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Long-term Vanguard Lifestrategy 60 asset allocation changes
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Tim D
Posted: 08 October 2019 21:42:56(UTC)
#11

Joined: 07/06/2017(UTC)
Posts: 8,883
paul armstrong;93069 wrote:
Of course, home bias in bonds may be judged differently than in equities.


Hadn't looked at the bond allocation at all, but now you mention it... yes it was entirely UK gilts, index-linked and IG back in 2011. But then by 2014 they were also making use of a bunch of international bond funds (US, Europe, Japan) and their global bond index fund too.

With Vanguard (UK), all their bond funds are GBP hedged, which at least means the international diversification doesn't add currency risk.

Hard to get excited about this end of the Lifestrategy Portfolios (at least while I hold a mix of 80 and 60 varieties).... I just regard it as the stable ballast/shock-absorber part of the contraption. Might get clobbered by duration creep and the interest-rate normalization Bond Apocalypse one day though.
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Joe 90
Posted: 09 October 2019 10:56:10(UTC)
#12

Joined: 14/01/2018(UTC)
Posts: 310
On a related point, I see LS is a fund of funds. Does this mean that there are effectively 2 lots of charges: one for the LS fund (0.22%) and another for each of the underlying funds within the basket?
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Joe 90
Posted: 09 October 2019 11:04:48(UTC)
#14

Joined: 14/01/2018(UTC)
Posts: 310
Joe 90;93103 wrote:
On a related point, I see LS is a fund of funds. Does this mean that there are effectively 2 lots of charges: one for the LS fund (0.22%) and another for each of the underlying funds within the basket?

Just seen the answer on a new thread started today! Talk about serendipity! Think I'll buy a lottery ticket.
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1 user thanked Joe 90 for this post.
Tim D on 09/10/2019(UTC)
Tim D
Posted: 09 October 2019 11:06:26(UTC)
#13

Joined: 07/06/2017(UTC)
Posts: 8,883
Simultaneous post with above, but I'll leave it here...

Joe 90;93103 wrote:
On a related point, I see LS is a fund of funds. Does this mean that there are effectively 2 lots of charges: one for the LS fund (0.22%) and another for each of the underlying funds within the basket?


No. See the 1st and 2nd posts in this thread: https://moneyforums.city...es---confused-I-am.aspx

You do have to be a bit careful with funds-of-<things which aren't UCITS funds> though. Quoting the best bit of a thread with same question at https://forums.moneysavi...howthread.php?t=5670936

Quote:
... for most funds you'll come across, ESMA provides regulatory definitions for UCITS and tells them that if a UCITS fund invests a substantial proportion of its assets in other UCITS or collective investment undertakings, its ongoing charges figure shall take account of the ongoing charges incurred in the underlying CIUs. They can use published OCF figures to work it out, or use suitable alternatives or estimations in the absence of published OCFs for the investees, as prescribed by the regulations
...
However, some funds or investment companies you invest into may not be UCITS and not covered by the same regulations; and some investments made (particularly into closed ended investment trusts or real estate vehicles) are not required to be "looked through" because they are not themselves considered "collective investment undertakings" even though in substance they allow investors to access a portfolio of underlying assets.


So for example, if you look at the Unicorn Mastertust fund (a fund-of-ITs) it's cheapest unit class claims an OCF of 0.84% but there is at least an explicit warning on the factsheet that the figure "excludes the charges for the underlying investment trusts". Similarly iShares IUKP (an ETF of UK REITs and property companies) claims an OCF of 0.4% (which certainly doesn't include any of its holdings' expenses). That VT RM Alternative Income fund everyone likes is another one: the 0.85% OCF doesn't include anything for the underlying trusts and REITs it's largely into (although actually that fund is quite interesting because in the small print on the OCF there's something about all the other costs will be borne out of the 0.85% by the management, so at least there won't be any further "incidentals" at that level of the fund's management).
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Tim D
Posted: 30 December 2022 15:11:52(UTC)
#15

Joined: 07/06/2017(UTC)
Posts: 8,883
Revisited this thread, prompted by some comments in https://moneyforums.city...io--using-Vanguard.aspx about how "active" (or not) the Lifestrategy funds are... was curious to see whether much/anything had changed in the VLS60 allocation since the last snapshot in this thread of July 2019 (see #1 in thread).
Tim D;92396 wrote:

July 2019 from https://www.vanguard.co....strategy-newsletter.pdf at time of this post:

Vanguard® FTSE Developed World ex-U.K. Equity Index Fund 19.30
Vanguard® Global Bond Index Fund 19.20
Vanguard® FTSE U.K. All Share Index Unit Trust 15.00
Vanguard® U.S. Equity Index Fund 14.20
Vanguard® U.K. Government Bond Index Fund 5.80
Vanguard® Emerging Markets Stock Index Fund 4.90
Vanguard® U.K. Inflation-Linked Gilt Index Fund 3.80
Vanguard® FTSE Developed Europe ex-U.K. Equity Index Fund 3.70
Vanguard® U.K. Investment Grade Bond Index Fund 3.60
Vanguard® Japan Stock Index Fund 2.00
Vanguard® US Investment Grade Credit Index Fund 1.70
Vanguard® US Government Bond Index Fund 1.70
Vanguard® Euro Government Bond Index Fund 1.60
Vanguard® Pacific Ex-Japan Stock Index Fund 1.00
Vanguard® Japan Government Bond Index Fund 0.90
Vanguard® Global Aggregate Bond UCITS ETF 0.80
Vanguard® Euro Investment Grade Bond Index Fund 0.80
Vanguard® U.K. Government Bond UCITS ETF 0.00

UK/NA equities: 15.0% / 27.1%


Where is it now? For consistency, used the numbers in the last "Lifestrategy Newsletter" https://www.vanguard.co....etter-uk-en-2022-q3.pdf (dated Sept 30th 2022):

Quote:
Vanguard Global Bond Index Fund 19.9
Vanguard FTSE Developed World ex-U.K. Equity Index Fund 18.7
Vanguard U.S. Equity Index Fund 15.1
Vanguard FTSE U.K. All Share Index Unit Trust 14.7
Vanguard U.K. Government Bond Index Fund 5.9
Vanguard Emerging Markets Stock Index Fund 4.9
Vanguard U.K. Investment Grade Bond Index Fund 4.3
Vanguard U.K. Inflation-Linked Gilt Index Fund 3.4
Vanguard Global Aggregate Bond UCITS ETF 3.1
Vanguard FTSE Developed Europe ex-U.K. Equity Index Fund 2.9
Vanguard Japan Stock Index Fund 1.6
Vanguard U.S. Government Bond Index Fund 1.3
Vanguard U.S. Investment Grade Credit Index Fund 1.2
Vanguard Euro Government Bond Index Fund 1.1
Vanguard Pacific Ex-Japan Stock Index Fund 0.8
Vanguard Japan Government Bond Index Fund 0.6
Vanguard Euro Investment Grade Bond Index Fund 0.5

UK/NA equities: 14.7% / 28.9%


Looks like the major holdings are all within 1% of what they were in 2019. If the overall North American Equities exposure has crept up in that time, it's probably only because the US' proportion of the "Developed World ex-U.K. Equity Index Fund" has increased since then, rather than any active fiddling by Vanguard. A bit more in the Global Aggregate Bond UCITS ETF than in 2019 (3.1% vs. 0.8%, but when most of the bond exposure is via the Global Bond Index Fund I'd guess the ETF is held for "liquidity purposes" or some other technical reason.).

Move along, nothing to see here. Sure, Lifestrategy is active in that any multi-asset allocator has to actively choose weightings across asset classes. But (excepting the ~2011-2014 messing about mentioned earlier in thread) Vanguard sure don't mess with it once they've decided, unlike AFAIK all of their competition for this sort of multi-asset fund-of-funds.

I note the newsletter also includes some text:
Quote:
Many investors change their portfolios in a bid to take advantage of the latest news. However, it’s very difficult to time these changes effectively. In practice, shifting your portfolio in response to short-term events may lead to little more than increased trading costs. At Vanguard, we believe that investors will usually be better served by identifying the appropriate asset allocation to suit their goals, then sticking with it and tuning out short-term noise. By regularly rebalancing back to target weights, the LifeStrategy® Funds are built to reflect this belief.
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7 users thanked Tim D for this post.
Robin on 30/12/2022(UTC), Thrugelmir on 30/12/2022(UTC), Rob B on 30/12/2022(UTC), Easyrider on 30/12/2022(UTC), SF100 on 30/12/2022(UTC), Guest on 30/12/2022(UTC), Peanuts on 30/12/2022(UTC)
Thrugelmir
Posted: 30 December 2022 15:43:31(UTC)
#16

Joined: 01/06/2012(UTC)
Posts: 5,318
Over the past 3 years makes you wonder what they do for the fees they charge? Given they don't benchmark the VLS range against any index. Seem to be trading on their name rather investment performance. Going forward will be extremely interesting. As no longer the US Mega caps to aid short term returns.
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Apostate
Posted: 30 December 2022 16:09:23(UTC)
#19

Joined: 02/04/2018(UTC)
Posts: 2,287
Fidelity Multi Asset Allocator series another that doesn't change

Thrugelmir;252025 wrote:
Over the past 3 years makes you wonder what they do for the fees they charge? Given they don't benchmark the VLS range against any index. Seem to be trading on their name rather investment performance. Going forward will be extremely interesting. As no longer the US Mega caps to aid short term returns.


it will go where the stock market goes - as it's invested in large and mid cap stocks the world over.

more interesting is if interest rates continue to rise - and the fund stuck in bonds with an average duration of 10 years.
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Rob B
Posted: 30 December 2022 16:15:39(UTC)
#17

Joined: 07/10/2018(UTC)
Posts: 1,701

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Thrugelmir;252025 wrote:
Over the past 3 years makes you wonder what they do for the fees they charge?

Fees? You mean the 0.22% (plus 0.02% to 0.06% transaction costs depending on LS20/40/60/80/100)? As in the infinitesimal fee (rolled up because LS in an OEIC of OEICs) for holding a diversified funds of funds?

As in a fee that's broadly representative of the funds underneath - I'm guessing with zero or very little uplift?

As in a total fee - if I use LS60 as an example - of 0.26%?

Thrugelmir;252025 wrote:
Seem to be trading on their name rather investment performance.

On what basis do you make this sweeping judgement? What should a smorgasbord of passive trackers perform like? Their underlying performance, maybe?

Thrugelmir;252025 wrote:
Going forward will be extremely interesting. As no longer the US Mega caps to aid short term returns.

LifeStrategy came into existence in late 1994 in the US. Been through quite a bit over the last 28 years:

Dot-com bubble (2000)
Downturn (2002)
GFC (2008)
Eurozone Crisis (2010)
S&P Bear (2011)
China (2015)
COVID (2020)

Their asset allocation has changed very little over the last few years here in the UK as Tim has taken the time to demonstrate. You seem to have some beef with Vanguard and LifeStrategy, Thrugelmir?
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Easyrider on 30/12/2022(UTC), Tim D on 30/12/2022(UTC), Robin on 30/12/2022(UTC)
Thrugelmir
Posted: 30 December 2022 16:26:18(UTC)
#20

Joined: 01/06/2012(UTC)
Posts: 5,318
Apostate;252028 wrote:
Fidelity Multi Asset Allocator series another that doesn't change

Thrugelmir;252025 wrote:
Over the past 3 years makes you wonder what they do for the fees they charge? Given they don't benchmark the VLS range against any index. Seem to be trading on their name rather investment performance. Going forward will be extremely interesting. As no longer the US Mega caps to aid short term returns.


it will go where the stock market goes - as it's invested in large and mid cap stocks the world over.

more interesting is if interest rates continue to rise - and the fund stuck in bonds with an average duration of 10 years.


I was looking at the underlying % allocations. All seem within bounds of tolerance. Rather than any significant change in strategy. In essence little more than a global ETF fund that could be provided at less than half the cost to investors.

The short term downturn in bond values will progressively unwind. Additionally new monies will be invested into better yielding longer duration bonds.
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Robin
Posted: 30 December 2022 17:20:32(UTC)
#18

Joined: 06/07/2009(UTC)
Posts: 1,281

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Rob B;252030 wrote:

LifeStrategy came into existence in late 1994 in the US. Been through quite bit over the last 28 years...



Please, Rob, be sensible. 1994 was not 28 years ago. It couldn't be. That would make me.... oh. Shit. Happy New Year.
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4 users thanked Robin for this post.
SF100 on 30/12/2022(UTC), Rob B on 30/12/2022(UTC), Easyrider on 30/12/2022(UTC), Mr GL on 14/01/2023(UTC)
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