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    • JustAnotherSaver
    • By JustAnotherSaver 15th May 19, 10:44 AM
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    JustAnotherSaver
    Is 'Vanguard LifeStrategy' enough in your portfolio?
    • #1
    • 15th May 19, 10:44 AM
    Is 'Vanguard LifeStrategy' enough in your portfolio? 15th May 19 at 10:44 AM
    Some of you may remember me as the clueless investor. Others may have joined since i last posted about retirement so if you haven't seen me around before then hi i'm the clueless investor In that i don't pretend to know a lot about this & jargon makes my eyes glaze over.


    On that note - i set up a SIPP with Cavendish a year or two ago, opted for one of the LifeStrategy funds as a subscribe-&-forget policy & then with everything else going on in life my reading on retirement went on the back burner for a good while. I opted for a subscribe-&-forget approach because i simply A) don't know enough and B) am not confident enough to go shuffling/rebalancing my portfolio, so until that time....


    NOTE: I know i mention LifeStrategy but really this question could apply to any fund-of-fund that's similar. I just named LifeStrategy as it appears to be the 'biggie' that everyone mentions.



    Anyway so i was reading a little recently regards returns on investments & this piece said about how LifeStrategy funds are fairly solid but they're nowhere near market leading (not that i thought they would be).
    It mentioned/suggested adding in some managed funds which from what i've previously read historically does not to as well as passive investing/index tracking over the long term (& therefore for someone who is looking at a 30+ year timeframe, i wondered why you'd want to do that).


    Now obviously everyone wants to buy the gold fund that is the lowest of the low and sell at the point when it's at the highest high, but nobody has a crystal ball. Likewise i understand that nobody can really say - yes LifeStrategy (or similar) WILL (or WONT) build you a huge pension pot that you can retire comfortably on as there's so many variables.


    But for anyone who's still kept with this post, in your own personal opinion, would you be happy to have one of these funds (or similar - not necessarily Vanguard's) as the solitary investment in your portfolio?






    Also to save me creating a separate thread on it - at what point would you consider an IFA (if you'd consider one at all)?
    I first started at 28 with 100pm. Nothing really but it was all i could afford at the time. I went with an IFA and after asking & reading on this forum i learned that any gains i make would likely be eroded by fees. Essentially it was a bad decision & i should 'have a go' myself while the pot is a small amount & only when it gets much larger should i consider an IFA.
    So how big would your pot have to be to consider one?

Page 2
    • Prism
    • By Prism 15th May 19, 2:12 PM
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    Prism
    For example....?

    From reading your posts on & off over the years i get the impression you've grown to move away from VLS. That you're not necessarily anti-VLS as you once used them but you made the decision at some point to move to a different option for some reason that'll probably stay private.
    Like i said, my question could've been about any similar fund. I think someone actually managed to coax it out of you once to name a fund alternative to VLS that you thought was better, although you didn't answer directly IIRC, you sort of clued them & they worked it out from that. I'm pretty sure the HSBC range (Dynamic, Balanced etc etc) was the one in that case, although i've read that many posts they all seem to blend in to one so i'm happy to hold my hands up & say i could be wrong.
    Originally posted by JustAnotherSaver
    Here is the link to HSBCs range
    https://www.hsbc.co.uk/investments/isas/hsbc-global-strategy-portfolios/

    The differences mainly are that it doesn't focus especially on the UK and each fund is very much about a certain risk level. The VLS range does a flat equities/bonds split which doesn't change.
    • JustAnotherSaver
    • By JustAnotherSaver 15th May 19, 2:16 PM
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    JustAnotherSaver
    Past performance is not necessarily a guide to future performance so what works will not always work (Japan carry trade is a good example) whatever funds you pick understand the risks you are taking.
    Originally posted by Seabee42
    That wasn't what i was getting at but since people keep pulling me up for using incorrect terms i was very wishy washy on how i described it.


    Basically i was saying that based on what i've read, managed funds are consistently beaten by trackers over many many years. There'll be cases where the opposite is true and some active managers will have good records but the vast majority it is not the case.
    So why not go with index tracking if over many many years it has given better results?


    Which is different to me saying investing in property (or Japan) (for example) for a 10 year spell in 19xx (i've gone xx as it's only for example sake but if i put numbers on it someone will pull me up and say property didn't do well in that decade ........ even though this is only an example!!) did much better than anything else so why not keep doing it.

    • Seabee42
    • By Seabee42 15th May 19, 2:20 PM
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    Seabee42
    My comment wasn't a specific comment about what you said, just that what we know to be correct today may not be in future, that's why I think people should try and understand the reason for their choice of investments and the risks involved.
    • El Torro
    • By El Torro 15th May 19, 2:21 PM
    • 369 Posts
    • 345 Thanks
    El Torro
    But for anyone who's still kept with this post, in your own personal opinion, would you be happy to have one of these funds (or similar - not necessarily Vanguard's) as the solitary investment in your portfolio?
    Originally posted by JustAnotherSaver
    Yes. In fact I think a solitary multi asset fund is probably a great choice for many investors, myself included.

    I don't practice what I preach though (I never said i wasn't a hypocrite ). Most of my investments are in multi asset funds, though I do also hold some other funds for the areas that I think are under represented in my multi asset funds.


    Ultimately I don't think it matters that much. As long as you manage your funds correctly (e.g. rebalance once a year) and keep your platform costs down you can make your portfolio as simple or as complicated as you want it to be.

    Also to save me creating a separate thread on it - at what point would you consider an IFA (if you'd consider one at all)?
    I first started at 28 with 100pm. Nothing really but it was all i could afford at the time. I went with an IFA and after asking & reading on this forum i learned that any gains i make would likely be eroded by fees. Essentially it was a bad decision & i should 'have a go' myself while the pot is a small amount & only when it gets much larger should i consider an IFA.
    So how big would your pot have to be to consider one?
    Originally posted by JustAnotherSaver

    I agree with the other posters that the amount isn't the only relevant point. For me the big point is where you're starting from and what you want your IFA to achieve for you. If someone who doesn't have that many assets suddenly inherets 200k (or more) then my first suggestion would be to use an IFA. An IFA can help with picking the right investments, but also the right tax shelters for the future.


    Conversely, if someone who has gained their wealth over time, with a wisely invested pension pot of 250k, and 50k in wisely invested S&S ISAs asked if they needed an IFA, I would probably advise against it. What can an IFA do that someone who has successfully DIY'ed over the years can't do?
    • OldMusicGuy
    • By OldMusicGuy 15th May 19, 2:42 PM
    • 950 Posts
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    OldMusicGuy
    Simple answer is yes. Better than nothing, a great place to start before you decide if you want a more complex approach or maybe you want to go with an IFA. Or maybe you decide you are happy with VLS.

    I hold a large DC pot across three multi-asset funds. It suits my objectives and is working fine.

    As much as I value dunstonh's posts (and I have learned a lot from them), I do find it a bit frustrating when he posts (as he has done before) that his model portfolio outperforms VLS but like all IFAs he will not put his money where his mouth is by accepting a variable charging model against a benchmark like VLS.

    That's the main reason why I don't use IFAs but of course YMMV.
    • JustAnotherSaver
    • By JustAnotherSaver 15th May 19, 3:06 PM
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    JustAnotherSaver
    Most of my investments are in multi asset funds, though I do also hold some other funds for the areas that I think are under represented in my multi asset funds.
    Originally posted by El Torro
    That was something else i was thinking about but i'm weary about trying to ask too much too soon and certainly in one thread.


    But i will do anyway Even if it's just a reply from yourself.


    I suppose there'll be no such thing as a perfect multi asset fund and that they'll all be lacking in one way or another ... so that's when an investor may bring in other funds where their multi asset fund may be lacking.
    I'm curious about how that person then splits the contributions. I don't just mean percentages but beyond that. Let's say 70% multi asset fund, 30% 'other'.

    Now someone investing x000 per month may not have an issue but someone who can't afford as much, that 30% may take them under the minimum monthly amount so how they'd get around that?




    I agree with the other posters that the amount isn't the only relevant point. For me the big point is where you're starting from and what you want your IFA to achieve for you. If someone who doesn't have that many assets suddenly inherets 200k (or more) then my first suggestion would be to use an IFA. An IFA can help with picking the right investments, but also the right tax shelters for the future.


    Conversely, if someone who has gained their wealth over time, with a wisely invested pension pot of 250k, and 50k in wisely invested S&S ISAs asked if they needed an IFA, I would probably advise against it. What can an IFA do that someone who has successfully DIY'ed over the years can't do?
    Very fair point

    • Prism
    • By Prism 15th May 19, 3:18 PM
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    • 669 Thanks
    Prism
    I'm curious about how that person then splits the contributions. I don't just mean percentages but beyond that. Let's say 70% multi asset fund, 30% 'other'.

    Now someone investing x000 per month may not have an issue but someone who can't afford as much, that 30% may take them under the minimum monthly amount so how they'd get around that?
    Originally posted by JustAnotherSaver
    I stuck to a multi-asset for for my pension until i got to about 100k. At that point I started moving things around a bit and finding my own fund. It simpky coincided with my transfering an old fund into a SIPP.

    There are no rules with this stuff. I use passive funds from time to time but currently I am all in active ones. Lots of different opinions. My general advice to anyone asking would be to stick to a single multi-asset fund or possibly one equity and one bond fund if you want to balance yourself.
    • El Torro
    • By El Torro 15th May 19, 3:21 PM
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    • 345 Thanks
    El Torro
    I suppose there'll be no such thing as a perfect multi asset fund and that they'll all be lacking in one way or another ... so that's when an investor may bring in other funds where their multi asset fund may be lacking.
    I'm curious about how that person then splits the contributions. I don't just mean percentages but beyond that. Let's say 70% multi asset fund, 30% 'other'.

    Now someone investing x000 per month may not have an issue but someone who can't afford as much, that 30% may take them under the minimum monthly amount so how they'd get around that?
    Originally posted by JustAnotherSaver


    All my monthly contributions go into a multi asset fund. I only pay into my "satellite" funds when I do my annual rebalance.


    Some platforms charge per transaction so paying into multiple funds every month, assuming you even meet the minimum pay-in requirement, can get expensive.
    • thickasabrick
    • By thickasabrick 15th May 19, 3:58 PM
    • 82 Posts
    • 68 Thanks
    thickasabrick
    Is 'Vanguard LifeStrategy' enough in your portfolio?
    Yes, I would quite happily have a single low cost fund in my pension similar to Vanguard's LifeStrategy series.

    I used an IFA to setup my SIPP. I was consolidating two previous workplace personal pensions and at the time I was completely ignorant about finance in general and all I knew about pensions was to put at least 10% of your salary into it. The total at that time was about 125000 which represented 20 years contributions minus whatever amount was lost transferring out of the Equitable Life fiasco.

    I no longer use an IFA. This came about after reading an article by the Escape Artist "Do you even know whats going on in your pension?". I started to do some research and eventually felt confident enough that sticking with a simple portfolio such as Vanguard LifeStrategy 60/40 satisified my level of investment risk and goals.

    There are quite a few articles talking about the differences in growth between managed funds and trackers but for me the articles talking about "rate of saving" and costs (transaction fees, platform fees, adviser fee etc) are much more important. Which is why Vanguard LifeStrategy and similar from other providers offer a simple easily managed portfolio that will be "sufficient" to satisfy most risk and investment goals and be self managed.
    ...
    would you be happy to have one of these funds (or similar - not necessarily Vanguard's) as the solitary investment in your portfolio?
    ...
    Also to save me creating a separate thread on it - at what point would you consider an IFA (if you'd consider one at all)?
    I first started at 28 with 100pm. Nothing really but it was all i could afford at the time. I went with an IFA and after asking & reading on this forum i learned that any gains i make would likely be eroded by fees. Essentially it was a bad decision & i should 'have a go' myself while the pot is a small amount & only when it gets much larger should i consider an IFA.
    So how big would your pot have to be to consider one?
    Originally posted by JustAnotherSaver
    • BLB53
    • By BLB53 15th May 19, 5:59 PM
    • 1,526 Posts
    • 1,388 Thanks
    BLB53
    Until a few months back I would have agreed VLS was a good option for a stand alone buy-n-forget multi-asset investor. However with climate change becoming a big issue, you need to be wary of too much exposure to fossil fuel companies such as the big oil majors.

    The VLS allocate 25% of their equity to the UK market which is dominated by the likes of Shell and BP and that, for me makes it a risky choice going forward. I am now more inclined towards HSBC Global Strategy which has less than 5% in UK and therefore much less exposure to oil stocks.

    It's not mentioned too often but I think the climate emergency will be changing the investing landscape in a big way over the coming few years so investors need to factor this in when looking at long term investment strategy.
    If you choose index funds you can never outperform the market.
    If you choose managed funds there's a high probability you will underperform index funds.
    • JustAnotherSaver
    • By JustAnotherSaver 15th May 19, 7:03 PM
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    JustAnotherSaver
    Is there a reason why the LifeStrategy funds seem to be the 'biggie'?


    Many on here rave about them. There's also a number giving their reasons for going elsewhere. Is there a website with a stat on the popularity of these to see what is the most selected (such as Vanguard's LifeStrategy, HSBC's Global Strategy, so on & so forth)?

    • Thrugelmir
    • By Thrugelmir 15th May 19, 7:26 PM
    • 63,427 Posts
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    Thrugelmir
    Basically i was saying that based on what i've read, managed funds are consistently beaten by trackers over many many years.
    Originally posted by JustAnotherSaver
    That's a very broad generalisation. Trackers are ideally suited to the larger liquid markets. When one discusses global equity funds for example. Bear in mind that 80% of all trades in 2018 were conducted in just 110 stocks. That leaves an awlfull lot of smaller under researched companies where it's possible for the smaller fund manager and private investor to plough their own furrow. Likewise you might need to invest for 5 years or more to see the results of a contrarian investment stance come to fruition.

    Chasing something because the price is rising (i.e. everybody else is buying the same stocks) isn't investing, just speculation.
    The stock market is a device for transferring money from the impatient to the patient. Warren Buffett
    • dunstonh
    • By dunstonh 15th May 19, 9:26 PM
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    dunstonh
    Is there a reason why the LifeStrategy funds seem to be the 'biggie'?
    The church of Vanguard has a devout following that is rather vocal.

    Vanguard was active in bringing the fund charges down. So, for a while, they were the driver. However, like many things in life, the first one to do it isn't necessarily the one to be with later on.

    Also, Vanguard also happened to be heavier in the sector which was the best performing in this cycle. Had the lifestrategy funds existed in the previous cycle, they would likely have underperformed with the same asset spread as that sector underperformed. So, they got a bit lucky with their timing. Plus, they launched after the credit crunch. So, their past performance charts so no significant loss period.

    There is nothing wrong with VLS. If you had VLS, L&GMI, HSBC GS or Architas MAP then you would pretty happy with any of them. It really is just fine tuning as they all have different weightings and approaches.
    Last edited by dunstonh; 16-05-2019 at 8:05 AM. Reason: spelling
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • bostonerimus
    • By bostonerimus 16th May 19, 12:24 AM
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    bostonerimus
    Many IFA's will themselves be buying their portfolio modelling and advice. There's a lot of hard work and maths that goes into portfolio development and management and also a lot of bias, assumptions, projections and guess work....garbage in, garbage out.

    I am not convinced of the utility of IFAs after the initial development of a plan. If you have big changes in your circumstances then you might want to use an IFA for one time strategic advice, but I don't think most people need to be paying them on an ongoing basis with the advent of multi-asset funds and diverse low cost equity and bond funds that can be assembled into a simple no fuss portfolio.
    Last edited by bostonerimus; 16-05-2019 at 1:10 AM.
    Misanthrope in search of similar for mutual loathing
    • Linton
    • By Linton 16th May 19, 5:22 AM
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    Linton
    Whether a single multi asset fund is either sufficient or optimal depends on your circumstances. For someone relatively young with a relatively small pot and little experience making long term contributions to a pension scheme they are probably your best option.

    At the other extreme if you were retired living off a pension pot of say 500K with complex objectives that come from requiring a secure and stable ongoing inflation matching income, providing an inheritance for your dependents etc then a single multi asset fund would not be your worst option. However someone with knowledge, experience and interest in doing so could construct a better portfolio designed for their particular circumstances.

    Whether Vanguard Life Strategy is the best multi asset product is another matter. VLS100 has consistently underperformed global indexes because of its high FTS100 allocation and the non-equity allocations in the other VLS funds are in my view not ideal given the high prices of very safe government bonds since the 2008 crash.
    Last edited by Linton; 16-05-2019 at 5:27 AM.
    • MK62
    • By MK62 16th May 19, 7:03 AM
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    • 321 Thanks
    MK62
    VLS100 is not a multi asset product though......

    As to whether multi-asset VLS products are the best.....that's pretty subjective imho. Going forward there is no way to know, and looking back they have performed on a par with some of their peers, and better than some others. What is clear though, at least imho, is that if someone was looking for a low cost multi-asset fund, then the VLS series is certainly not a bad place to start looking, but it's not the only game in town either.
    • Linton
    • By Linton 16th May 19, 7:17 AM
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    Linton
    VLS100 is not a multi asset product though......
    ...
    Originally posted by MK62
    No, but it represents the equity portion of all the other
    VLSs.
    • Albermarle
    • By Albermarle 16th May 19, 10:29 AM
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    • 501 Thanks
    Albermarle
    May be of interest.

    https://www.telegraph.co.uk/investing/funds/probably-lifestyle-fund-good/
    • JustAnotherSaver
    • By JustAnotherSaver 16th May 19, 3:04 PM
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    JustAnotherSaver
    VLS100 is not a multi asset product though......
    Originally posted by MK62
    So 100 isn't, but the others are?


    Why?


    And so what is one then?


    Out of interest, how come the HSBC one gets mentioned here frequently but isn't on that link? Or did the HSBC one get released after 2017?

    • Linton
    • By Linton 16th May 19, 3:19 PM
    • 10,727 Posts
    • 11,097 Thanks
    Linton
    So 100 isn't, but the others are?


    Why?


    And so what is one then?
    Originally posted by JustAnotherSaver
    A multi asset fund holds different types of assets. Equity (shares) is one type of asset. In a global crash all your equity is likely to fall. Other types of asset, eg bonds, property, gold, bitcoins, Lego bricks etc could well behave differently, perhaps rising if equity falls. Multi asset funds holding several different types of asset will be less volatile than a fund which just holds one type. As its name suggests VLS100 is 100% equity so isnt multi asset. VLS80 is 80% equity and 20% bonds and so is multi asset.

    Other multi asset funds may hold further types of asset such as property which the VLS funds do not.
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