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VanGuard Lifestrategy OCF query

Index tracking funds and ETFs
MrBristol
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VanGuard Lifestrategy OCF query

#215511

Postby MrBristol » April 16th, 2019, 9:23 pm

Evening All,

I have a hopefully quick query that I can't seem to find a simple answer to.

I'm quite taken with the idea of the VanGuard Lifestrategy 100% as it seems to have a low OCF, accumulates so I don't have to revisit it and I can just leave it for 10-15 years.

I can see that it charges 0.22% (plus transaction fees) OCF but it is made up from a number of other funds (US Equity fund - 0.10%, Japan 0.23% etc about 10 funds)

Is the 0.22% charge on the main fund made up from the inner funds cost or is that additional? I wondered if this is what they mean by transaction fees?

I do seem to recall someone suggesting making a DIY version by buying the underlying funds directly, but I might have dreamt it.

Any website/documentation covering this would be awesome to, I can't seem to find it on VanGuard's site.

Thanks in advance,
MrBristol

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Re: VanGuard Lifestrategy OCF query

#215512

Postby Backache » April 16th, 2019, 9:31 pm

The charge includes the charges of the subfunds.
web site is here https://www.vanguardinvestor.co.uk/
The only reason I can see why you might want to create a DIY version is if you wanted to re-balance at longer intervals,

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Re: VanGuard Lifestrategy OCF query

#215516

Postby Backache » April 16th, 2019, 9:40 pm

Sorry I've just realised that you said you couldn't see where the info was on the website, I misread as you couldn't find the web site.
The info of allocation of charges is in the prospectus. Look at page 50 for how it is allocated between the funds.

MrBristol
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Re: VanGuard Lifestrategy OCF query

#215526

Postby MrBristol » April 16th, 2019, 10:41 pm

Hi Backache,

Thanks for the information - this is exactly what I was after. So looking at page 50 of the docs it says:

As each Fund invests at least 10% of its NAV in other collective investment schemes, the COLL 50 Vanguard LifeStrategy® Funds ICVC Sourcebook would require each Fund to calculate an additional “synthetic” OCF to reflect the charges and expenses of the underlying funds. However, the ACD anticipates that the synthetic OCF of each Fund will track closely the annual rate of its management charge because each of these underlying funds is managed or operated by the ACD or an associate of the ACD.


Is this the bit is basically saying the 0.22% is made up from the sub amounts?

I don't really want to go down the route of trying to build my own as that rather defeats the purpose of doing it :)

Thanks again.
MrBristol

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Re: VanGuard Lifestrategy OCF query

#215550

Postby Backache » April 17th, 2019, 6:45 am

Hi that is my understanding though the language is rather opaque I'd agree.

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Re: VanGuard Lifestrategy OCF query

#215616

Postby DrBunsenHoneydew » April 17th, 2019, 11:22 am

Yes that's right - the 0.22% is the overall charge before trading costs within the subfunds.
It is cheaper to DIY by buying the subfunds individually but the extra charge is essentially the convenience fee of having Vanguard do the rebalancing.
It's not a purely passive fund as they make a judgement about what proportion of e.g. UK shares to include.
Lifestrategy 100% Equity is not a simple passive All-world tracker like VWRL, as there is a deliberate UK bias.


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