Investing newbie

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  • older_and_no_wiserolder_and_no_wiser Forumite
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    I'm about to take the plunge, I want to use stocks and shares isa allowance to invest in a Vanguard 60:40 life strategy product,
    It is a very popular product but personally I would prefer the similar HSBC fund you were looking at . There is not much in it, but the HSBC Balanced fund has outperformed VLS 60 over the last 6 months/12 months and 5 years.
    I agree. I had the same decision to make over a year ago and went with HSBC Global Strategy (Dynamic) over the Vanguard LifeStrategy 80. I agree about past performance not applying to future, but when I looked at the Trustnet charting tool and compared both, the HSBC was consistently performing better over long time frames. Either way, after deciding, stick with it. The worst thing you can do is keep chopping and changing. It leads to sleepless nights and self doubt. There will always be better solutions but if you stick to a plan, you will win.
  • JohnWinderJohnWinder Forumite
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      I agree. …and went with HSBC Global Strategy (Dynamic) over the Vanguard LifeStrategy 80. I agree about past performance not applying to future, but when I looked at the Trustnet charting tool and compared both, the HSBC was consistently performing better over long time frames.

    The only reason we’re hearing for choosing HSBC over VLS is past performance, and yet we all agree past performance does not predict future performance. There’s a non sequitur there.  If you can’t find any difference between the funds you might as well choose the better performing, but we can.

    The fees are quite different, and not surprisingly Vanguard is cheaper because they’re leaders in that respect.

    Both can vary their stocks from 40-85% (can’t believe I’m reading that of a fund called ‘60% equity’). There’s a lot of active management in choosing 40 or 85%, so we shouldn’t be surprised one fund has outperformed the other, or that outperformance could move from one to the other since they’re basing it on predicting the future.

    But that they are both very broadly diversified, cap weighted index tracking funds trumps those lesser issues I suppose. But the only thing you can do to reliably increase returns is reduce costs.


    …stick with it. The worst thing you can do is keep chopping and changing….but if you stick to a plan, you will win.

    Win. The plan here was for 10 years investing. HSBC says ‘long term’ is >5 years. I don’t know what a ‘win’ is, but having your portfolio value worth less than you started with, after inflation, would not be a win for me. That’s what happened to a 60/40 portfolio from March 2000, after 9 years. I agree with the sentiment, ‘stick to it’, but I think that is the wrong justification because there are no guarantees with stock investing. And it undermines this and other sensible advice if it doesn’t hold true. 

    I’m more confident saying that sticking to a plan gives it the best chance of realising its potential, and that the research (which I don’t understand) finds that chopping and changing is worse than ‘buy and hold’. https://www.ifa.com/articles/dalbar_2016_qaib_investors_still_their_worst_enemy/

  • Collyflower1Collyflower1 Forumite
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    I went with Vanguard's VLS60 in january. It seemed like the correct call for my circumstances and attitude to risk. I'd advise to drip feed now with hindsight, indeed i did so with £500 for the first three months but then decided to deploy a lump sum to use all last years isa allowance. I played out the worse case scenario of having my money drop by 20-50% and thought that there would be plenty of time left to bring it back, 10 years, if things got really bad. I'm down 4.86%, -£1020, which isnt a lot compared to other funds but that would have been -£120 if i'd carried on drip feeding. I also made the mistake of ploughing money in after the price had risen so my average cost went above what i'd originally gone in at. Previous data shows, however,  that lump sum investing outperforms dca'ing over the long term.
        I'm back to drip-feeding now but very cautious and wary about the future and that i may end up losing money. I'm not sure i'd be prepared to lose more than 10-20k so i may not continue with it. There seems to be too many imponderables involved and i havent got the time or inclination to learn which was another reason for opting for vanguard's life strategy . I did notice, however, that the markets fell again yesterday  but that the VLS funds containing higher proportions of bonds all rose slightly whereas VLS80 less so and VLS100 was negative. On other occasions when equities have fallen the LS funds containing the higher proportion of bonds have fallen the most. So, does this mean that the situation with bonds is starting to improve?
     Also, if interest rates go higher for the rest of the year and then inflation drops over the next couple of years there may be opportunities to get some decent 5 year fixes!
  • k_mank_man Forumite
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      I agree. …and went with HSBC Global Strategy (Dynamic) over the Vanguard LifeStrategy 80. I agree about past performance not applying to future, but when I looked at the Trustnet charting tool and compared both, the HSBC was consistently performing better over long time frames.

    The only reason we’re hearing for choosing HSBC over VLS is past performance, and yet we all agree past performance does not predict future performance. There’s a non sequitur there.  If you can’t find any difference between the funds you might as well choose the better performing, but we can.

    The fees are quite different, and not surprisingly Vanguard is cheaper because they’re leaders in that respect.

    Both can vary their stocks from 40-85% (can’t believe I’m reading that of a fund called ‘60% equity’). There’s a lot of active management in choosing 40 or 85%, so we shouldn’t be surprised one fund has outperformed the other, or that outperformance could move from one to the other since they’re basing it on predicting the future.

    But that they are both very broadly diversified, cap weighted index tracking funds trumps those lesser issues I suppose. But the only thing you can do to reliably increase returns is reduce costs.


    …stick with it. The worst thing you can do is keep chopping and changing….but if you stick to a plan, you will win.

    Win. The plan here was for 10 years investing. HSBC says ‘long term’ is >5 years. I don’t know what a ‘win’ is, but having your portfolio value worth less than you started with, after inflation, would not be a win for me. That’s what happened to a 60/40 portfolio from March 2000, after 9 years. I agree with the sentiment, ‘stick to it’, but I think that is the wrong justification because there are no guarantees with stock investing. And it undermines this and other sensible advice if it doesn’t hold true. 

    I’m more confident saying that sticking to a plan gives it the best chance of realising its potential, and that the research (which I don’t understand) finds that chopping and changing is worse than ‘buy and hold’. https://www.ifa.com/articles/dalbar_2016_qaib_investors_still_their_worst_enemy/

    Minor point, but where are you seeing these fees?
    VLS seem to be 0.22, and HSBC Global strategy 0.18 to 0.23 (depending on specific fund)

    So not a big difference, and HSBC FS mostly lower.
  • JohnWinderJohnWinder Forumite
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    Good that you fact checked that post. I had no idea which HSBC fund was being referred to, but at the top of p5 of this thread it’s called 
    There is not much in it, but the HSBC Balanced fund has outperformed VLS 60
    When I searched for (HSBC balanced fund uk) the top hit was: https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/h/hsbc-balanced-class-c-accumulation
    listed the OCF as 0.74%.  The trustnet site said TER 1%.  VLS60 got me 0.22%.
    I’m aware that fees in practice can be less than fees a search brings up (another little obstacle to transparency). So I avoid being precise on fees.
    Did I miss the correct name for the HSBC fund somewhere in these posts?
  • AlbermarleAlbermarle Forumite
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    Minor point, but where are you seeing these fees?

    The poster is based in the US , so is not familiar with all funds we often mention .


    The only reason we’re hearing for choosing HSBC over VLS is past performance, and yet we all agree past performance does not predict future performance. There’s a non sequitur there.  If you can’t find any difference between the funds you might as well choose the better performing, but we can.

    The fees are quite different, and not surprisingly Vanguard is cheaper because they’re leaders in that respect.

    Both can vary their stocks from 40-85% (can’t believe I’m reading that of a fund called ‘60% equity’). There’s a lot of active management in choosing 40 or 85%, so we shouldn’t be surprised one fund has outperformed the other, or that outperformance could move from one to the other since they’re basing it on predicting the future.

    The comparison is between HSBC Global strategy Balanced and Vanguard Life strategy 60.

    The fees are similar but the philosophy is different , for the UK based funds anyway . Vanguard has a fixed equity /bond allocation ( 60:40) and UK holdings of 25%.

    The HSBC fund is 'risk targeted' ( ie more actively managed) and has a variable equity/bond split of approx  60:40 and it is only 5% UK.

    The HSBC fund has been outperforming the Vanguard fund quite consistently, although they are both targeted in the same area .

  • JohnWinderJohnWinder Forumite
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     On other occasions when equities have fallen the LS funds containing the higher proportion of bonds have fallen the most. So, does this mean that the situation with bonds is starting to improve?
    A quick think about verb tenses and predicting the future offers an answer here.
    What you described means that the situation with bonds had (past tense) started to improve. Because we can’t predict the future accurately we don’t know if that ‘had started’ means it will continue. Folk write: ‘interest rates are rising’ and like statements. It hints at what will come…more rises; we should be writing ‘interest rates have been rising’. 
    Commiserations on your investment timing decisions. But you’d have to be the lucky duck to get that right every time. Perhaps set the computer to make the purchases and forget about it, or for those of us who find mistiming very discomforting do something else with one’s money.
  • tebbinstebbins Forumite
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    The difference in effect is the UK weighting, not hedging global bonds and including property. All this has been great since Brexit, I'm not as convinced it will in the post-Covid cycle. You should never expect consistent outperformance between two similar products unless there is a reason why, such as gearing or a materially higher equity %, or you believe the equities held to be better companies somehow. VLS offers continuity, a sensible home bias, protection against currency fluctuations in the bond element, it does include a small amount of REITs in the same weights they show up in the funds it holds (not to mention mortgage backed bonds, or indirectly property related bonds such as to banks, building societies and real estate related companies in the bond components), given the significant valuations gap between UK vs global equity I think a reasonable amount of home bias is sensible, and you aren't outscoring any decisions to a human fund manager.
    The performance and actual substance of each is a similar enough (as opposed to comparing a European infrastructure fund with long term TIPS, for example) you could almost say it comes down to preference.
  • JohnWinderJohnWinder Forumite
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    Thanks. I see now that this means the fund is in this ‘sector’, not its range of holdings.
  • missymousemissymouse Forumite
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    I’ve also got the 60/40 VLS but have left 2000 in cash from last year. I’m feeling cautious as it is in - figures at the moment and can relate to what Colly is saying. It was doing very well before April I’m still drip feeding this year.

    I’ve had it for 2 years’.  
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