Vanguard Life Strategy

Dilbert_Investor

Does anyone have a view of the merits of Vanguard Lifestrategy 80% versus Vanguard Life Strategy global 80%. The global version seen to new to have any performance data.

Thanks,

eskbanker

The global one has only started this year so clearly can't have performance data before that, but there's a limit to the usefulness of historical performance data anyway - the key differentiator between the two appears to be the geographic mix, with the older one having the higher UK weighting and the new one aiming to more closely reflect global cap weighting, so your feelings on UK allocation are likely to be a significant factor if choosing between these two funds.

Other funds may be a better fit with your strategy and objectives though - what has led you to evaluating these two in particular?

GeoffTF

https://forums.moneysavingexpert.com/discussion/6685710/vanguard-life-strategy

Performance data is not relevant. Sometimes the UK market beats the global market and sometimes it does not. Vanguard overweighted the UK in the original version because their research suggested that would make it sell better. They have recently reduced the UK bias, but it is still quite large. Vanguard also introduced the new funds with no UK bias. There are arguments in favour of some UK bias. UK dividends are not subject the withholding tax. About a third of UK shares income is in our own currency, which reduces volatility a little. Some might fear that nasty foreigners will not respect their property rights. Others will just want to buy British. On the other hand, the global funds offer a higher degree of diversification. That means a higher proportion of US stocks, which some do not like.

Dilbert_Investor

I’ve has the lifestyle fund for a while and it has performed well for me, I’m thinking about an additional investment, and noticed the global fund whilst look. Maybe global diversification is better than a more Uk centric option.

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/82159375#Comment_82159375

I don't see them as being significantly different in terms of diversification - they largely contain the same holdings but in different proportions, so there's little point in holding both IMHO…

What makes you think about an additional investment, i.e. in what way does/do your existing one(s) not meet your objectives?

Dilbert_Investor

Additional funding and crystallising CGT by switching between

Exodi

https://forums.moneysavingexpert.com/discussion/6685710/vanguard-life-strategy

If we consider the UK in the lens of global market capitalisation, the FTSE Global All Cap Index puts the UK at ~3.2%. https://research.ftserussell.com/analytics/factsheets/home/downloadsingleissue?issueName=GEISLMS

Vanguard LifeStrategy is made up of about ~20.5% UK holdings, Vanguard LifeStrategy Global is made up of about ~3.4%

The difference is whether a UK investor wants a large home bias or not - or how optimistic/pessimistic you are about the future of the UK compared to the rest of the world.

Dilbert_Investor

I’ve has the lifestyle fund for a while and it has performed well for me, I’m thinking about an additional investment, and noticed the global fund whilst look. Maybe global diversification is better than a more Uk centric option.

The holdings are virtually identical, with the exception that LifeStrategy 80 owns 16.6% FTSE U.K. All Share Index Unit Trust GBP Acc, and a couple of % in U.K. Government Bond Index Fund GBP Acc, U.K. Investment Grade Bond Index Fund GBP Acc and U.K. Inflation-Linked Gilt Index Fund GBP Acc.

LifeStrategy 80 owns 2.6% FTSE U.K. All Share Index Unit Trust GBP Acc and does not hold the small percentages in the UK Bond/Gilt funds.

https://www.vanguardinvestor.co.uk/investments/vanguard-lifestrategy-80-equity-fund-accumulation-shares/portfolio-data https://www.vanguardinvestor.co.uk/investments/vanguard-lifestrategy-global-80-equity-fund-a-gbp-accumulation-shares/portfolio-data

Rather than invest in both, it would probably be simpler if you wanted less UK than the LifeStrategy 80 offers, but more than the LifeStrategy 80 Global offers, to invest in LifeStrategy 80 Global and just invest a small amount of your portfolio into the FTSE UK All Share directly.

Dilbert_Investor

Thanks Exodi, that makes sense.

Are they sufficiently different to realise the CGT gain is selling one nd buying the other?

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/82159408#Comment_82159408

Yes, they are different for CGT purposes.

Dilbert_Investor

Many thanks

dunstonh

https://forums.moneysavingexpert.com/discussion/comment/82159375#Comment_82159375

Being heavier in US equities in the current cycle has been more beneficial than not being heavier. However, the cycles change and some feel we are getting close to the next changeover. Nobody has a crystal ball but you can make a judgement call.

Also note that there is more to life than Vanguard. Some of the similar alternatives offer lower costs.