Vanguard LifeStrategy v Active Funds?
Discussion
I have a chunk of money split between Fundsmith and Lindsell Train Global Equity and with the usual disclaimer that past performance != future performance I'd hope that their track record continues.
However, I'm starting to wonder at what point all my eggs are in two baskets and I'm debating putting a chunk into Vanguard LifeStrategy (60, 80, or 50/50 so essentially a 70) and just letting the market do the work.
The timescale for the money in the active funds is long term (10+ years) but this new money is money I don't plan on needing any time soon but I'm cautious of putting it at the same risk as 100% equities.
However, I'm starting to wonder at what point all my eggs are in two baskets and I'm debating putting a chunk into Vanguard LifeStrategy (60, 80, or 50/50 so essentially a 70) and just letting the market do the work.
The timescale for the money in the active funds is long term (10+ years) but this new money is money I don't plan on needing any time soon but I'm cautious of putting it at the same risk as 100% equities.
It depends what you're trying to achieve. Your eggs aren't really in two baskets though, are they? Fundsmith invests in 27 holdings, Lindsell Train presumably more.
If you want less exposure to equities then Vanguard LifeStrategy offers you some, however if your money is split equally between the two above and LifeStrategy 60, then your exposure to equities is still over 90%. Vanguard is also heavily US and UK-centric, which depending on your preferences might be a concern.
If you want less exposure to equities then Vanguard LifeStrategy offers you some, however if your money is split equally between the two above and LifeStrategy 60, then your exposure to equities is still over 90%. Vanguard is also heavily US and UK-centric, which depending on your preferences might be a concern.
CzechItOut said:
It depends what you're trying to achieve. Your eggs aren't really in two baskets though, are they? Fundsmith invests in 27 holdings, Lindsell Train presumably more.
They're similar in that they're low turnover low number of holdings.I'm debating with myself whether, as you say, LifeStrategy is actually that much less of a risk.
I've read enough articles that I know that when you go over a dozen or so holdings and keep adding more you're theoretically not decreasing your risk by much.
I'd likely go with a 50/50 split between LifeStrategy and the other funds i.e. 50% LifeStrategy/25% Fundsmith/25% Lindsell Train.
By coincidence this just landed in my Inbox https://www.trustnet.com/news/830868/the-top-perfo...
The nice thing is that its global diversified anyway. You have the same with FS and LT, so Vanguard perhaps should hold a little more in bonds depending on what you are after in terms of risk.
I hold VWRL which is pretty much LS100 but in ETF form. Well an approximate for it anyway.
I dont think you can go wrong with either as a set and forget purchase.
I hold VWRL which is pretty much LS100 but in ETF form. Well an approximate for it anyway.
I dont think you can go wrong with either as a set and forget purchase.
ringram said:
The nice thing is that its global diversified anyway. You have the same with FS and LT, so Vanguard perhaps should hold a little more in bonds depending on what you are after in terms of risk.
I hold VWRL which is pretty much LS100 but in ETF form. Well an approximate for it anyway.
I dont think you can go wrong with either as a set and forget purchase.
I'm considering a couple of options.I hold VWRL which is pretty much LS100 but in ETF form. Well an approximate for it anyway.
I dont think you can go wrong with either as a set and forget purchase.
One is just to keep with FS and LT but hold some directly with FS too so slightly less fees overall.
b
hstewie said:
hstewie said: One is just to keep with FS and LT but hold some directly with FS too so slightly less fees overall.
Aren't you restricted to "T" class if going direct unless you've got £5m, so potentially fees are actually higher if holding direct than through a platform that offers "I" class?xeny said:
Aren't you restricted to "T" class if going direct unless you've got £5m, so potentially fees are actually higher if holding direct than through a platform that offers "I" class?
Yes, part of a wider think which platform(s) to use for what, but direct is 1.05 and on a platform (I class) is 0.95 but depending on the platform...I think you get an AGM invite if you hold direct and a dumb little part of me thinks that may be worth it.
bhstewie said:
hstewie said: I think you get an AGM invite if you hold direct and a dumb little part of me thinks that may be worth it.
My GF holds some direct (long story) and you get an invite, a paper copy of the annual letter and a paper six monthly valuation statement.They're the only ISA provider I've dealt with that wanted to see actual proof of ID (certified copy of passport IIRC), which was a little annoying.
bhstewie said:
hstewie said:CzechItOut said:
It depends what you're trying to achieve. Your eggs aren't really in two baskets though, are they? Fundsmith invests in 27 holdings, Lindsell Train presumably more.
They're similar in that they're low turnover low number of holdings.I'm debating with myself whether, as you say, LifeStrategy is actually that much less of a risk.
I've read enough articles that I know that when you go over a dozen or so holdings and keep adding more you're theoretically not decreasing your risk by much.
I'd likely go with a 50/50 split between LifeStrategy and the other funds i.e. 50% LifeStrategy/25% Fundsmith/25% Lindsell Train.
By coincidence this just landed in my Inbox https://www.trustnet.com/news/830868/the-top-perfo...
Thinking I may just do a simple 3 way between
- Fundsmith (held direct)
- LT Global
- Troy Trojan
CzechItOut said:
It depends what you're trying to achieve. Your eggs aren't really in two baskets though, are they? Fundsmith invests in 27 holdings, Lindsell Train presumably more.
If the stocks held are all primarily of the same type - i.e. large cap growth stocks, you need to be very aware of the risks should these factors go out of favourbhstewie said:
hstewie said: I'm of the view that if something happens that has a major impact on Fundsmith and LT Global it's probably going to have a major impact on anything involving equities but I still like the idea of having some of the pot that isn't 100% in equities as it may help balance things out if there's choppy times ahead.
I wouldn't be so sure of thatBobToc said:
Surprised there’s not as much support for Vanguard here. I take the view that most active management adds less value than the fees charged and almost my entire equity portfolio is in LS100.
I think internet finance forums each tend towards reaching a concensus (or group think) on active vs passive. Reddit's UK forum certainly considers you're crazy for suggesting active funds for example.Intellectually I tend towards your view, but I'm no believer in the efficient market hypothesis, so I don't consider active outperformance impossible.
I've got holdings in LS 100 and Fundsmith Equity. The last time I looked, one of them has averaged approaching twice the annual return of the other for over half a decade at this point, and especially when you consider compounding, that makes a big difference. Given the choice between following logic or getting more return, I tend to prefer the cash.
I do however acknowledge the challenge that is identifying a priori if the manager you're looking at is actually any good, or if their preferences "fits" the current market conditions - ideally you want/need both.
This thread https://www.lemonfool.co.uk/viewtopic.php?f=8&... is a good discussion of the topic.
bhstewie said:
hstewie said: It's an option then, plus this wouldn't be ISA money as that's maxed out.
I'm interested who people look to beyond the Lindsell Train and Fundsmith families for that sort of conviction/quality theme?
If your ISA's are maxed out then it's probably worth understanding what these are invested in. Surely you need to balance what you have in the ISA's with where new money will go. And depending what you want to do with the ISA money & the new money, where is you pension money invested. If you look across your total investments you may get a very different risk profile. I'm interested who people look to beyond the Lindsell Train and Fundsmith families for that sort of conviction/quality theme?
GT03ROB said:
If your ISA's are maxed out then it's probably worth understanding what these are invested in. Surely you need to balance what you have in the ISA's with where new money will go. And depending what you want to do with the ISA money & the new money, where is you pension money invested. If you look across your total investments you may get a very different risk profile.
Yes that's a fair point 
Whilst I get that any investment shouldn't be a short term thing, I'm looking at the ISA as a long term "do not touch" holding.
The pot under discussion here should also be long term but I may be prepared to put a little more into it than I ordinarily would if I dropped the overall risk profile it a little compared to the ISA pot.
Does that make sense?
Derek Chevalier said:
If the stocks held are all primarily of the same type - i.e. large cap growth stocks, you need to be very aware of the risks should these factors go out of favour
Sorry, I missed this post I understand that, but how likely is it?
Are there periods where the likes of Unilever and Diageo and Pepsi have done terribly because of their cap but something else, smaller companies for example, have done well?
Sectors I can understand, cap I'm not so clear on
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