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  • FIRST POST
    • 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 3
    • JustAnotherSaver
    • By JustAnotherSaver 16th May 19, 3:55 PM
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    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 it’s name suggests VLS100 is 100% equity so isn’t 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.
    Originally posted by Linton
    I actually figured that out about 20mins after my last post but i'd gone for a lay down. Obviously you guys can't see this but my head is like cotton wool at the moment as i'm pretty ill & (trying) to spend the time being productive. Problem is, it just makes reading about a topic i struggle with on a good day even harder but then i don't like to sit on the sofa and literally do nothing even though that's possibly what i should do.


    What funds are there of this type then so that i can try and look at them more.
    Obviously there's the ones on the link provided and i'm aware of HSBCs variety.

    • Kendall80
    • By Kendall80 16th May 19, 10:19 PM
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    Kendall80
    With an OCF of 0.32% (growth option) I believe the Fidelity Multi-asset allocator series may fit such a description.
    • Mordko
    • By Mordko 17th May 19, 12:28 AM
    • 238 Posts
    • 78 Thanks
    Mordko
    A good investment is:
    1. Simple. Today there is very little reason to hold lots of different products
    2. Cheap. Cost is one and only aspect of performance which is entirely under your control
    3. Diversified. You are as diversified as one can be as far as the stocks are concerned.
    4. Aligned with you personality/risk tolerance. Only you can evaluate this, and only after reading and understanding a few good books.

    VLS is a great product for someone who doesn’t care enough to read a few books, understand them, develop an investment policy statement and stick to it. 100% in stocks for someone asking the kind of questions you are is likely too high. Nothings wrong with it for a young man, except that you must be able to stick to this strategy thru thick and thin. And it’s hard.

    You really don’t want to jump to advisors and products from a good solution you already have - unless you educate yourself first. Stick to plan A.

    And remember, it’s a game called “who gets a prosperous and secure retirement”. And you don’t win by trying to find the investments that would give the highest returns. You win by saving, minimizing costs, diversifying and forgetting about your portfolio once you picked one.
    • JustAnotherSaver
    • By JustAnotherSaver 17th May 19, 7:33 AM
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    JustAnotherSaver
    VLS is a great product for someone who doesn’t care enough to read a few books, understand them,
    Originally posted by Mordko
    Although i think i may know where you're coming from, i'd have to disagree with you there.
    I do care enough to read a few books and i have read a few books.


    You (not specifically YOU but an individual) could read 1000 books but if they're not grasping it then they're not grasping it.
    It also doesn't help when you come here (or just asking online in general, doesn't have to be MSE) to check things and you wind up in a situation that post 18 summarises.




    And remember, it’s a game called “who gets a prosperous and secure retirement”. And you don’t win by trying to find the investments that would give the highest returns. You win by saving, minimizing costs, diversifying and forgetting about your portfolio once you picked one.
    True. I'm not aiming to be the richest man in retirement. I'm not a cash splasher. I just want enough to live comfortably.

    • Anonymous101
    • By Anonymous101 17th May 19, 8:18 AM
    • 1,296 Posts
    • 897 Thanks
    Anonymous101
    A good investment is:
    1. Simple. Today there is very little reason to hold lots of different products
    2. Cheap. Cost is one and only aspect of performance which is entirely under your control
    3. Diversified. You are as diversified as one can be as far as the stocks are concerned.
    4. Aligned with you personality/risk tolerance. Only you can evaluate this, and only after reading and understanding a few good books.

    VLS is a great product for someone who doesn’t care enough to read a few books, understand them, develop an investment policy statement and stick to it. 100% in stocks for someone asking the kind of questions you are is likely too high. Nothings wrong with it for a young man, except that you must be able to stick to this strategy thru thick and thin. And it’s hard.

    You really don’t want to jump to advisors and products from a good solution you already have - unless you educate yourself first. Stick to plan A.

    And remember, it’s a game called “who gets a prosperous and secure retirement”. And you don’t win by trying to find the investments that would give the highest returns. You win by saving, minimizing costs, diversifying and forgetting about your portfolio once you picked one.
    Originally posted by Mordko


    Great post. One which sums up my thoughts on investing very clearly and concisely.
    • _pete_
    • By _pete_ 17th May 19, 9:35 AM
    • 139 Posts
    • 43 Thanks
    _pete_
    My portfolio is split between Vanguard LS60 and it's HSBC equivalent. I need this portfolio to give me enough to live on for the next 40 years.

    I chose to go down this route because I don't have the ability to identify an IFA who can put together a portfolio that will consistently beat the Vanguard and HSBC products, particularly when their fees are taken into account.
    • Mordko
    • By Mordko 17th May 19, 10:29 AM
    • 238 Posts
    • 78 Thanks
    Mordko
    It also doesn't help when you come here (or just asking online in general, doesn't have to be MSE) to check things and you wind up in a situation that post 18 summarises.
    About LifeStrategy being “managed”? Like post 18 says, it’s irrelevant. Everything is “managed”. The point is that it’s not ACTIVELY managed. LifeStrategy = a bunch of passive investments covering the world with fixed allocation to various markets. Except for the home market, allocations represent market cap. If you had bonds in your fund, it would be a fixed allocation too, again passive.

    Vanguard’s founder was the man behind passive cap weighted investment strategy (John Bogle). They upended Mutual fund industry and drove the costs down. They are doing the same to the IFA industry which is ripe for it. Vanguard US is a non-profit, is owned by investors which constantly strives to minimise cost. They have proven it over the years. Hard to go wrong with their products but it is possible; lately they’ve been introducing active ETFs. No idea why. Similar low cost products from BlackRock, HSBC et al are just as good, but once you picked one of these products there is very little reason to switch.

    Boards like this will always give you a bunch of opinions, good and bad and you have to pick. Good books are easier in this respect as they are often written by known individuals with a track record and provide detailed justification.

    Given you are 100% in stock (which may or may not be justified), I would suggest reading Deep Risk and Rational Expectations by Bernstein. Random Walk is a great book too, and of course John Bogles Little Book, but I would start with books about risk and asset allocation - if you haven’t read them yet.
    • Prism
    • By Prism 17th May 19, 10:50 AM
    • 843 Posts
    • 655 Thanks
    Prism
    It also doesn't help when you come here (or just asking online in general, doesn't have to be MSE) to check things and you wind up in a situation that post 18 summarises.
    Originally posted by JustAnotherSaver
    Don't overly worry about the differences between the Vanguard approach and some of those other risk targeted approach. You can't really go wrong with either. Impossible to know if the static percentage split of VLS is better than the floating splits of something like the HSBC range. Buy both if you can't decide.
    • dunstonh
    • By dunstonh 17th May 19, 10:55 AM
    • 98,329 Posts
    • 66,584 Thanks
    dunstonh
    The decision to hold x% in US equity is a management decision. The decision to have a home bias is a management decision. The decision not to focus on a target volatility range but use a rigid equity content is a management decision.

    Using multiple multi-asset funds with different investment weightings is a management decision. if you thought fund A had the best allocations then why would you want fund B. If you thought fund A didnt have the right allocations then why are you using it in the first place.

    Vanguard’s founder was the man behind passive cap weighted investment strategy (John Bogle). They upended Mutual fund industry and drove the costs down. They are doing the same to the IFA industry which is ripe for it.
    Vanguard are not competing with IFAs. They provide no advisory services. Vanguard are also a very large managed fund house and they actually consider active management to be viable. They have just chosen not to launch their managed funds in the UK yet.
    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.
    • Mordko
    • By Mordko 17th May 19, 11:01 AM
    • 238 Posts
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    Mordko
    Vanguard are not competing with IFAs
    They will be providing reasonably priced financial advice in the UK in the not too distant future. Something to look forward to.

    They are already providing excellent alternatives for cost conscious investors who don’t want to go the DIY route. And investing into LifeStrategy or passive funds isn’t “DIY” any more than buying IKEA products.
    • Mordko
    • By Mordko 17th May 19, 11:06 AM
    • 238 Posts
    • 78 Thanks
    Mordko
    The decision to hold x% in US equity is a management decision.
    . Don’t stop there. The decision to invest is a management decision. How much = management decision. To get up in the morning.

    The point that matters is that active fund managers’ decisions in response to market conditions have been shown to hurt investors over long periods of time. LifeStrategy funds don’t do that.
    • Mordko
    • By Mordko 17th May 19, 11:09 AM
    • 238 Posts
    • 78 Thanks
    Mordko
    Don't overly worry about the differences between the Vanguard approach and some of those other risk targeted approach. You can't really go wrong with either. Impossible to know if the static percentage split of VLS is better than the floating splits of something like the HSBC range. Buy both if you can't decide.
    Originally posted by Prism
    Have to disagree. Pick one or the other. Stick to it.
    • Prism
    • By Prism 17th May 19, 11:35 AM
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    • 655 Thanks
    Prism
    Have to disagree. Pick one or the other. Stick to it.
    Originally posted by Mordko
    It makes no difference unless the platform charges more to buy 2 funds than 1. If you can't decide then why not try both
    • Mordko
    • By Mordko 17th May 19, 11:42 AM
    • 238 Posts
    • 78 Thanks
    Mordko
    It makes no difference unless the platform charges more to buy 2 funds than 1. If you can't decide then why not try both
    Originally posted by Prism
    Because it adds unnecessary complexity and shows lack of policy/strategy.
    • Prism
    • By Prism 17th May 19, 11:53 AM
    • 843 Posts
    • 655 Thanks
    Prism
    Because it adds unnecessary complexity and shows lack of policy/strategy.
    Originally posted by Mordko
    I would hardly call a 50/50 split between global passive funds complex. By its nature this kind of investing doesn't exactly have a strategy except for make money with an acceptable amount of risk. No need to worry about making a decision about very similar funds when it makes very little difference what decision you make. Personally I would pick one too, but I can't see any issue in having more than one if someone is unsure.

    For what its worth my choice would likely be HSBC but take that with a pinch of salt as I don't invest in any of the multi asset funds.
    • bostonerimus
    • By bostonerimus 17th May 19, 12:15 PM
    • 2,891 Posts
    • 2,216 Thanks
    bostonerimus
    The decision to hold x% in US equity is a management decision. The decision to have a home bias is a management decision. The decision not to focus on a target volatility range but use a rigid equity content is a management decision.

    Using multiple multi-asset funds with different investment weightings is a management decision. if you thought fund A had the best allocations then why would you want fund B. If you thought fund A didnt have the right allocations then why are you using it in the first place.



    Vanguard are not competing with IFAs. They provide no advisory services. Vanguard are also a very large managed fund house and they actually consider active management to be viable. They have just chosen not to launch their managed funds in the UK yet.
    Originally posted by dunstonh
    Vanguard do offer some active funds in the UK.

    In the US they have far more funds and their Wellesley and Wellington funds are two of the oldest managed multi-asset funds. They also provide advise in the USA.
    Misanthrope in search of similar for mutual loathing
    • Mordko
    • By Mordko 17th May 19, 1:57 PM
    • 238 Posts
    • 78 Thanks
    Mordko
    I would hardly call a 50/50 split between global passive funds complex. By its nature this kind of investing doesn't exactly have a strategy except for make money with an acceptable amount of risk. .
    Originally posted by Prism
    I thought HSBC multi-asset funds are active; reviewing allocations every 3 months (?)

    Strategy is how we approach the money making process - selecting passive vs active approach, asset allocation, geographic allocation, factors, rules for making changes, rebalancing, etc. Multi-asset products implement it for you, but it’s a strategy. Ideally this is a conscious decision rather than “I like the name”.

    Mixing different products makes sense to achieve diversification. Mixing two types of multi asset porridges for the sake of mixing at no diversification benefit is relatively harmless but utterly useless and shows that decision isn’t well informed. Chances are this individual won’t be able to stick with the strategy of neither here nor there, and that’s when performance will be hurt.
    Last edited by Mordko; 17-05-2019 at 1:59 PM.
    • JustAnotherSaver
    • By JustAnotherSaver 18th May 19, 8:31 AM
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    • 607 Thanks
    JustAnotherSaver
    About LifeStrategy being “managed”? Like post 18 says, it’s irrelevant. Everything is “managed”. The point is that it’s not ACTIVELY managed. LifeStrategy = a bunch of passive investments covering the world with fixed allocation to various markets. Except for the home market, allocations represent market cap. If you had bonds in your fund, it would be a fixed allocation too, again passive.
    Originally posted by Mordko
    Which goes back to my earlier point - you can read all the books in the world (which goes against those people who essentially say you can't be bothered to learn) but if you don't understand them fully then you simply don't understand them. Take this for example - the simple addition of the word active that i'd just really missed. There'll be other cases of my misunderstanding too.



    It's easy to look back on it when it's pointed out & you're left feeling stupid - like oh of course that's how it is, how did i even not spot that, but fact is little things do get missed & little things can make a difference. Doesn't mean i'm not trying though.

    • Mordko
    • By Mordko 18th May 19, 12:52 PM
    • 238 Posts
    • 78 Thanks
    Mordko
    Which goes back to my earlier point - you can read all the books in the world (which goes against those people who essentially say you can't be bothered to learn) but if you don't understand them fully then you simply don't understand them. Take this for example - the simple addition of the word active that i'd just really missed. There'll be other cases of my misunderstanding too.
    Originally posted by JustAnotherSaver
    Sorry; I had assumed you were not sufficiently interested in your family’s future prosperity to invest time into educating yourself. I was wrong and I apologise.

    A question to old hats on this forum - is there a recommended literature list and a wiki for people starting to familiarize themselves with investments and pensions? Something like this?

    https://www.finiki.org/wiki/Main_Page
    https://www.finiki.org/wiki/Recommended_reading
    https://www.bogleheads.org/wiki/Outline_of_ETFs_and_mutual_funds
    • Thrugelmir
    • By Thrugelmir 18th May 19, 1:04 PM
    • 63,238 Posts
    • 56,105 Thanks
    Thrugelmir
    Vanguard’s founder was the man behind passive cap weighted investment strategy (John Bogle). They upended Mutual fund industry and drove the costs down. They are doing the same to the IFA industry which is ripe for it. Vanguard US is a non-profit, is owned by investors which constantly strives to minimise cost.
    Originally posted by Mordko
    Smoke and mirrors. Do Vanguard disclose what their executives earn? No they don't. Non-profit is a neat marketing spin.

    Even John Bogle prior to his death. Questioned the validity of the growth in passive trackers. His concept was built on the US markets. The most researched and analysed in the world. Somewhat different to other markets globally. Without active investors who sets the value of a company and therefore it's share price?
    “The stock market is a device for transferring money from the impatient to the patient.” – Warren Buffett
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