Vanguard LifeStrategy 60%

bjorn_toby_wilde

I have very little of my pension in cash at the moment. The tiny bit that is in cash with AJ Bell gets a pretty low interest rate although they don’t charge me to hold it. Not sure how others hold cash.

I do have some in Royal London Short Term MMF which has grown about 2.5% since October, so a little more than the 5% p.a. discussed. If I need cash I’d simply sell some of that as and when. If interest rates fall then I’m sure MMFs will be less attractive and I might need to rethink that bit of the pot.

dunstonh

As Dunstonh kindly put it it's on a high at present. However the highest it's been for me was Nov 21 thereafter a gradual slide.

That high is the assets under management (AUM).  Not the return.    If you look at the HSBC fund that has had steady inflows, VLS60 has had outflows but is still getting inflows.   

Nov 21 was the peak in bonds and gilts.     Equities, excluding UK have been doing quite well.    Unfortunately, VLS60 is high in bonds (in particular gilts)  and has a UK home bias.  It is those two things that have been a drag with the VLS range.

JohnWinder

We expect UK bonds to deliver annualised returns of around 4.4%-5.4% over the next decade […]

That’s a huge difference compared to when quantitative tightening started in early 2022.

Indeed Vanguard was looking for just 0.8%-1.8% 10-year annualised returns as recently as the end of 2021

I'm not the bond expert I wish I was but I don't think we need be mesmerised by 10 year predictions or dismayed by predictions that fall over next day.
If you hold a bond maturing in 10 years, and today it is yielding 4.4%/year, you can confidently say 10 year bonds will deliver 4.4%/year for the next 10 years because that's what you'll get if you hold the bond for 10 years to maturity.
If by next month interest rates have changed so much that that bond maturing in 9 years 11 months is yielding 2%/year, then that's the expected return for 9.9 year bonds and thus the expected bond return for the next 9.9 years. 
The reason one can make these predictions, confidently, with UK government bonds and not stocks, is because the bonds are backed by a government guarantee to pay up as promised. 

P933alilli

Ive been in VLS60 for the last two years and  the return has been negative for most of that time but has been increasing since the end of november and my r.o.r is currently c.4.5%. I plan to hold for ten years.

  I find the bonds confusing.If interest rates start falling will this have an immediate affect on the price of LS and start to increase or is it something that will take time to factor in?

   In the meantime i have a cash isa maturing next month and wondered whether to put more into VLS60 or  increase my exposure to equities, ftse global all cap or the ftse developed world. I have a total of 11% equities, 7.5% bonds and the rest, ie. c.82% in 1-5 fixed rate cash bonds. In fact as i am cash heavy, it ,may even have been better for me to go into those global equity trackers to start with?

   A further thing to consider is transferring my VLS60 over to HSBC global strategy. Is this an easy thing to do and how long would it take.

   Finally the Vanguard 12 month predictions. I realise that they are just predictions but i take it that these are before inflation and not real returns?

Ivkoto

Collyflower1 said:

Ive been in VLS60 for the last two years and  the return has been negative for most of that time but has been increasing since the end of november and my r.o.r is currently c.4.5%. I plan to hold for ten years.

  I find the bonds confusing.If interest rates start falling will this have an immediate affect on the price of LS and start to increase or is it something that will take time to factor in?

   In the meantime i have a cash isa maturing next month and wondered whether to put more into VLS60 or  increase my exposure to equities, ftse global all cap or the ftse developed world. I have a total of 11% equities, 7.5% bonds and the rest, ie. c.82% in 1-5 fixed rate cash bonds. In fact as i am cash heavy, it ,may even have been better for me to go into those global equity trackers to start with?

   A further thing to consider is transferring my VLS60 over to HSBC global strategy. Is this an easy thing to do and how long would it take.

   Finally the Vanguard 12 month predictions. I realise that they are just predictions but i take it that these are before inflation and not real returns?

You should consider ⬇️

https://www.trustnet.com/factsheets/O/gfzl/blackrock-consensus-85


At any one time, the Fund will aim to have no less than 40% and no more than 85% of its investment exposure to equity securities gained either directly or through its investment in other funds.

Hoenir

Skinnydad said:

 Any advice appreciated. what's the best way to generate an income with this amount of capital. I don't really fancy an annuity as i don't want to give the pension fund my cash if I pop my clogs way too early. 

There in lies the challenge. Exposing yourself to a higher risk level ( in the sense of broad collective funds rather than targeted individual stocks). Isn't going to generate a return more than a couple of % a year. That's with the income reinvested. The performance of some markets in the recent past isn't the norm. Likewise the tailwind of exporting manufacturing to China on a huge scale from the early 90's is petering out. Equities generally may well be heading for a period in the doldrums. 

Annuites pay a higher return as some people will receive far more than they've paid in. That's why it's a pooled risk. Not just a question of the pension company receiving what's left if you personally depart early. 

Skinnydad

Thanks for all the input folks.  I really appreciate it. Nothings easy eh!