Is 'Vanguard LifeStrategy' enough in your portfolio?

JustAnotherSaver · 15 May 2019 at 11:44AM

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

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?

dunstonh · 15 May 2019 at 12:08PM

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).

VLS and any multi-asset fund investing in passives is a managed strategy. The decisions on how much to hold in each area is a management decision. The decision to adjust weightings is a management decision.

Its the degree of management that is the issue. A good many multi-asset funds are computer run. And do not inspire. Personally, when I use multi-asset I usually use one with underlying passives.

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.

Not necessarily. Our model portfolios have typically outperformed VLS after charges. We used to operate an active portfolio, hybrid portfolio and passive portfolio. The active has been dropped. Hardly anyone does passive now and hybrid is the most popular. And that is the one we have moved most onto. (hybrid as in using tracker as the default unless we feel there is a managed fund that is viable for a particular area). However, for smaller investors we tend to use multi-asset funds. So, if you were a smaller investor and being put into a multi-asset fund similar or same as what you have when you DIY, then you could end up paying more charges. However, if the IFA used a multi-asset fund costing 0.1% and a platform costing 0.18% then thats 0.28%. If the alternative DIY was to use HL at 0.45% and VLS at 0.22% then thats 0.67%. There would come a breakeven point where the adviser solution is cheaper. Or if the adviser firm was a wealth management type that used Discretionary management on an expensive platform, it could be over 2%. So, a context is always needed.

Whether you need an IFA or not is really like any other area. Do you DIY or do you pay for someone to do it for you. If you DIY well, you can save money. if you DIY badly it can cost you a lot more. So, its very much a personal decision. Some will use an IFA as they value their time doing other things. Some need the advice and handholding and like the comfort. Others are willing to DIY and spend the time. No right or wong. Just choice.

Albermarle · 15 May 2019 at 12:27PM

Regarding the debate about trackers /multi asset/active funds , this thread covers most angles .
https://forums.moneysavingexpert.com/showthread.php?t=5989131&highlight=vanguard

So how big would your pot have to be to consider one?

The size of the pot is only one consideration . It depends on your own knowledge, or lack of, for one thing. Also when older you might change your mind , especially if your partner was not financially literate and you did not want to leave them a complex situation. Could also be that although financially savvy , dealing with complex tax or inheritance issues you could be out of your depth .
It's not always just about investment advice

EdSwippet · 15 May 2019 at 12:34PM

JustAnotherSaver wrote: »

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?

Yes .

Katmandhu · 15 May 2019 at 12:40PM

I would diversify and have a few investment funds, ideally around 5, so that way you are spreading your risk.

Damian Fahy of 80/20 investor gives some very good avice on choosing the right funds and helps take the guess work out of it.

bostonerimus · 15 May 2019 at 12:53PM

JustAnotherSaver wrote: »

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?

Yes I would. With something like VLS you own a wide variety of funds. For the vast majority of people I don't see much reason to own anything else other than to make your life more complicated.

AnotherJoe · 15 May 2019 at 12:58PM

Katmandhu wrote: »

I would diversify and have a few investment funds, ideally around 5, so that way you are spreading your risk.

Damian Fahy of 80/20 investor gives some very good avice on choosing the right funds and helps take the guess work out of it.

is that the guy that flogs share tips?

AnotherJoe · 15 May 2019 at 1:07PM

JustAnotherSaver wrote: »

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??

Not solitary but essentially, yes. One of my SIPPS consists of 4 trackers, and its only 4 because it was meant to be 3, but I couldnt make my mind up one which of two funds would make up one of the three so went 50/50. That is 3 equity trackers, 1 property (only 10% of the portfolio). And the reason it was two equity trackers was so i could reduce UK, one is global with UK at 6% or whatever it naturally is, the other is ex-UK. And two of those are Vanguard.

JustAnotherSaver wrote: »

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)?
So how big would your pot have to be to consider one?

Nothing to do with the size of pot though i daresay most IFAs wouldn't get out of bed for less than £100k or so to be managed. Its to do with the investor. I had an IFA and realised early on they (and no one else either) has any more insight than me on whats going to happen in future. Others will be paralysed by fear or indecision and need one. I dont buy the other usual reason for having one "too busy". As I think the escape artist pointed out its like saying you are too busy to bend down and pick up a £50 note off the pavement whilst on your way to the dentist.

fred246 · 15 May 2019 at 1:09PM

Whatever you ask the answer from IFAs is always the same.
I wouldn't recommend that.
I won't tell you what I'd do but it would be better.
I know more than you so let's complicate things.

ex-pat_scot · 15 May 2019 at 1:16PM

EdSwippet wrote: »

Yes .

Ditto.

VWRL in my case, as a global diversified tracker.
(OK I have a few other legacy trivial bits and pieces, but all the material amounts are in the one approach).

dunstonh · 15 May 2019 at 1:34PM

I would diversify and have a few investment funds, ideally around 5, so that way you are spreading your risk.

You are not spreading the risk. Indeed, you are potentially increasing the risk as the mult-asset fund has a structured strategy. Picking additional funds breaks that strategy. How you break it adjusts the risk. would you allocations be researched and structured or random? would your alternatives compliment or duplicate? etc etc

Damian Fahy of 80/20 investor gives some very good avice on choosing the right funds and helps take the guess work out of it.

I don't believe he is authorised to give any advice. Just opinion.

Is 'Vanguard LifeStrategy' enough in your portfolio?

Comments

Categories

Get our FREE Weekly email full of deals & guides - and it’s spam-free