iweb platform, and  would prefer something that is available there.I am prepared to hold everything for at least 8 years with medium risk 

Anyone have any recommendations considering my present holdings? 

Thank you.

There is no single right answer, though there are of course many wrong ones.  In my view, unless you want to spend a lot of effort in detailed research,  the right ones are all based on choosing a set of well diversified investments aligned to your objectives in terms of returns, timescale and acceptance of uncertainty in the final outcome and volatility in the shorter term.

Beyond that comes how you feel about your choices.  For example if putting 60%+ in the US or 25% in the UK makes you uneasy dont do it.  Within reasonable bounds, in the long term it probably wont make a lot of difference and in the short term it could easily go either way.

One suggestion - it seems a bit strange to invest fully with Vanguard Life Strategy and then add something else because you dont like its allocations.  Perhaps you should start with a fund that does more closely meet your wishes.  Bringing your overall allocation to UK down to near its true global % from a startingpoint of VLS would require major additional investment in a new non-VLS fund.

The other aspect to consider is your equity/bond allocations.  8 years is a rather short time for equity investments.   If not now it could be so in 2-3 years time.  You could  come up with an allocation appropriate for your objectives by splitting the total pot between some needed in 8 or so years and some put aside for the long term.  You can then calculate an appropriate % bonds for you circumstances with say 40% equity for the 8 year tranch and 80%-100% equity for the long term.

aroominyork

Linton said:

Londonlisa12 said:

With the new tax year approaching and with it another £20K of ISA allowance , I am undecided where I put it apart from knowing it will come from fixed rate bond cash and go into a fund.At the moment I am very cash heavy 60% to 40% over 2 funds which is made up of a combination of Vanguard life strategy 40 and 60 {50% / 50.%} so in effect VLS 50.

I know VLS is very much weighted to the UK and I think US so want a fund  that  balances this out a bit more globally. I hold these on the iweb platform, and  would prefer something that is available there.I am prepared to hold everything for at least 8 years with medium risk 

Anyone have any recommendations considering my present holdings? 

Thank you.

The other aspect to consider is your equity/bond allocations.  8 years is a rather short time for equity investments.   If not now it could be so in 2-3 years time.  You could  come up with an allocation appropriate for your objectives by splitting the total pot between some needed in 8 or so years and some put aside for the long term.  You can then calculate an appropriate % bonds for you circumstances with say 40% equity for the 8 year tranch and 80%-100% equity for the long term.

It can be difficult to understand what posters mean when they say they will not touch the money for X years. Some might mean they will then buy an annuity (which I assume will make a bit of a comeback with post-2015 pension freedom excitement abating as interest rates rise), others that they might start drawdown. Linton's last sentence describes one approach.

Albermarle

One suggestion - it seems a bit strange to invest fully with Vanguard Life Strategy and then add something else because you dont like its allocations.  Perhaps you should start with a fund that does more closely meet your wishes.  Bringing your overall allocation to UK down to near its true global % from a startingpoint of VLS would require major additional investment in a new non-VLS fund.

However if you think 25% UK is too much ( like with VLS) but that 4% ( the UK % is many other multi asset and global funds) is too little. A mixture to get around 10 to 15% UK could be a good compromise.

ColdIron

Londonlisa12 said:

I know VLS is very much weighted to the UK and I think US so want a fund  that  balances this out a bit more globally. I hold these on the iweb platform, and  would prefer something that is available there.

You might look at another multi-asset fund with a more representative geographical allocation. Perhaps the HSBC Global Strategy Balanced fund, it's available at IWeb