Vanguard funds for a new investor

NithyaH

Hoenir said:

InvesterJones said:

Hoenir said:

Cococatdog said:

  I'm looking to take control of my workplace SIPP and want to start investing in index tracker funds to forget about for the next 30 years.  

Wouldn't recommend this route. Either be fully active yourself. Or pass control over to a fund manager that uses passive funds in an active manner (a multi asset fund). For example as a well known brand - Vanguard Life Strategy. Investing is cyclical in nature. Better to have the portfolio tweaked as events unfold. 

When was the last time Vanguard Life Strategy was 'tweaked' as events unfolded?

Believe it to be quarterly. The internal fund allocations are far from fixed / rigid. VLS is an actively managed fund of passive funds. Hence why they've never benchmarked the range against any indices.  

As far as the UK is concerned. Vanguard only arrived on these shores in 2010. Pretty much a one way street in the time period since. 

Isn’t it just a market cap weighted allocation apart from an overweight to the UK?

Albermarle

Cococatdog said:

Labtebricolist said:

VWRP is a perfect set and forget ETF.  It is the main ETF in my pension fund - I have around 75% in this with 20 per cent in bonds and 5 per cent in a gold ETF.  As you get older there may be an argument for complementing it with a bond fund or other non-stock assets, but not 30 years out.

Bear in mind that active management and/or fund of funds are very unlikely to beat the market average over a 30 year time horizon, especially when their significantly higher fees are taken into account.  Almost all of the research supports this and, for the majority of people, a passive approach tracking a well diversified index (such as the FTSE all world tracked by VWRP) is the most sensible approach.

Thanks - super helpful!  When you say 20% in bonds, do you mean directly invested in bonds, or in a bond based fund? 

I was also aiming for 80% equity approach for now, would you count cash in ISAs towards the 20% if I'm willing to earmark it as retirement funds?

Many people would see their cash savings as somehow separate from their investments, pensions etc but ideally you should see them as part of the bigger picture.
Some cash could be earmarked for emergency funds, short term spending, but otherwise it is part of the bigger mix. 

GeoffTF

Cococatdog said:

Hoenir said:

Cococatdog said:

  I'm looking to take control of my workplace SIPP and want to start investing in index tracker funds to forget about for the next 30 years.  

Wouldn't recommend this route. Either be fully active yourself. Or pass control over to a fund manager that uses passive funds in an active manner (a multi asset fund). For example as a well known brand - Vanguard Life Strategy. Investing is cyclical in nature. Better to have the portfolio tweaked as events unfold. 

I've been reading around and thought a completely passive index tracker was the best option over the long term but maybe I've been influenced by the FIRE community on reddit a bit too much?  Isn't any tweaking only as good as the fund manager?  Will have a look at Vanguard life strategy though - thanks.

Tweaking is a game of chance and costs you money. The Vanguard LifeStrategy portfolios very rarely undergo any material change except for rebalancing, and then do so for marketing reasons. If you can cope with having an equity tracker and a bond tracker, you use cash flow rebalancing:

https://www.betterment.com/help/portfolio-rebalancing-methods

I prefer that approach if you know what you are doing, but most people don't.

jacko74

I'm a little confused at the moment, I bought the most popular Vanguard S&P tracker (VUAG) on the 8th April, its currently showing as up around 5% ... yet in that same time period the S&P is up around 14%.

Why isnt my tracker reflecting the S&P gains??

Hoenir

NithyaH said:

Hoenir said:

InvesterJones said:

Hoenir said:

Cococatdog said:

  I'm looking to take control of my workplace SIPP and want to start investing in index tracker funds to forget about for the next 30 years.  

Wouldn't recommend this route. Either be fully active yourself. Or pass control over to a fund manager that uses passive funds in an active manner (a multi asset fund). For example as a well known brand - Vanguard Life Strategy. Investing is cyclical in nature. Better to have the portfolio tweaked as events unfold. 

When was the last time Vanguard Life Strategy was 'tweaked' as events unfolded?

Believe it to be quarterly. The internal fund allocations are far from fixed / rigid. VLS is an actively managed fund of passive funds. Hence why they've never benchmarked the range against any indices.  

As far as the UK is concerned. Vanguard only arrived on these shores in 2010. Pretty much a one way street in the time period since. 

Isn’t it just a market cap weighted allocation apart from an overweight to the UK?

No. It's an actively managed portfolio of sub funds. Vanguard have never benchmarked the VLS range. Whatever their methology it's never been disclosed. UK listed companies a high % of their revenue from overseas. The only bias is in the minds of investors. Who will happily pay a premium for a US company in exactly the same global market sector. Never understood this myth as the information has always been in the public domain. 

dunstonh

jacko74 said:

I'm a little confused at the moment, I bought the most popular Vanguard S&P tracker (VUAG) on the 8th April, its currently showing as up around 5% ... yet in that same time period the S&P is up around 14%.

Why isnt my tracker reflecting the S&P gains??

Because you are not in the US.   As a UK investor, you are subject to currency fluctuations and the pound has risen against the dollar, neutralising much of the S&P500 gain in that period.

The exchange rate is predicted to get to around 1.5.   If that happens, then UK investors in US equities are going to take some pain.

This is not unexpected.   It's a cycle that happens. You never know when it will start but so far, it does look like this period is not the time to be overweight in US equities.

GeoffTF

Hoenir said:

NithyaH said:

Hoenir said:

InvesterJones said:

Hoenir said:

Cococatdog said:

  I'm looking to take control of my workplace SIPP and want to start investing in index tracker funds to forget about for the next 30 years.  

Wouldn't recommend this route. Either be fully active yourself. Or pass control over to a fund manager that uses passive funds in an active manner (a multi asset fund). For example as a well known brand - Vanguard Life Strategy. Investing is cyclical in nature. Better to have the portfolio tweaked as events unfold. 

When was the last time Vanguard Life Strategy was 'tweaked' as events unfolded?

Believe it to be quarterly. The internal fund allocations are far from fixed / rigid. VLS is an actively managed fund of passive funds. Hence why they've never benchmarked the range against any indices.  

As far as the UK is concerned. Vanguard only arrived on these shores in 2010. Pretty much a one way street in the time period since. 

Isn’t it just a market cap weighted allocation apart from an overweight to the UK?

No. It's an actively managed portfolio of sub funds. Vanguard have never benchmarked the VLS range. Whatever their methology it's never been disclosed.

Vanguard says:

"The Fund is actively managed in that the Investment Adviser has discretion in respect of the Associated Schemes in which the Fund may invest and the allocations to them, each of which may change over time."

https://www.vanguardinvestor.co.uk/investments/vanguard-lifestrategy-60-equity-fund-accumulation-shares/overview

The allocations do not appear to change much over time. Here are the latest published allocations for the equity part of VLS 60:

* FTSE Developed World ex-U.K. Equity Index Fund GBP Acc    18.8%
* U.S. Equity Index Fund GBP Acc    15.5%
* FTSE U.K. All Share Index Unit Trust GBP Acc    15.4%
* Emerging Markets Stock Index Fund GBP Acc    4.6%
* FTSE Developed Europe ex-U.K. Equity Index Fund GBP Acc    2.8%
* Japan Stock Index Fund GBP Acc    1.4%
* Pacific ex-Japan Stock Index Fund GBP Acc    0.7%

You can compare the ratios of the US to the various other regions with those for VWRL. There seems to be a reasonable match for those that I tried, with the exception of the UK. Vanguard has clearly under-weighted Canada, but it is not a big market. It is also worth noting that the emerging markets fund that they have chosen tracks the MSCI index, whereas the others track the FTSE indexes. That is not ideal.

Albermarle

jacko74 said:

I'm a little confused at the moment, I bought the most popular Vanguard S&P tracker (VUAG) on the 8th April, its currently showing as up around 5% ... yet in that same time period the S&P is up around 14%.

Why isnt my tracker reflecting the S&P gains??

Since 8th April the S&P 500 is up 8.5% ( not 14 %)
In the same period the Pound against the Dollar increased by around 4%.
So you would expect a S&P tracker in GBP to be up around 4.5% over that period.