Vanguard S&P 500

dont_use_vistaprint

Hi would this be a sensible  choice to put majority of ISA allowance in for the next few years with aim of beating cash ISA returns over 5-7 years.

Why would people choose this vs something like Vanguard Life strategy 60?  Or would both make sense ? 

Section62

Pretty much all covered here -

https://forums.moneysavingexpert.com/discussion/6573092/s-p-500/p1

InvesterJones

dont_use_vistaprint said:

Hi would this be a sensible  choice to put majority of ISA allowance in for the next few years with aim of beating cash ISA returns over 5-7 years.

Why would people choose this vs something like Vanguard Life strategy 60?  Or would both make sense ? 

No, both wouldn't make sense, unless you were trying to make your own weird ultra-US overweight portfolio - if you were that keen to just invest in one market then might as well go all S&P 500. But if your aim is simply to beat cash returns then you don't need to take on that much risk - a global index, or even a multi-asset fund, should do that in the long run with lower volatility. 5-7 years is kind of medium term, so I'd go with multi-asset and something like VLS60 is not a bad choice if you don't mind overweighting the UK (which is 'value' at the moment).

masonic

VLS60 won't be an option if you are using T212 as per your other thread.

dont_use_vistaprint

masonic said:

VLS60 won't be an option if you are using T212 as per your other thread.

VLS60 is an option on T 212  within S&S ISA 

vanguard life strategy 60 percent  equity (Acc)

is this not the same thing? 

Why would certain things not be available on T212 ? 

dont_use_vistaprint

InvesterJones said:

dont_use_vistaprint said:

Hi would this be a sensible  choice to put majority of ISA allowance in for the next few years with aim of beating cash ISA returns over 5-7 years.

Why would people choose this vs something like Vanguard Life strategy 60?  Or would both make sense ? 

No, both wouldn't make sense, unless you were trying to make your own weird ultra-US overweight portfolio - if you were that keen to just invest in one market then might as well go all S&P 500. But if your aim is simply to beat cash returns then you don't need to take on that much risk - a global index, or even a multi-asset fund, should do that in the long run with lower volatility. 5-7 years is kind of medium term, so I'd go with multi-asset and something like VLS60 is not a bad choice if you don't mind overweighting the UK (which is 'value' at the moment).

Why are some people on here a little bit negative towards the S&P 500? Other than a few instances in the lost decade after 9/11 it looks like it’s returned above 10% annual returns consistently for over 100 years, often much much higher. it seems you would need to be extremely unlucky not to make money tracking it

wmb194

dont_use_vistaprint said:

masonic said:

VLS60 won't be an option if you are using T212 as per your other thread.

VLS60 is an option on T 212  within S&S ISA 

vanguard life strategy 60 percent  equity (Acc)

is this not the same thing? 

Why would certain things not be available on T212 ? 

Oh yes, euro denominated ETFs listed in Germany and Italy:

masonic

dont_use_vistaprint said:

masonic said:

VLS60 won't be an option if you are using T212 as per your other thread.

VLS60 is an option on T 212  within S&S ISA 

vanguard life strategy 60 percent  equity (Acc)

is this not the same thing? 

Why would certain things not be available on T212 ? 

As highlighted by wmb194, it is not the same thing as the UK fund discussed on these forums. T212 is a share trading platform, so you can only buy exchange traded investments like individual shares and ETFs, not open-ended funds. See https://www.trading212.com/isa

I don't know whether the composition of the German and Italian ETFs match that of the UK OEIC. Presumably they'd be targeting those markets with bias towards German or Italian shares, but that's something you'd have to research.

dont_use_vistaprint said:

Why are some people on here a little bit negative towards the S&P 500? Other than a few instances in the lost decade after 9/11 it looks like it’s returned above 10% annual returns consistently for over 100 years, often much much higher. it seems you would need to be extremely unlucky not to make money tracking it

It's mainly not wishing to put too many eggs in one basket. The S&P500 is dominated by a few highly correlated mega-companies. These companies are trading at bubble-like valuations reminiscent of the dot-com euphoria. There is also a long term pattern of US vs ROW alternating in delivering superior returns. Alongside that, Vanguard and other commentators are predicting 10 year real returns from the S&P500 to be 3-5%pa, which looks fairly unattractive even compared with global bonds. So not quite another lost decade, but not good.

So there are plenty of reasons why you might not want 60+% of your investments tied to this index. I have never invested more than 50% of my investable assets in the US market.

Regarding the comment about consistent returns, see below long term chart (there were worse bear markets before 2000):

https://www.macrotrends.net/2324/sp-500-historical-chart-data

Linton

dont_use_vistaprint said:

InvesterJones said:

dont_use_vistaprint said:

Hi would this be a sensible  choice to put majority of ISA allowance in for the next few years with aim of beating cash ISA returns over 5-7 years.

Why would people choose this vs something like Vanguard Life strategy 60?  Or would both make sense ? 

No, both wouldn't make sense, unless you were trying to make your own weird ultra-US overweight portfolio - if you were that keen to just invest in one market then might as well go all S&P 500. But if your aim is simply to beat cash returns then you don't need to take on that much risk - a global index, or even a multi-asset fund, should do that in the long run with lower volatility. 5-7 years is kind of medium term, so I'd go with multi-asset and something like VLS60 is not a bad choice if you don't mind overweighting the UK (which is 'value' at the moment).

Why are some people on here a little bit negative towards the S&P 500? Other than a few instances in the lost decade after 9/11 it looks like it’s returned above 10% annual returns consistently for over 100 years, often much much higher. it seems you would need to be extremely unlucky not to make money tracking it

One can’t be negative or positive about the S&P 500, it is what it is. Like any other index, or any other fund, it will experience good and bad times. Which will predominate is unknown.

The question is how can you justify investing solely in the S&P 500, ignoring the rest of the world? In my view diversification is the most important single factor in the design of a portfolio.  My 40% US enables me to invest about 30% in Europe with about 25% in the far east. So gains will be made no matter which areas in the world win out,

Hoenir

dont_use_vistaprint said:

InvesterJones said:

dont_use_vistaprint said:

Hi would this be a sensible  choice to put majority of ISA allowance in for the next few years with aim of beating cash ISA returns over 5-7 years.

Why would people choose this vs something like Vanguard Life strategy 60?  Or would both make sense ? 

No, both wouldn't make sense, unless you were trying to make your own weird ultra-US overweight portfolio - if you were that keen to just invest in one market then might as well go all S&P 500. But if your aim is simply to beat cash returns then you don't need to take on that much risk - a global index, or even a multi-asset fund, should do that in the long run with lower volatility. 5-7 years is kind of medium term, so I'd go with multi-asset and something like VLS60 is not a bad choice if you don't mind overweighting the UK (which is 'value' at the moment).

Why are some people on here a little bit negative towards the S&P 500? Other than a few instances in the lost decade after 9/11 it looks like it’s returned above 10% annual returns consistently for over 100 years, often much much higher. it seems you would need to be extremely unlucky not to make money tracking it

S&P 500 was only launched in 1957 though.  

incus432

dont_use_vistaprint said:

Why are some people on here a little bit negative towards the S&P 500? Other than a few instances in the lost decade after 9/11 it looks like it’s returned above 10% annual returns consistently for over 100 years, often much much higher. it seems you would need to be extremely unlucky not to make money tracking it

I think - as @masonic says - one big factor is because its peformance is concentrated in a tiny number of huge companies. I watched this Pensioncraft video https://www.youtube.com/watch?v=MrBHPk9E1Jw which explores Goldman Sachs shock advice to move out of the S&P into bonds. It shows a number of other worrying indicators. 

Anyway why would you choose to invest purely in the US economy when you can invest in the whole world?