How do I invest in the Vanguard 60/40 or 80/20 - do they have tickers?

[richfool]

How does my wife invest in Vanguard LifeStrategy 80/20 or 60/40? Do they have tickers like shares and IT's (I can't trace a ticker), or can they only be bought through Vanguard? My wife holds an ISA with X-O which doesn't accept investments into OEIC's or presumably funds.

If she can't buy the Vanguard 80/20 or 60/40 in her ISA, I am thinking that a suitable home made version might be a combination of holding VEVE (developed world), and maybe some VUSA (US only) and a bond ETF or two, (- one for Gov't bonds and one for corporate bonds). In the case of the latter, the bonds, I wouldn't have any idea what ETF to aim at, and would welcome suggestions on that.

* Currently, my wife holds a range of global and UK IT's, which I anticipate she will continue to hold. Objective long term growth and preservation of capital (or at least reduced volatility), with the prospect of income later, that she can draw upon.

[richfool]

As a footnote to my above post, I was aiming at VEVE as it tracks the developed world (no spurious frontier or emerging markets) and has lower fees. (0.20%). I appreciate it is US heavy. Similarly VUSA tracks the S&P 500 and has even lower fees (0.07%).

My wife doesn't have any significant knowledge of investment matters and so would, after my passing, basically maintain the holdings, or move them gradually towards the global general, ETF and Vanguard 60/40 type holdings.

For further background info, my wife's existing IT holdings include:

JGGI, SAIN,
BUT, ATST, FCIT.
RICA
DIG, LWDB
JEGI, AAIF.
BERI, EGL
API, JLEN.

[Newroad]

Morning RichFool.

My guess is that the various LifeStrategy products are only available to Vanguard Customers.

Assuming so, the easiest way to proxy them would probably be (e.g. for 60/40) to buy

60% VWRL
40% VAGP

Please note, these are both distributing (similar to dividend paying) products. There is an accumulating version of VWRL - VWRP, which can be useful for things like SIPPs which otherwise let you hold US$ - but I don't think there is an equivalent for VAGP. Please also note that I understand that it is possible replicate VWRL more cheaply, but I personally don't bother.

Whichever way you chose to proxy it, you would then need to rebalance periodically - I would say once a quarter would be optimal, taking the quarterly distributions which may be enough to do the rebalancing - otherwise buying/selling to do so.

As a related aside since you mention it in passing, Vanguard appear to have introduced a corporate bond product not too long ago, VGIL, which may be of interest as a portion of the bond component. What I suspect will annoy me is that there is likely an overlap with VAGP - I would prefer a straight high yield version (BlackRock do one) with no overlap.

Regards, Newroad

[Tedx]

You can buy Vanguard Lifestrategy through AJ Bell

For example, LS40

Vanguard LifeStrategy 40% Equity Fund A Acc

SEDOL B3ZHN96

ISIN GB00B3ZHN960

...so it might be better searching on the SEDOL number?

HTH

[Alaric]

My wife holds an ISA with X-O which doesn't accept investments into OEIC's or presumably funds.

Most ISA providers allow investment into OEICs, so a solution would be to open a second ISA with someone else.

[Newroad]

Hi again, Richfool.

Inspired by Tedx, I checked on II. Here is the result

When I then try for a quote for one, I get single pricing (presumably previous close)

So I'm guessing it's not traded "on exchange" like its presumed underlying constituent products, but rather end of day - purchasing however many units based on the money you've put in.

Regards, Newroad

[mc2fool]

How does my wife invest in Vanguard LifeStrategy 80/20 or 60/40? Do they have tickers like shares and IT's (I can't trace a ticker), or can they only be bought through Vanguard? My wife holds an ISA with X-O which doesn't accept investments into OEIC's or presumably funds.

"funds" is kind of a generic term that usually refers to OEICs and UTs (Unit Trusts, the "older" incarnation of OEICs, although Vanguard does have some), and OEICs and UTs can only be bought from their provider (Vanguard in this case), but that doesn't mean that they can't be bought through brokers/platforms.

As Alaric notes, it's just a matter of finding one that offers that and my guess is that's probably most of them, with ones like X-O that don't being the exception. There is one gotcha to look out for though: most brokers/platforms that do offer them charge annual ad valorem fees for holding OEICs and UTs, i.e. a %age of their value each year. E.g. HL charge 0.45%pa, AJ Bell 0.25%pa, Vanguard themselves 0.15% (capped at £375).

But there are some flat-fee brokers that offer OEICs & UTs that just charge you a (surprise!) flat fee for your account, or even zero, although they do charge a dealing fee. https://monevator.com/compare-uk-cheapest-online-brokers/ is always a good starting point for comparisons.

I hold the Vanguard LifeStrategy 80 via IWeb, which has no annual fees, charges just £5 for dealing, and at the moment and for the rest of this year is waiving its account opening fee. https://www.iweb-sharedealing.co.uk/

[Alaric]

So I'm guessing it's not traded "on exchange" like its presumed underlying constituent products, but rather end of day - purchasing however many units based on the money you've put in.

It's set up as an OEIC, so will have to follow their trading rules. Basically that's one trading point a day, usually in the middle of the day and you deal at an unknown future price having placed a buy or sell prder for cash or units before the cut off point.

[richfool]

Thank you all for your helpful and informative responses.

The X-O trading page recognises the various SEDOL's and shows the correct title of each, but the trading details remain greyed out and it doesn't allow me to proceed with placing an actual trade. Upon clicking on the "information" button, it then says -"not a recognised security". So I deduce they can't be traded through X-O.

I don't want to further complicate my wife's life by opening a new ISA for her with another broker, so that seems to push me towards using a world equity ETF, such as VWRL or preferably VEVE, accompanied with a bond ETF, such as VAGP as suggested by Newroad.

VAGP appears to hold Gov Bonds from a spread of different countries. I'm not sure if it holds any corporate bonds. Assuming not, should I also aim at holding a corporate bond ETF? (I personally hold NCYF, but that is not an ETF).

[EthicsGradient]

If you want to reproduce what the LifeStrategy funds portfolio is, then remember they use a significant UK (or "home") bias. For instance, for the 80/20 fund, it is currently invested in:

Allocation to underlying Vanguard funds
As at date 30 Sep 2023

Vanguard FTSE U.K. All Share Index Unit Trust GBP Acc 19.4%
Vanguard U.S. Equity Index Fund GBP Acc 19.4%
Vanguard FTSE Developed World ex-U.K. Equity Index Fund GBP Acc 19.2%
Vanguard Global Bond Index Fund GBP Hedged Acc 14.0%
Vanguard Emerging Markets Stock Index Fund GBP Acc 6.2%
Vanguard S&P 500 UCITS ETF (USD) Accumulating 6.0%
Vanguard FTSE Developed Europe ex-U.K. Equity Index Fund GBP Acc 5.1%
Vanguard U.K. Government Bond Index Fund GBP Acc 2.7%
Vanguard Japan Stock Index Fund GBP Acc 2.7%
Vanguard U.K. Investment Grade Bond Index Fund GBP Acc 1.7%
Vanguard U.K. Inflation-Linked Gilt Index Fund GBP Acc 1.6%
Vanguard Pacific ex-Japan Stock Index Fund GBP Acc 1.3%
Vanguard FTSE 100 UCITS ETF (GBP) Accumulating 0.8%
Vanguard FTSE 250 UCITS ETF (GBP) Accumulating 0.1%

https://www.vanguardinvestor.co.uk/inve ... folio-data
ie about 20.3% UK shares, and 6% UK bonds (government and company) (maybe plus a little more if "Global Bond Index" doesn't exclude UK?)

[Newroad]

That's interesting, EthicsGradient.

Now that you mention it, I vaguely recall hearing that before.

That would be it for me, three strikes

1. Home bias
2. Only once a day pricing (i.e. OEIC vs ETF)
3. Insufficiently granular (i.e. 20% increments for the equity bond split - yes, I know you could buy a proportion of two to get somewhere between 60% and 80% equities)

I would simply buy the appropriate amount of VWRL and VAGP then rebalance quarterly.

That said, if it's for fire'n'forget purposes, as it may be for RichFool, then the OEIC's may be just fine.

Regards, Newroad

[richfool]

Thank you for that insightful breakdown, EthicsGradient. In addition to the UK bias, it also draws me to thinking about the charges on all the subfunds.

As Newroad says, that draws me ever more towards a couple of ETF's, - VWRL (or my preference for VEVE) and VAGP.

[richfool]

My only foray into bonds is with NCYF which holds corporate bonds (current yield c 9.3%). So this is causing me to ponder whether to add VAGP to my own income focussed IT portfolio. I could even add NCYF to my wife's potfolio.

[kempiejon]

As Newroad says, that draws me ever more towards a couple of ETF's, - VWRL (or my preference for VEVE) and VAGP.

Reading this thread I think I like that idea for the home gamer making a VS80/20 type clone. VEVE excludes emerging markets, they are only 6% I think.

I built a global portfolio in my SIPP using vanguard EFTs, I picked VUSA, VERX, VJPN and VAPX, VFEM to cover America, Europe exUK, Japan and Asia exJapan and emerging markets, with a slice of VGOV for UK gilts. Mostly to shave a few percent of costs but it also gave me the ability to bias regions slightly, I excluded UK as I hold FTSE350 shares directly, I started on 50% USA when VWRL had nearer 60%, I was 10% EM. I hadn't thought about a global gilt/bond but with hindsight VGAP might be a preferred option.
I have not looked nor rebalanced since 2021, might investigate that in the new year as I have another slug of money coming in. VEVE plus VAGP looks a bit easier.

[mc2fool]

Thank you for that insightful breakdown, EthicsGradient. In addition to the UK bias, it also draws me to thinking about the charges on all the subfunds.

UK regs require that the ongoing charges figures funds state have to include those of constituents, so the 0.22% is total, including the charges of the subfunds.

"The Ongoing Charges Figure (OCF) is the ratio of the Fund’s total disclosable costs (excluding overdraft interest) to the average net assets of the Fund. Because the Fund invests more than 80% of its assets in other UCITS or Collective Investment Undertakings ("CIU"), it is required to disclose a synthetic OCF that accounts for the ongoing charges incurred in the underlying CIUs."

https://fund-docs.vanguard.com/lifestrategy-annual-report.pdf, page123 (as numbered, 125 in document)

The table at the bottom of that page shows that the Fund Direct Charge for the LifeStrategy funds is 0.09-0.11% with the Synthetic element (i.e. the average OCF of the constituents) being 0.11-0.13%, in each case adding up to the declared 0.22%.

[vand]

Some good advice above. It's very useful to know the differences between funds set up as OIECs and exchange traded, and also between closed and open ended structure.

But it's also totally irrelevant to how it performs, therefore not of significant importance.

So useful...but not important.

[GeoffF100]

VAGP appears to hold Gov Bonds from a spread of different countries. I'm not sure if it holds any corporate bonds.

VAGP is an aggregate bond fund. that means it holds both government and (in this case investment grade) corporate bonds in their market weights. It is hedged into sterling. The hedging is expensive. You can see that by comparing the transaction costs quoted by Vanguard with those for VGOV, which is a gilt fund. You cannot compare Vanguard's transaction costs with those of other fund managers, because there is no standard method of calculation.

[richfool]

VAGP is an aggregate bond fund. that means it holds both government and (in this case investment grade) corporate bonds in their market weights. It is hedged into sterling. The hedging is expensive. You can see that by comparing the transaction costs quoted by Vanguard with those for VGOV, which is a gilt fund. You cannot compare Vanguard's transaction costs with those of other fund managers, because there is no standard method of calculation.

I have to say, I'm not sure I properly see the attraction of bond ETF's such as VAGP, IGLH, or even VGOV, as their dividend yields are so low, (i.e. under 2.00%). Noted that Gov bonds pay less and are more secure than Corporate bonds. Is it that if/when interest rates drop their SP's will increase, thus providing a capital gain?

I appreciate that bonds should provide stability in the event of a stock market (equities) crash, if not, as in the past, their prices should move inversely to equities.

[JohnW]

‘if not, as in the past, their prices should move inversely to equities.’

Prices aren’t quite the issue, it’s returns that buy the groceries, not just prices. And no, returns shouldn’t move inversely, because they haven’t as much as they have. For the last two years stock and bond returns have both been negative.
‘make the history of stock-bond correlation part of your mental furniture.
Don't refer to "the" negative correlation of stocks and bonds. Since 1926 anyway, they've had close to a zero correlation which is a very different thing. Before 2021 the correlation had been negative for about twenty years ( those were the days, my friend, we thought they'd never end ) but it had been positive for about thirty years before that, then negative before that, then positive before that and so on. Since 1926 there have been seven years in which stocks and bonds both had negative returns. It's not common and 2022 was extraordinary, but it's not all that rare. The last time it happened was in 2018,...’ https://www.bogleheads.org/forum/viewto ... 3#p7065803

[richfool]

‘if not, as in the past, their prices should move inversely to equities.’

Prices aren’t quite the issue, it’s returns that buy the groceries, not just prices. And no, returns shouldn’t move inversely, because they haven’t as much as they have. For the last two years stock and bond returns have both been negative.
‘make the history of stock-bond correlation part of your mental furniture.
Don't refer to "the" negative correlation of stocks and bonds. Since 1926 anyway, they've had close to a zero correlation which is a very different thing. Before 2021 the correlation had been negative for about twenty years ( those were the days, my friend, we thought they'd never end ) but it had been positive for about thirty years before that, then negative before that, then positive before that and so on. Since 1926 there have been seven years in which stocks and bonds both had negative returns. It's not common and 2022 was extraordinary, but it's not all that rare. The last time it happened was in 2018,...’ https://www.bogleheads.org/forum/viewto ... 3#p7065803

So what's the attraction with bond products that pay less than a 2% dividend yield, even at a time when interest rates and inflation are considerably higher and 5- 6% is readily available from equities? E.g. as with the likes of VGOV, VAGP, IGLH.