Vanguard Direct site - which fund in case of stock market crash?

Options
funguy
funguy Posts: 601 Forumite
First Post First Anniversary
in Savings & investments
Hi all,

I've got an account with Vanguard direct with some funds in the VLS80. Would it make sense to have some of my money invested in a more cautious Vanguard fund too in case of a stock market drop/correction? I see they do 100% bond funds as well...?

Thank you
«1345

Comments

  • Audaxer
    Audaxer Posts: 3,508 Forumite
    First Anniversary Name Dropper First Post
    Options
    If you are invested for the long term and are comfortable with the risk level of a VLS80, you should be able to ride out any volatility like an equity crash. If concerned you could transfer some or all of your money into a VLS40 or even VLS20, but the problem is you don't know when an equity crash will happen, and if it doesn't happen for the next 3 years, you are missing out on 3 years of good returns on your VLS80. I know it is tempting to try to time the market but all advice is that it doesn't work and that 'time in the market' is more important.
  • atush
    atush Posts: 18,726 Forumite
    Name Dropper First Anniversary First Post
    Options
    TBH (an no offence intended) this queston smacks of someone who doestn uderstadn risk and investing.

    So as said, if you are happy with that level of risk, you need to rid out the lows and highes.

    Look up pound cost averaging. And instead of looking to get out ahead of a crash, look at saving in cash to buy assets after a crash.
  • dunstonh
    dunstonh Posts: 116,371 Forumite
    Name Dropper First Anniversary First Post Combo Breaker
    Options
    Would it make sense to have some of my money invested in a more cautious Vanguard fund too in case of a stock market drop/correction?

    It is not a case of "if". You know a stockmarket crash is coming. It is always coming.

    As you know it is coming but do not know when, why would you want to invest any differently? Crashes are short term issues but you invest for the long term. If you cant handle the short term loss potential of your investments, then you are invested above your risk profile and should lower it.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • Alexland
    Alexland Posts: 9,653 Forumite
    First Anniversary Photogenic Name Dropper First Post
    edited 13 January 2018 at 9:40AM
    Options
    atush wrote: »
    So as said, if you are happy with that level of risk, you need to rid out the lows and highes.

    I personally don't see a problem with the OP dialing down the risk a bit after achieving a good return when market fundamentals look streched. Having observed market behaviour across multiple economic cycles there are times when the markets are clearly offering good value and so investing in stocks would be lower risk than when they are looking expensive.

    However I do challenge the idea that people should run totally or mostly into bonds (see below bond crashes) and, while it is important to remain in the market, balanced approach of equities, bonds, cash and perhaps other asset classes might be the best approach.

    https://moneyweek.com/heres-what-happened-the-last-time-the-bond-market-crashed/

    https://moneyweek.com/what-we-can-learn-from-the-bond-market-crash-of-the-late-1960s/

    Alex.
  • bostonerimus
    bostonerimus Posts: 5,617 Forumite
    First Anniversary Name Dropper First Post
    Options
    Alexland wrote: »
    I personally don't see a problem with the OP dialing down the risk a bit after achieving a good return when market fundamentals look streched. Having observed market behaviour across multiple economic cycles there are times when the markets are clearly offering good value and so investing in stocks would be lower risk than when they are looking expensive.

    I would rebalance the portfolio rather than looking to time the market in any other way. Having observed market behaviour across multiple economic cycles I have no clue what the markets are going to do.
    “So we beat on, boats against the current, borne back ceaselessly into the past.”
  • Alexland
    Alexland Posts: 9,653 Forumite
    First Anniversary Photogenic Name Dropper First Post
    edited 13 January 2018 at 9:42AM
    Options
    bostonerimus wrote: »
    I would rebalance the portfolio rather than looking to time the market in any other way. Having observed market behaviour across multiple economic cycles I have no clue what the markets are going to do.

    I agree but my point is that you look at the current fundamentals and take a view on current allocation rather that trying to guess the future. It's unlikely to cause any wild changes in your portfolio.
  • A_T
    A_T Posts: 959 Forumite
    Name Dropper First Post First Anniversary
    Options
    Like the majority of multi-asset funds Vanguard's UK Lifestrategy funds are untested in a stock market crash. They contain a large proportion of corporate bond funds - such funds crashed along with equity funds in the credit crunch. Gilt funds went up at that time.
  • ValiantSon
    ValiantSon Posts: 2,586 Forumite
    Options
    A_T wrote: »
    Like the majority of multi-asset funds Vanguard's UK Lifestrategy funds are untested in a stock market crash. They contain a large proportion of corporate bond funds - such funds crashed along with equity funds in the credit crunch. Gilt funds went up at that time.

    LifeStrategy funds are actually more skewed towards government bonds than corporate bonds, although they do include both. Funds like HSBC Global Strategy are more balanced to corporate bonds than government bonds.
  • Audaxer
    Audaxer Posts: 3,508 Forumite
    First Anniversary Name Dropper First Post
    Options
    A_T wrote: »
    Like the majority of multi-asset funds Vanguard's UK Lifestrategy funds are untested in a stock market crash.
    Although VLS funds weren't around during previous equity crashes, individual index funds were, and investors previously did and still do buy individual index funds in equities and bonds and rebalance the funds themselves. With Vanguard LifeStrategy funds the allocations are professionally selected, regularly rebalanced and more diversified than a few individual indexes, so no reason to think that they would not do as well or better than individual indexes have done in previous equity crashes.
  • ivormonee
    ivormonee Posts: 395 Forumite
    Name Dropper First Anniversary First Post
    Options
    funguy wrote: »
    Hi all,

    I see they do 100% bond funds as well

    I didn't think they did a LifeStrategy 100% Bond. That would make no sense at all. I would have thought it would only go down to VLS 20 (ie. 80% bonds).
This discussion has been closed.
★ ★ ★ Meet your Ambassadors

Categories

  • All Categories
  • 343.2K Banking & Borrowing
  • 250.1K Reduce Debt & Boost Income
  • 449.7K Spending & Discounts
  • 235.3K Work, Benefits & Business
  • 608K Mortgages, Homes & Bills
  • 173.1K Life & Family
  • 247.9K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.9K Discuss & Feedback
  • 15.1K Coronavirus Support Boards