Vanguard Life Strategy

Congrats on usng up your allowance.

Whether or not you have any ISA allowance left doesn't really change the decision of whether you should save cash vs make investments in any given month. You'll get another 11k of new ISA wrapper next April anyway and whether you choose cash or investments now you can move it into the ISA then if you want (though if you're only a basic rate taxpayer you might not really need to wrap your LS investment).

The cash vs investment decision is simply driven by how long into the future it's likely to be before you need the money. If you could live without it until age 55 you could stick it in a pension wrapper and benefit from a tax break (relatively more useful for a high rate taxpayer). If you want to buy a house with it in 10 years you could invest it outside a wrapper. If you want to use it with your other stashed cash to buy a house or car in 5 years you should save it outside a wrapper.

Beyond those obvious points you might have a feeling on market timing, and plan to invest it but hold back for a market crash. The problem with doing that is you might miss out on the markets going up instead.

Good luck making your decision - having a chunk of money coming in that you don't really need at the moment is a nice place to be!

But if you want 100% equity why the Vanguard Lifestrategy?
If you already have exposure to UK shares, you could have the Vanguard ex UK shares fund for 10% lower charges.

Well, if you already have enough UK exposure and not enough ex-UK exposure, such that you don't want 35% of your lifestrategy fund to be in the UK all-share, then sure, don't buy a lifestrategy fund. That's a decision for every investor to make for themselves.

The fee argument is a bit of a red herring really. Saving 10% always sounds like a good thing to be doing. In reality though if you are looking at funds with 1.5% charges or 0.33% charges or 0.30% charges, the latter two funds are 'about the same' in that we're talking 15 pounds a year on 50,000 pounds invested.

Sure, it's a bottle of wine for free every year but the gross returns will differ by more than that based on the actual mix of shares held; the Vanguard LS 100 for example at end of May has slightly more relative weighting to US over Japan than the developed ex-UK has. Only by a bit, but it could be a factor. Also the LS100 has an emerging markets component while "developed ex-UK" does not, as the clue is in the name, and that will certainly affect returns.

I think I generally prefer the concept of having a high level view of investing in a portfolio of regional funds rebalanced against each other periodically, than an index where every single share floats free against every other.

Example say the world is just US and Japan and I am invested in a US index and a Jap index, at £500:£100. Within the US index, Apple is £12. Say Apple goes up 50% in price and everything else stays the same, my split has changed to £506:£100. I am now more 'exposed' to Apple versus Sony. A passive investor is fine with that as they believe you should have more in the bigger companies. But I am also now more 'exposed' to the US versus Japan - which might still be OK for a true passive investor as the US now has a bigger market capitalisation, but many would want to go back to their 5:1 ratio and make it £505:£101. If you were in a 'whole world' index, you couldn't do that.

Of course when we are talking about global businesses like Apple in the US or Sony in Japan or Samsung in South Korea, there is less 'home country risk' than smaller businesse and they have global multicurrency revenue streams - but there are still some politics and tax and fx rates and interest rates and other relevant factors which tie to their domicile of choice, so thinking in major global regions makes sense. It can help you understand where your money is at work, to consider against other funds in your portfolio you might have outside the lifestrategy or other large-cap tracker of choice, without going down to individual country or company level (of course, you can do the country-level analysis if you want, as "Europe" contains as wide variations as "Pacific Ex-Japan", and some sector analysis is useful too).

Now, I'm not saying the vanguard lifestrategy funds are necessarily rebalancing between all the regional investee funds all the time, but the fact that the lifestrategy's US/Jap ratio differs slightly from the global-ex UK's US/Jap ratio, implies they are not just allowing it all to free float. Their prospectus notes:

Whilst the Fund will seek broadly to maintain the equity notional exposure at the stated level, theidentity and proportion of the particular indices, securities and/or markets, etc. to which the Fund is exposed will be at the discretion of the Investment Adviser taking into account aspects of those schemes considered to be relevant to maintain exposure to a diversifiednotional portfolio. The stated levels of exposure may from time to time fluctuate in response to fluctuations in the market capitalisations or market values of the indices tracked by the Associated Schemes in which the Fund is invested

So anyway the point of that long ramble was to say the exposure through lifestrategy is different to just a single index tracker, not least because it contains a chunk of UK and emerging markets, but also because how it's built, making an expense ratio difference of 0.03% an irrelevance.