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Vanguard LifeStrategy funds review

The Vanguard LifeStrategy promise is instant portfolio diversification in a single fund

The Vanguard LifeStrategy funds are excellent if you want to put your money to work in a quality investment that you can leave to grow over time.

These funds are easy to understand, need minimal maintenance, and should perform well over the long term. There are no worries about constantly having to manage it.

Vanguard LifeStrategy funds are like the iPads of investing. They take a product category that was overly complex and made it super-simple for anyone. All while still delivering good results. 

Think there must be a catch – such as that LifeStrategy funds are sub-standard? You’re dead wrong.

The truth about investing is you can achieve life-changing results just by getting the basics right:

  • Diversify across the global equity markets.
  • Mix your risky equities with high-quality bonds for additional diversification.
  • Choose a low-cost fund. This way your money fattens your balance not some fund manager’s.
  • Choose passive investing for a great balance of results, simplicity, and best practice.

The Vanguard LifeStrategy funds tick all of these boxes. 

What are Vanguard LifeStrategy funds?

Vanguard LifeStrategy funds belong to an investment category known as multi-asset funds. 

Multi-asset products bundle multiple asset classes into a single package. It’s a convenient format that contrasts with the majority of funds that specialise in a single market. 

Traditionally, you’d construct a portfolio from several individual funds. Each would be invested in a particular market. 

For example, you’d choose one fund for UK shares1. Another for emerging markets. Yet another for government bonds, and so on. 

But LifeStrategy funds do away with all that. Instead they invest across global equity and bond markets in a one-er.

It’s like buying a multi-pack of crisps. Except this bumper deal enables you to scoop the major investment flavours in one easy purchase. 

This is known as a fund-of-funds approach. That’s because a Vanguard LifeStrategy fund nests several index funds inside it. 

Each nested fund ensures you’re covering a major market. For example here are the individual funds that the Vanguard LifeStrategy 60 fund automatically invests in for you:

A table showing that Vanguard LifeStrategy funds contain a portfolio of index funds investing in every major world market

Those underlying funds amount to an instant portfolio. Et voila! You’re now diversified around the world in thousands of shares and bonds. But instead of you doing the work, Vanguard did it for you.

Who is Vanguard?

Vanguard has grown to become one of the biggest asset managers in the world. It is famous for index funds and driving down investment costs on behalf of consumers.

Vanguard was founded in 1975 the US by the late John Bogle. Bogle was a visionary. His mission was to offer a better deal to investors and disrupt the fund industry.

It took decades, but Bogle ultimately won the argument. Vanguard’s success forced competitors to respond with their own ranges of cheap index funds and ETFs.

When Vanguard arrived in the UK in 2009 it repeated the trick.

UK investors have enjoyed a cheaper and wider range of investment products ever since. Index tracking funds continue to take market share from the traditional fund industry.

Which Vanguard LifeStrategy fund?

There are five LifeStrategy funds in the range. How do you pick one?

The key difference between the funds is their asset allocation split between equities and bonds. 

Here’s the strategic asset allocation for each Vanguard LifeStrategy fund:

Fund name Equity allocation Bond allocation
LifeStrategy 20 Equity Fund 20% 80%
LifeStrategy 40 Equity Fund 40% 60%
LifeStrategy 60 Equity Fund 60% 40%
LifeStrategy 80 Equity Fund 80% 20%
LifeStrategy 100 Equity Fund 100% 0%

At one end is LifeStrategy 100. It’s purely invested in equities.

LifeStrategy 20 is at the other end. It is 20% allocated to equities, with the rest in bonds.

The rule of thumb is: 

The higher the percentage of equities in a Vanguard LifeStrategy fund, the better its prospects for growing your wealth in the long-term. 

Equities have historically been the best performing asset class over most periods of at least ten years. 

But there’s a trade-off. Equity-dominated portfolios are riskier. They’re prone to falling harder and faster during stock market crashes and bear markets.  

The role of bonds in a portfolio is to take the edge off such stock market slumps. 

Bonds have historically earned less than equities over the long-term. But they’re typically less risky in the short-term. That’s because bonds can weather recessions better than equities. 

Bonds may even rise in value during a stock market crisis. 

Think of equities as wealth rocket-boosters that are prone to misfire. 

Bonds can act as parachutes that soften the landing.

However, they don’t always work. And their extra weight slows down your rocket ship a little over time. 

In short, picking the right Vanguard LifeStrategy fund means balancing the amount of growth you need versus the risk level you’re comfortable with.

Choosing more equities means exposing yourself to more risk in the hope of greater gains.  

Expected equity/bond portfolio behaviour

Here’s how Vanguard illustrates the risk vs reward compromise using historical UK returns:

A chart showing average returns plus max gains and losses for different equity/bond portfolios

Notice that the average annualised return increases as you hold more equities. But the downside risk is also more severe.

The minus number reveals the worst return each portfolio suffered in a single calendar year from 1901-2020. 

This encapsulates the expected behaviour of the different Vanguard LifeStrategy funds. 

You can’t expect a repetition of those precise numbers. But you can expect the LifeStrategy 20 fund to suffer less than riskier, equity-heavier versions in downturns. (Not always, not all the time. But that’s the historical trend.)

Conversely, the Vanguard LifeStrategy 100 is likely to deliver the best returns over the decades. (No guarantees, mind.) Yet watching 50% of your wealth vaporise in a year can be a sickening experience. And this is almost certain to happen at some point. 

The risk is that you then panic. You sell up and lock in your losses. Or you lose a large amount of money just before you need it and don’t have time to wait for a bear market recovery. 

That’s why choosing a LifeStrategy 100 or even a LifeStrategy 80 fund based on long-term performance is not a no-brainer. They’re too risky for some people.

Which is the best Vanguard LifeStrategy fund for me?

The best Vanguard Lifestrategy fund depends on your attitude to risk and need for growth.

The less growth you require to achieve your financial goals, the less point there is taking on the risk inherent in a 100% equities portfolio. 

How much growth do you need? Work that out using our guide to creating an investment plan based on your circumstances.

If you dream of financial independence then try this walkthrough on how to achieve FI.

We can also help you answer the question: How much do I need to retire?

To understand more about handling risk, you should read our primer about risk tolerance.

Many people though can’t find the time to make a plan or get to grips with their risk tolerance. Or they discover it’d be easier to nail jelly to a wall.

Instead, you can substitute rules of thumb for a proper plan – at least to get started.

One of the best known rules of thumb suggests you choose your equity allocation like this:

110 minus your age = your equity holding

You can then round up or down to the nearest Vanguard LifeStrategy fund.

Potentially you can even blend Vanguard LifeStrategy funds. Take your equity allocation to 50% or 70% or whatever you prefer.

Rule of thumb assumptions

The rule of thumb above assumes young people can afford to take more risk than older investors.

That’s because young ‘uns have more working years to recover from a stock market crash. And they’ve less wealth on the line in the first place.

But while that’s broadly true, every individual is different. 

Ultimately, it’s best to choose a fund in line with your risk tolerance. Because even seasoned investors can find stock market crashes very hard to handle.

Know though that the industry default position is a 60/40 equity/bond asset allocation. That equates to the LifeStrategy 60 fund.

As you close in on your goal, you can mitigate the danger of a stock market crash by transferring from riskier funds into the less volatile LifeStrategy 40 or LifeStrategy 20 fund.

It’s definitely time to consider doing so once a big financial objective (such as retirement) lies within seven years.

Vanguard LifeStrategy performance

Compare the Vanguard LifeStrategy performance below. The graph shows you the cumulative return for every fund in the range since launch in 2011:

A chart showing Vanguard LifeStrategy performance since launch

Source: Trustnet. Dividends reinvested. The table shows nominal annualised returns.

As a passive investing product, Vanguard LifeStrategy returns are in line with stock market performance and your bond allocation.

Over the last 11 years, you’d be happy with your choice.

Perhaps you’d be less stoked about results over the last year. But that’s not a problem confined to the LifeStrategy range. 

Equity and bond markets have had a terrible 2022. This happens occasionally. It’s why investing is said to be risky. Sometimes nothing seems to work.

But given time, world markets recover. Batten down the hatches, ride out the storm, and a diversified portfolio like Vanguard LifeStrategy should deliver over longer periods.

And, as you can see above, the actual performance of the LifeStrategy funds over the past decade or so does resemble the historical illustration we looked at earlier in the piece.

Vanguard LifeStrategy 100 leads the pack, followed by 80, with LifeStrategy 20 bring up the rear.

Vanguard LifeStrategy fund performance in a recession

Where the bond-orientated funds will often show their mettle is in a crash.

Look at the plunge that happened a few months before the June 2020 line in the graph below. You’re seeing the gouge torn out of the markets by the pandemic. 

Markets recovered in record speed that time due to massive government intervention. 

But the crash still illustrates why bonds can be useful. 

Because we can see how the usual LifeStrategy pecking order was completely reversed:

A chart showing how Vanguard LifeStrategy funds performed during the coronavirus crash

Investors anticipated the mother of all recessions, so they sold down shares. Hence the Vanguard LifeStrategy 20 performed best. Meanwhile the LifeStrategy 100 cratered over 25%.

Granted, the LifeStrategy 20 did still fall nearly 10%. But its large bond allocation acted as a counterbalance to out-of-favour equities. And it rebounded faster than the others, too. 

The other LifeStrategy funds dropped progressively more, in relation to bond allocation. 

It didn’t matter much in 2020. Because as I said it proved to be the shortest bear market of all time!

However the defensive qualities of bonds could have played a more useful role if the slump lasted years. That does happen.

Nothing is guaranteed

Sadly, bonds don’t always ride to the rescue. High inflation is particularly toxic for bonds and equities.

Both can plummet like Holmes and Moriarty at the Reichenbach Falls when inflation spirals.

That’s what’s happened in 2022. And it’s been bad news for the bond-heavy LifeStrategy funds:

A LifeStrategy performance chart showing the damage done by high inflation

The purple line of the LifeStrategy 100 fell furthest in February and much of March. Just as you’d expect when stock markets come under pressure. 

But from April, the hierarchy inverted. Since May the funds have buckled in proportion to their bond holdings. LifeStrategy 20 has actually done worst. 

This is an unusual situation, though not unprecedented. Markets are capricious. Sometimes investing reality doesn’t match expectation.

Vanguard LifeStrategy performance charts: what they don’t tell us

Performance charts contain helpful lessons. However they are a bad way to choose between funds.

It’s a hard fact for new (and indeed old) investors to accept. But it is true:

  • You do not have the ability to predict which investments will outperform in the future.
  • Past performance charts do not contain predictive data. This is stated in all fund literature.
  • You can pay someone else to predict the future. But they will probably either overestimate their ability, or else charge you so dearly that you’re actually worse off anyway.
  • In many cases they overestimate their ability and charge you dearly. This eats up your profits.

Passive investing products have surged in popularity over the past decade. That’s because the evidence is overwhelming that most people are better off with a passive strategy.

Though past fund performance is not relevant, historic asset class returns do matter.

You can expect a highly-diversified portfolio of equities to outperform bonds and bonds to outperform cash, over the long term. Otherwise, investors would not invest in riskier assets.

Equity returns are your reward for taking the risk that for some years – even decades in extreme cases – equities underperform bonds and cash.

The following three articles explain why you should ignore past performance as a variable, and be wary of anyone’s claims about investing skill:

Vanguard LifeStrategy portfolio

To check the portfolio of each Vanguard LifeStrategy fund you can go to its home page. 

Here’s the full line-up.

Once you’re on your fund’s page, tap on the Portfolio Data tab. 

Now you can see every individual index fund that comprises your LifeStrategy’s portfolio. 

However to save you time, below we’ve plucked out Vanguard’s breakdown of the underlying asset classes held in each portfolio.

(The bond duration data is from Morningstar.)

The Vanguard LifeStrategy 100 portfolio

A table showing the Vanguard LifeStrategy 100 portfolio
  • 100% equities, 0% bonds
  • Bond duration: No bonds, so not applicable

The Vanguard LifeStrategy 80 portfolio

A table showing the Vanguard LifeStrategy 80 portfolio  
  • 80% equities, 20% bonds
  • Bond duration: 8.92

The Vanguard LifeStrategy 60 portfolio

A table showing the Vanguard LifeStrategy 60 portfolio  
  • 60% equities, 40% bonds
  • Bond duration: 8.98

The Vanguard LifeStrategy 40 portfolio

A table showing the Vanguard LifeStrategy 40 portfolio  
  • 40% equities, 60% bonds
  • Bond duration: 9.02

The Vanguard LifeStrategy 20 portfolio

A table showing the Vanguard LifeStrategy 20 portfolio  

  • 20% equities, 80% bonds
  • Bond duration: 9.01

What are the Vanguard LifeStrategy fees? 

Vanguard LifeStrategy fees range from 0.24% to 0.30% depending on the fund in question. 

The Ongoing Charge Figure (OCF) of all Vanguard LifeStrategy funds is currently 0.22%. 

Next we must add the (tiny) transaction costs. They vary by fund. 

  • LifeStrategy 100: 0.02% (transactions) + 0.22% (OCF) = 0.24% total
  • LifeStrategy 80: 0.04% (transactions) + 0.22% (OCF) = 0.26% total
  • LifeStrategy 60: 0.06% (transactions) + 0.22% (OCF) = 0.28% total
  • LifeStrategy 40: 0.06% (transactions) + 0.22% (OCF) = 0.28% total
  • LifeStrategy 20: 0.08% (transactions) + 0.22% (OCF) = 0.3% total

What does that total cost percentage mean?

Let’s say your total costs are 0.28%. Essentially, you pay Vanguard £2.80 annually to manage your fund for every £1,000 you have in it.

That’s highly competitive. You can compare it against similar funds by tracking down their OCFs and transaction costs. 

Both numbers can be found in the Fees And Expenses section of each fund’s Morningstar page.

Some managers refer to the Total Expense Ratio (TER). That is broadly comparable with the OCF.

Ignore references to Annual Management Charges (AMCs). These exclude important costs and are misleading.

Best way to buy Vanguard LifeStrategy funds

You can buy and sell Vanguard LifeStrategy funds through Vanguard or through other financial platforms. See our broker comparison table.

Currently, investing directly with Vanguard is the cheapest option if you’re just starting out:

Investing in a Stocks and Shares ISA

  • Use Vanguard if your fund portfolio is less than around £40,000.
  • Check out Lloyds Bank Share Dealing if your fund portfolio is worth more than £40,000.

Investing in a SIPP

  • Use Vanguard if your fund portfolio is less than around £125,000.
  • Check out Interactive Investor if your fund portfolio is worth more than £125,000.

Simply choose your platform, set up a direct debit, and then employ your platform’s regular investment tools to automate your investing.

Vanguard LifeStrategy: the good

You get a low-cost, globally diversified, passive investment product in one simple package. It’s an off-the-shelf portfolio that’s extremely low maintenance.

Vanguard automatically rebalances your holdings daily. This helps control risk. And it saves you the time and cost of doing it yourself.

Each LifeStrategy fund’s asset allocation is clearly fixed between equities and bonds.

In contrast rival multi-asset funds typically allow asset class exposure to float over a wide range. That means you don’t really know what you’re getting.

Vanguard is FCA-authorised. The LifeStrategy funds are UK domiciled, so they benefit from the UK’s FSCS investor compensation scheme.

Vanguard LifeStrategy: the bad

The funds hold more UK equities than investing theory suggests is optimal. This skew is called ‘home bias’. It typically exists because people like holding shares in firms from their own country.

The LifeStrategy prospectus states that the UK stock market typically accounts for 25% of each fund’s equity allocation. You’d expect around 4% UK in a global index fund free of home bias.

Taken to extremes, this tendency can leave investors under diversified. But Vanguard hasn’t overdone it. It’s more of wrinkle than a rankle.

Another snag: if your fund is more than 60% invested in bonds and cash at any point during its accounting year then its distributions count as interest payments – not as dividends.

Interest payments are taxed at a higher rate than dividends. So beware if you hold LifeStrategy 20% (and potentially LifeStrategy 40%) outside of your ISA and SIPP tax shelters.

Note: this is a general issue with bond fund taxation. It’s not Vanguard-specific.

Vanguard LifeStrategy: the indifferent

LifeStrategy funds do not invest directly in other asset classes like property and gold.

However, they do hold equities with exposure to these markets (for example, mining companies). And you can add other asset class funds to your portfolio later with specialist index trackers if you want.

Multi-asset funds like LifeStrategy work by holding individual funds within a single ‘fund-of-funds’ wrapper. It is slightly cheaper to hold the underlying funds separately. With LifeStrategy you pay a small OCF premium for the convenience of buying in bulk.

That said, your overall costs may still be cheaper with an all-in-one fund. You’re not paying dealing fees for trading and rebalancing multiple funds.

Either way, the time savings alone are well worth it.


See how rival funds-of-funds stack up.

Read more on the best global trackers.

Vanguard LifeStrategy ETFs exist but not on the London Stock Exchange. These products are multi-asset just like their fund counterparts. Intriguingly, they are free of home bias. 

You can buy the LifeStrategy ETFs if your platform enables you to trade ETFs on the German, Dutch, and Italian stock exchanges. 

Some financial advisors may also be able to offer home bias-free versions of LifeStrategy. They need to access the LifeStrategy MPS Global range. 

Finally, if you’re pondering the differences between the inc or acc versions, this accumulation vs income funds post should help.

Are Vanguard LifeStrategy funds good?

Vanguard LifeStrategy funds are a good investment if you need to invest money to achieve a major financial objective.

Think retirement, financial independence, and sending the kids to Uni in a decade or two.

Are they always best? No, you can always find a different investment which would have been amazing in retrospect. One year it’s crypto, the next it’s oil futures. 

But absent a crystal ball, you’re best off choosing a simple, passive, diversified portfolio that captures the growth of the world’s major markets. 

Vanguard LifeStrategy does that at a low cost. And you aren’t sacrificing much in the process.

The crucial decision is selecting which version best fits your financial objectives and risk tolerance. 

After that you can just review your LifeStrategy fund once a year, and learn a few simple portfolio management techniques that help control your risks as you age.

Take it steady,

The Accumulator

  1. Also known as equities. []
{ 279 comments… add one }
  • 1 Ash October 19, 2011, 1:27 pm

    Good stuff, now if someone will just start selling these with no monthly fees that would be lovely. For now I’ll stick with my HSBC trackers. £1.50 a month is a bit rich for my blood.

  • 2 The Investor October 19, 2011, 1:54 pm

    I think these are a killer product for mass market passive investing. The fees are trivial compared to the thwack they typically take from fund managers et cetera, and they deliver an all-in-one shot solution. Personally, I’d happily point friends and family towards them.

  • 3 Ben October 19, 2011, 3:55 pm

    Its a brilliant product – thanks for the article

    Can someone give me a boot up the backside to buy it through AT?

    I have 1 ISA going spare and this looks perfect

    Would prob reduce my pound cost averaging to annually to make things even lazier and attract no dealing costs (just the AMC)

    that said that would only save me £18 so its hardly a big deal

  • 4 Ham October 19, 2011, 10:27 pm

    Great article – I was wondering how long it would take for you to cover these funds, since the 80% fund through AT is exactly the approach I decided to take for my pension contributions through a SIPP.

    I do wonder, though, how easy it will be to adjust the asset allocation towards a higher bond allocation as I near retirement (still a long way away now). Do you have a good strategy for this?

    Keep up the great blog!

    P.S. Your article last week makes me think it may be more cost effective to change to SippDeal to hold this fund. Watch this space…

  • 5 Andrew Hallam October 20, 2011, 1:13 am

    You’re doing people a HUGE service when you write articles like this. I hope you end up with thousands of readers a week!!

    Keep up the great work!


  • 6 The Investor October 20, 2011, 10:06 am

    Thanks Andrew, much appreciated!

    (Also, you might be surprised — we already get thousands of readers a week, although the bulk of them come in via older articles, as with most websites…)

  • 7 Andrew Hallam October 20, 2011, 11:36 am

    Wow! Incredible volume! Well done!

  • 8 A Fan October 20, 2011, 5:10 pm

    I declare a vested interest here having recent bought into some of these for my ISA. Agree with everything above.

    I’ve also been keeping an eye on these vs my own self-managed index tracker SIPP portfolio. This shows me performing almost slightly worse than the LifeStrategy funds (equalling gains but exceeding losses) except that I’m also taking about a 10% higher equity allocation i.e. more risk as well as personal “skill penalty”. So, I am seriously considering moving my SIPP over to LifeStrategy as well (despite the punitive AT charges, grumble).

    This has shown me that not only am I a bad investor, I’m even a poor passive investor as I can’t beat an off-the-shelf asset allocation on level ground.

    A good way to see this is to chart all the LifeStrategy funds together in e.g. TrustNet to see a good picture of the relative risk difference (20% -> 100% equity) – there isn’t much historic data though as they’re new but we have been going through a recent period of unprecedented market volatility the past few months. The relative performance is informative a la Hale. Then also chart this against your own portfolio (if you can bear to crawl through TrustNet’s interface to input all your holdings!). Well worth a few minutes for anyone considering these Vanguard funds or a move over.

  • 9 Bopper25 October 20, 2011, 10:02 pm

    Fantastic blog, I stumbled across this site a little while ago and its transformed my investment thinking. With a combination of your articles and the excellent book by Tim Hale, I’m a definite convert to passive investing.

    Quick question though. Been looking at drip feeding into a SIPP on SippDeal, having looked everywhere on their site are the Vanguard funds definitely available for regular investing? They don’t appear on the fund list! Any help appreciated, thanks

  • 10 Ham October 21, 2011, 9:48 am

    Hi Bopper25,

    The Vanguard funds are available via SippDeal, I asked them last week. This was their response:

    “If you are talking about the below fund, I can confirm that Sippdeal can invest in it.

    Vanguard LifeStrategy 80% Equity Fund Vanguard Group Inc ICVC B4KWNF9 & B4PQW15 UK

    Because this fund is not on our funds list there will be a custody charge of £12.50 per quarter.”

  • 11 saveonarola October 21, 2011, 3:56 pm


    As Monevator recently reported (http://monevator.com/2011/10/07/bestinvest-vanguard/), you can now buy Vanguard with no dealing charges through Bestinvest. However, as the article explains, Bestinvest charges a custody fee of £12.50+VAT per quarter for funds that pay no commission, so £60 a year. I haven’t done the sums, but I guess AT is cheaper unless you have a substantial lump sum to invest up front, and then want to drip-feed after.

    Does anyone see a conflict between the one-stop-shop approach of these funds and the eggs-in-one-basket risk? I know that FSCS covers investments with a single firm up to £50K, but still, would anyone worry about having their entire portfolio in one fund in one firm?

  • 12 Bopper25 October 21, 2011, 8:07 pm

    Thanks Ham – appreciated

  • 13 femur October 22, 2011, 6:41 pm

    These sound great for someone like me who isnt too bothered about being hands on with investing, but am I correct in thinking they are only available through a few routes? Currently I’ve got some investments through III but I’m struggling to find out if these Vanguard funds are available through their site.

  • 14 femur October 22, 2011, 6:59 pm

    And could somebody more knowledgable than myself explain the difference (if any) between the listed funds

  • 15 saveonarola October 23, 2011, 12:24 pm


    Vanguard are not currently available through iii. This article explains where and how you can get them:


    (Links also listed under the above article as ‘further reading’.)

    The difference between Accumulation (ACC) and Income (INC) is that ACC automatically reinvests dividends, whereas INC pays out dividends. INC is for people who want or need an income from their investments; ACC is for people who just want to reinvest the dividends to get the maximum capital growth. If the platform/broker charges for the reinvestment of dividends, ACC gets around this.

  • 16 The Accumulator October 23, 2011, 12:33 pm

    @ Ash – that’s hilarious. An investor after my own heart – dicing costs with a laser beam.

    @ Ham – great point, I’m going to have a think about that and maybe make that the subject of my next post.

    @ A Fan – good on you! It’s a rare and brave investor indeed who admits that they’ve underperformed. I suspect most don’t even know.

    @ saveonarola – for sure there is a slight institutional diversification issue here. I would personally rather not stake my entire future on any one broker, fund firm or single other entity no matter how strong they appear to be. After all we diversify across continents to guard against the convulsions of nations. Still, I don’t think that negates the value of these funds. The danger of complexity in the market leaving millions of Britons under saving for their future outweighs the risk of a trillion dollar company like Vanguard going kaput, in my view.

    @ femur – you’re right, there’s only a few routes available and iii isn’t one of them. Here’s a piece about the main options available: http://monevator.com/2011/10/07/bestinvest-vanguard/

    The Acc refers to accumulation units and the Inc to income units. Acc will reinvest your dividends for you. Inc will pay them out to you. Here’s a piece that gives you the full SP: http://monevator.com/2011/09/06/income-units-versus-accumulation-units-difference/

    @ Bopper, Andrew & Ben – thanks for your comments. Very much appreciated.

  • 17 Paul Claireaux December 6, 2011, 1:39 pm

    These are interesting funds but the problem with simply using Gilt and FI tracking funds to reduce risk is that at some points in the fixed interest market cycle (perhaps especially now) this stock gets quite risky.
    Perhaps more so than equities if worries about future inflation take hold.
    So I’m inclined to water down risk with cash deposits at the moment.
    Captial secure and with interest rates only having one way to go.

    Cash funds in collectives are of course a different question – with their own risk issues. I’ll leave you to write another peice on that.

  • 18 Ben December 6, 2011, 2:43 pm


    interesting points – you think you need to worry over the long term though? would you see your cash deposits being a good preserver of wealth over longer time periods? Or are you just considering the near term? Do you mean gilts are risky as in overvalued or as in volatile?

  • 19 Paul Claireaux December 6, 2011, 7:23 pm

    Yes well actually cash deposits normally do OK versus inflation but from time to time and esp now they’re allowed to be eroded as debt get’s inflated away.
    Trouble with that inflation is that eventually it kicks off higher yields/ lower prices in Gilts.
    So yes, keep plenty of cash for opportunities at times like these.
    Fixed interest fund volatility is a function of many things with “duration” being a big determinant. So i prefer to stay with short UK gilts in these conditions. I’ll take the inflation hit on the chin for now.

  • 20 The Accumulator December 6, 2011, 9:04 pm

    I think one of the advantages of a fund like this is the package deal enables you to power down the inclination to meddle or to try and predict the market.

  • 21 The Investor December 6, 2011, 9:16 pm

    You may or may want to hold more cash, but that’s independent of your choice of vehicle for how to hold your other asset classes. If you want to hold more cash, sell some of the Lifestyle tracker and put the proceeds into a savings account.

    Unless you’re buying something like Rothchild’s investment trust specifically in pursuit of the managers’ purported asset allocation skill, you don’t want your equity vehicles to be holding lots of cash anyway, or varying the amount on their own whims. It’s impossible to know what exposure you’ve got in that case.

    The Vanguard Lifestyle funds are designed for people to fire-and-forget, at most topping them up with new savings or switching to higher/lower equity ratios with changing circumstances. They aren’t designed for more active investors who want to try to time markets. For most Vanguard owners, strategic disinterest will be a blessing, and they’ll do better than the average amateur hedge fund manager next door (which who knows may include me! 😉 )

  • 22 Paul Claireaux December 6, 2011, 9:31 pm

    It rather depends upon the wrapper.
    With a simple (taxed) funds or stockbroking account then selling assets to go to bank deposits and then buying back later is fine.
    But with ISAs and SIPPs there are annual allowance, accessibility and tax relievability issues to consider which generally mean that once you’ve invested it’s best to hold your funds within the wrapper up the point of needing the funds to spend.
    My point related to the challenge of finding decent money market type funds within these wrappers that might be robust in the event of market meltdown of the underlying banks – given that deposit protection does not apply to deposits held within wrappers !
    Anyway – that’s all a bit heavy.
    RIT capital looks nice – try also “personal assets trust” – even lower volatility.

  • 23 The Investor December 7, 2011, 4:20 pm

    @Paul — Absolutely, I agree the lack of symmetry between cash and share ISAs is annoying. But not a particular issue for the lifestrategy funds more than others.

  • 24 The Investor December 7, 2011, 5:31 pm

    P.S. Personal assets are legends! Widespread sadness among a certain cohort of private investors when the old manager Rushbrook died a while back.

  • 25 Matthew Tompsett May 2, 2012, 1:16 pm

    I’ve been reading your articles on Vanguard Lifestrategy with great interest and I’ve been wanting to open a S&S ISA, this looks like a good option for it. Is it better to put in a lump sum or pay in monthly into a fund like this? I can put aside £200 a month but I also have a lump sum I can put straight it.


  • 26 The Accumulator May 5, 2012, 9:04 am

    Hi Matthew, the evidence suggests that you’ll be financially better off if you put a lump sum in. However, many people find it easier to drip-feed in to avoid the alarming scenario of putting it all in on day 1 and then watching it fall heavily into the red when the market slumps on day 2 (or shortly thereafter). In the long-term it won’t make much difference. Good luck!

  • 27 Simon May 11, 2012, 4:24 pm

    Thanks for this article, and the countless other useful articles I’ve recently found on this site.

    I take your point about trillion dollar companies going kaput, but generally speaking, to what extent, if any, would someone buying a fund such as this be protected should the worst happen? I guess there’s no equivalent of the FSCS guarantee for savers?

  • 28 Simon May 11, 2012, 5:29 pm

    Sorry to bombard you with questions, feel free to merge my comments.

    What would you consider a good return for a fund such as the 60% equity version over the first year of its life? I can see how it’s doing now, with a few weeks until its anniversary, and it doesn’t look spectacular, but I’ve no idea what would be considered “good” (and I do appreciate this should always be viewed as a long term investment).

  • 29 The Accumulator May 12, 2012, 1:12 pm

    Hi Simon – you’re covered for £50K. http://www.fscs.org.uk/what-we-cover/eligibility-rules/compensation-limits/investment-limits/

    There is no answer to your second question. It depends entirely on the market. An index fund doesn’t deliver a ‘good’ return. It delivers the market return.
    Consider that, over the long-term, UK equity (i.e. 100% in stocks) has delivered around a 5% real return. But it doesn’t deliver that every year. The funds you choose are a compromise between your risk tolerance, financial goals and time horizon. A one-year view tells you nothing about a fund.

  • 30 EP July 4, 2012, 8:30 pm

    Firstly within the Vanguard Lifestrategy 100% equity fund the portfolio includes 29.8% Vanguard FTSE U.K. Equity Index Fund and a separate 5% Vanguard FTSE U.K. All Share Index Unit Trust – what is the difference between these two – it seems to me they are effectively the same and if so what is the point?

    Secondly I was thinking of using the Lifestrategy 100% equity fund to gain greater diversification and then buy bonds funds separately to achieve my overall desired asset allocation e.g. 70% of my ISA allowance in Lifestrategy 100% and 30% inBonds – any views?

  • 31 The Accumulator July 4, 2012, 9:24 pm

    Great spot, EP. I haven’t noticed that before. I’ve done a bit of digging and it looks like a vehicle they use in a pension fund they run for Standard Life. See the factsheet: http://bit.ly/M6ivtA
    And the Morningstar snapshot: http://www.morningstar.co.uk/uk/funds/snapshot/snapshot.aspx?id=F00000LWVH

    It looks nigh on identical to the UK Equity fund, as it should do, because both are designed to track the FTSE All-Share index. Why it’s in the 100% LifeStrategy fund is a mystery to me. It’s not in the 80%er.

    I don’t see any problem with running your bond allocation separately. You’ll just need to remember to rebalance every now and then. Is there a particular reason why you don’t want to let Vanguard handle the bond aspect too in a LifeStrategy fund.

  • 32 The Accumulator July 5, 2012, 8:52 am

    I forgot to say that for our purposes the differences between a Unit Trust and Vanguard’s advertised index funds which are all OEICs (Open Ended Investment Companies) are negligible.

  • 33 EP July 5, 2012, 11:50 am

    Handling the bond allocation myself would I feel make it easier to lifestyle my portfolio. I am currently wresting with my passive investment options – Life strategy or LS + bonds or individual funds.
    Another Vanguard query whilst I’m here – What is your view on the UK Equity Index Fund vs UK Equity Income Index Fund? It would seem to me that the former will already include all of the holdings contained in the later albeit as part of a larger pool and holding both would be duplication unless of course you wanted an ‘income dividend yield tilt’.

  • 34 The Accumulator July 5, 2012, 7:05 pm

    @ EP – Here’s a piece I wrote about lifestyling your portfolio by holding two complementary Vanguard LifeStrategy funds: http://monevator.com/lifestyle-vanguard-lifestrategy-funds/

    I agree that you’d get a lot of unnecessary duplication if you held the Equity Income fund and the UK Equity fund. I’m still in the accumulation phase of my investment life, and I have yet to come across any compelling reason for me to hold an income orientated fund if I’m not drawing income. The one reason I would is if that fund’s high yield components made it a close proxy for a value fund.

  • 35 HHR July 13, 2012, 6:36 pm

    Hi Accumulator
    thanks for this great post and your blog (thanks to The Investor of course).

    I haven’t got a trading account yet, and i’m looking to invest around £20K lump (then monthly or quarterly additions) into the Vanguard LifeSTrategy.

    So, after reading lots of your other posts about trading accounts and fees etc, i’m more confused than before…
    if i only want to hold this ONE fund, where should i open an account?
    i will have to open a non-ISA account for this year (as unfortunately I’ve opened a S&S with Santander earlier this month and then decided to cancel, so that subcription for this year is gone). and i want to shift as much as i can into S&S ISA each year from next tax year (i presume i can transfer from non-isa to isa within a dealing account platform).

    Is Hargreaves Lansdown the correct choice for me, with only this one fund?

  • 36 Julius August 21, 2012, 7:15 pm

    I’m early on in my passive investment life early 20s and willing to take some risk with the Vanguard Lifestratergy 80% fund with regular deposits. As I grow older I’m just wondering how with a fund like this I can shift the allocation so that in my 30s, 40s and 50s the amount of equity funds reduces and shifts more towards bonds in order to reduce the overall risk?

    FYI I’m wanting to invest in this sort of fund as an addition to money for later on in my life and into retirement. I’ve got a pension at work which I currently max out to get the most amount of my employers pension contributions. So I’m wanting to save some additional money for the long term in a S&S ISA.

  • 37 The Accumulator August 25, 2012, 8:23 pm

    @ Julius – this piece explains how you can lifestyle from equity to bonds using two LifeStrategy funds: http://monevator.com/lifestyle-vanguard-lifestrategy-funds/

  • 38 david stuart November 18, 2012, 7:00 pm

    I want my longterm passive portfolio to be two funds–asset allocation

    40%global equity
    20%global smaller companies

    vanguard lifestrategy an a global smaller companies index

    how do i distribute the 10k?


  • 39 Andrew February 5, 2013, 6:56 am

    I recently read in the book Contrarian Investment Strategies, that after inflation stocks beat bonds 100% of the time over 15 years (between 1948-1996).

    If this is true then why have the age related rule of having your age in bonds? Surely it would make more sense to hold 100% equity until you’re 45 and then slowly transition more into bonds from then on.

    Also, are these lifestrategy funds really worth it over just a normal FTSE all share index tracker? The fees are double, is diversification really worth that?

  • 40 The Investor February 5, 2013, 12:48 pm

    @Andrew — If you don’t care about diversification and are prepared to risk volatility and the higher potential for long-term capital loss, then it’s not worth paying extra for LifeStrategy, no.

    But few people are really in that position, whatever they may think after looking at a graph of long-term returns from shares.

    I’m not knocking your thinking by the way — I never hold much in the way of bonds myself — but I understand why they’re put forward for most people.

    Just because US stocks beat bonds over 15 years for a five decade period, doesn’t mean they always will. I think the odds are strong, but it’s not a certainty. Look at Japan for an obvious counterpoint — the market is still down 75% there after more than 20 years.

    I’m going to do a post on this, so watch this space. 🙂

  • 41 antonius natale April 27, 2013, 2:09 pm

    Thanks to all for this thread. The Vanguard Lifestyle funds have to be one of the best investment options available today.

    However, there are a few questions I was hoping the forum could answer:

    1. How is the US vs UK Vanguard Lifestyle fund different. Looking at the total value of these funds, the UK version is quite a lot smaller e.g the Equity 100% version is only £56million.

    2. I see the value of the automated re balancing and inclusion of bonds, but the UK version are only UK bonds.
    To ensure proper global bond diversification, would it not be better to invest in the Vanguard Lifestrategy 100% equity AND Vanguard Global Bond index in the ratio that suits a person’s risk?

    3. From reading all the posts in this forum, it appears the two best options for investment are either Hargreaves Lansdown (HL) or TD Direct.
    To clarify their expenses,
    HL – opening an account is free. Minimum investment in vanguard funds is £500 or this can be set up with direct debit of £50 minimum. There is a £250 minimum for any top up.
    HL charges £2/month for any vanguard fund.
    In addition to the initial purchase fee of 0.25%.
    So for a year, on e.g a lump sum of £10,000 invested the total cost should be (£2×12 months) + 0.25×10,000 / 100 = 24 + 25 = Total £49

    Can anyone make a direct comparison with TD?

    4. While I have been reading and researching a lot about Vanguard, I can’t see any better alternatives.
    The US has a service called Betterment which looks quite impressive but is not available in the UK yet.
    I’m open to any other suggestions on investment options that would be better than Vanguard based on long term (15+ years investment accepting medium – high risk).

  • 42 Andy May 19, 2013, 12:28 pm


    1. If you are a UK based investor, you want the UK Vanguard fund. The US version will be biased towards US stocks for US investors. There may also be tax disadvantages. The UK version will be smaller than the US version since the UK version has only recently been introduced.

    2. Bonds generally are included in portfolios as a safe asset to reduce volatility. You don’t want the extra risk of currency fluctuations affecting your bond investments. So UK investors want to have UK bond investments.

    3. Perhaps you will find your answer to broker charges here – http://monevator.com/compare-uk-cheapest-online-brokers/

    4. I know of no better option than Vanguard for UK investors.

  • 43 Matt Thompson May 31, 2013, 12:59 pm

    Hi there,

    I’ve been researching the best fund options to begin a passive investing strategy (with no small amount of help from this fine blog!) and I recently settled on Vanguard 100% equity with TD Direct. However, imagine my horror when having signed up to TD Direct for a regular investment account, Vanguard funds aren’t allowed to be traded via the regular investment tool! Which puts a bit more of the active into my passive life!

    Thought people should perhaps know this, as I haven’t seen it discussed in all my reading. Also, anybody have any ideas as to why this is??

  • 44 Jon Williams June 4, 2013, 8:40 pm

    Hi Matt,

    I recently made the same mistake – the Vanguard Funds were recently on the regular investment account but if you tried to set them up you got a page error; it seems on the recent update as a ‘workaround’ TD have simply removed the Vanguard funds.


  • 45 Bluejeansman July 26, 2013, 11:51 pm

    Just stumbled upon this article. Great job by Monevator as usual.

    Lifestrategy funds sound interesting to me too, but there are a few points I feel not explored in this article or comments. Let me explain. Would love to hear Monevator’s feedback. I will list them as pros and cons.

    Pros :
    – Simgle fund : simplicity. simplicity is always nice.
    – Only need 100K to go direct with Vanguard. Before lifestrategy, you would have needed close to half million quid to build a decent portfolio of handful of funds direct with Vanguard. Now just 100k will suffice.

    Cons :
    There is an often cited “bonds in tax sheltered part of your portfolio” mantra. This is a tax-efficiency basic advice in Bogleheads and often practiced by many passive wealth managers. Let me explain : Suppose you have 40K in an ISA and 60K outside an ISA, i.e a total of 100K to invest. Supose your asset allocation is 60/40 : i.e 60% stocks, 40% bonds. The advice here is to use only bonds in your ISA (40k) and stocks in the taxable part (60K) of your portfolio. The idea is that for higher rate tax payers income from bonds is taxed at higher rate than dividend income and capital gain. So, if you went for LifeStrategy funds, you would inadvertently hold bonds in taxable account which would subject you to higher tax rate.

    If your asset allocation changes tomorrow as you grow older, then what do you do ? Right now you have 60/40 but years from now you may want 40/60. In Vanguard US, they have “Target retirement fund” which slowly inches you to safety as you approach retirement date. Lifestrategy is not the same as “Target retirement”. Lifestrategy always holds a fixed percentage.

    tax treatment in case of sale : Are such funds treated as CGT or Income tax upon disposal ? With 100% stock fund or 100% bond fund, the answer is clear. But what is the tax treatment of Lifestrategy fund ?

    Doubts :
    How often do they rebalance ? When they say 60/40 asset allocation, how often do they keep tuning this AA ? Every month ? Does this create any “churning” in your portfolio and are there possible tax consequences ? If you did stocks and bonds yourself, you dont need to worry too much if your AA goes out of whack. You can use new money to even it out to your target AA.

    Love to hear people’s thoughts on all above points, especially Monevator’s

    Cheers !

  • 46 The Investor July 27, 2013, 11:43 am

    @BJM — Out and about today but here’s an answer to the life styling piece of your query:


    Naturally you should structure your investments to best fit your particular tax circumstances and pension plans etc. It’s impossible for us to cover even half the individual permutations in our articles. 🙂

    Thanks for reading and the kind words about the site!

  • 47 Bluejeansman July 28, 2013, 1:04 pm

    Thanks for that. I had missed that article. Agree that taking 2 lifestrategy funds L1 and L2, and going for a convex combination, for lack of a better word : p*L1 + (1-p)*L2 where 0 <= p <= 1 should work to get any desired AA between L1 and L2. As an extreme case, you could take L1 to be 100% equity Lifestrategy and L2 to be 100% bonds Lifestrategy, and it suffices to hold just these 2 funds in each of the 3 buckets : dealing account, ISA, SIPP. This would solve my question above about "Bonds in tax-sheltered" motto. However at the moment, Vanguard UK does not offer 100% bonds lifestrategy fund. I guess you could go for the 20% equity (i.e 80% bonds) fund, and 100% equity fund as your 2 funds.

    My doubt about how often Vanguard rebalances (and whether such "churning" will trigger extra tax liability) is moot point. For UK investors it does not matter, because : I quote from Bogleheads UK Investing Wiki : "UK funds do not pass capital gains on to investors, and UK investors are not liable for capital gains tax on unit trusts or ETFs until the asset is actually sold" so it should not matter. Let it "churn". Who cares ?

    But I am still doubtful about tax treatment of Lifestrategy funds (outside ISA of course) for (a) disposal, i.e sale (b) dividend :
    Take (a) : sale : did Monevator mention in another blog that individual gilts do not attract CGT upon disposal however bond funds are liable for CGT ? In that case, I guess whether one owns a 100% bond fund, or 100% stock fund or mixed (Lifestrategy) fund, you would be liable for CGT upon disposal (above the CGT limit blah blah blah). What about losses ? Can you offset losses ?
    Take (b) dividend : Tax treatment for dividend from stocks is different from dividend income from bonds. Therefore, for Lifestrategy fund, would Vanguard UK issue separate statements – or at least breakdown the two so you can see it in the tax stateemnt – for the stock part and bond part of the Lifestrategy fund that you own in your dealing account ?

    sorry I write lengthy, but there are details and covering the details makes it lengthy.


  • 48 The Accumulator July 28, 2013, 7:49 pm

    All interesting questions. As I understand it you pay capital gains on bond funds. Also, I believe a fund that holds 60% of its assets in fixed income or cash is considered to be a bond fund, so I assume distributions will attract income tax at your usual rate in that case. I haven’t investigated this in any great depth, so I could be wrong.

    Vanguard pride themselves on their low cost, investment-friendly approach so I doubt they will rebalance frequently. No doubt the answer is buried in their literature somewhere.

  • 49 Bluejeansman July 28, 2013, 10:22 pm

    Accumulator> so I doubt they will rebalance frequently.

    As I mentioned above, that is not a problem. They can “churn” however often they want. wont affect the UK investor. In the USA, all this frequent selling of stocks inside a fund by the mutual fund manager will be passed on to the investor as “capital gains distributions” and would be taxed, even if the retail investor did not sell the fund. Hence the concept of “tax-efficiency” in American mutual funds. Fortunately we dont have this extra problem this side of the pond. So, not an issue.

    Accumulator> Also, I believe a fund that holds 60% of its assets in fixed income or cash is considered to be a bond fund,

    Oh boy ! certainly not pleased to hear that. So if I went for a 40% equity Lifestrategy fund in taxable account, it would certainly not be a wise move at all tax-wise ? I guess worth checking with Vanguard UK if they separate the two dividend income (i.e equity part and bond part) in the tax statement. Even if they did that, if HMRC treats it as “bond fund” then no point arguing. Let me check with Vanguard UK anyway.

    As I said I would have liked a 100% bond Lifestrategy fund, then I could do my neat convex combo with 100% equity and 100% bond. Just 2 funds would have been needed to get any desired AA. Essentially keep stocks and bonds completely separate like milk and meat in some communities 🙂 so no mixup and overpaying of dividend taxes. Last thing I want to do is argue with HMRC.


  • 50 manw September 2, 2013, 9:44 pm

    Bluejeansman, very insightful.

    Did you speak to Vanguard UK? (re HMRC treating their +60% as a bond fund)?


  • 51 Dan October 25, 2013, 3:31 pm

    Hi, Can anyone tell me if HL is still the best choice if one were to put a lump sum of £100,000 into a Vantage SIPP and invest entirely into a Vanguard LifeStrategy fund?

    I would also look to add monthly contributions on top of this

    Many thanks

  • 52 The Accumulator October 26, 2013, 1:30 pm

    Hi Dan, HL are going to announce a new pricing structure at some point in the next few months. It looks like it will be a tiered percentage charge of your assets. Given the size of your lump sum, it would be worth your while to take a look at a fixed free provider like Alliance Trust or Sippdeal.
    Also see: http://monevator.com/compare-uk-cheapest-online-brokers/

  • 53 Dan October 27, 2013, 7:46 am

    Thanks Accumulator – that is well-timed advice and I will make sure to read the other article. Many thanks as always.

  • 54 Paul October 29, 2013, 2:13 pm


    Great post, thank you. I’m 33′, never invested a penny before in my life. I have a standard teachers pension, which I understand isnt really invested, just a static pool which guarantees a fixed return. its approx 6% contribution from my salary, roughly 200 per month.

    My rationale for investing alongside the pension is the shockingly high mortality rate of teachers post retirement, many don’t see out 5 yrs of their retirement.

    I bought £3000 of funds through money supermarket (cofunds) at beginning of year, April 2013, HSBC American index Acc, legal and general emerging markets and Fidelity moneybuilder. I haven’t touched these but am too tempted to meddle, which is why the vanguard life strategy sounds appealing. Can I start off with a direct debit of £200 p/m with alliance trust (cheapest platform), I don’t have a lump sum?

    I’ve also just replicated your passive fund list for my wife, contributing £600 per quarter, she just turned 30 and like me doesn’t have any savings. Thank you for all the advice.

  • Mogul
    55 The Accumulator October 29, 2013, 3:16 pm

    Hi Paul,

    A pleasure to help. The good news is that the teacher pension is a pretty good one, even after the recent changes. Behind the scenes that money will be invested but as its defined benefit (rather defined contribution) it’s the State that’s taking the risk, rather than you as an individual investor.

    £200 a month will be more than fine with AT, last time I looked.

    I’ve not heard about high mortality rates for teachers before, post-retirement. You’d think the worst was over once you’d retired 😉

    Re: your wife’s line-up. If you’re investing through AT, consider Vanguards Developed World ex UK fund instead of separate European, US, Japanese and Pacific funds. It will cut down on trading fees. Also take a look at Interactive Investor: you can link family funds so you’ll pay platform fees of £80 per year rather than two separate fees totalling £96.

  • 56 Paul October 29, 2013, 4:19 pm

    Thanks Accumulator, just to be crystal clear, I’m a newbie to this, please go easy:

    Currently my portfolio is with cofunds, 3 funds named earlier. No regular ddebit at present. My wife’s is with fidelity (which incidentally was opened with cavendish but all paperwork and login/management is fidelity) and is currently exactly the same as your passive portfolio list, with a 200 pm DDebit.

    Am I correct in assuming that if I start the vanguard life strategy through Interactive investor with regular contribution of £200 p/m and move my wife to II too but with a change to the vanguard dev world ex Uk fund I would save platform fees than if I were to go with AT for the same investments?

    I thought my wife’s current passive list was as cheap as it got with Fidelity in terms of fees, should I not just leave this be and start myself off with vanguard life strategy.

    Thanks in advance for your patience.

  • 57 Paul October 29, 2013, 4:28 pm


    Maybe it’s just a myth about teaching after all 😉


  • Mogul
    58 The Accumulator October 29, 2013, 7:09 pm

    That’s a relief about your retirement.

    Currently you’re right, your wife’s portfolio couldn’t be any cheaper. Sadly however that situation can’t last because of a regulatory change that will compel Fidelity and everyone else to come clean on how much they are really charging investors. The outcome of that is that passive investors who were previously cross-subsidised by active investors are going to end up paying more at the start of their investing lifetimes.

    These two pieces explain what’s going on:


    This table shows you your best options:

    From memory, you’ll be a little better off with iii (as they’ll give you a few free trades too) but it’s worth you double-checking the details. Also AT have a better fund choice than iii when it comes to Vanguard.

  • 59 Paul October 29, 2013, 9:38 pm


    Thank you for looking into this, keep up the excellent articles, superb insight that helps to keep us mere mortals more financially savvy.



  • 60 Paul November 1, 2013, 11:39 am

    Hi Accumulator,

    Just sent the following email to iii, is there anything glaringly obvious I’ve omitted? Secondly, do you think both of us going with Vanguard is ‘diversified’ enough in terms of security, is it up to 50k each financial protection? We’re a long long way from worrying about that?

    Thanks in advance, Paul

    Dear Sir/Madam,

    Due to RDR being introduced in April 2014, Id like to transfer some ISA based funds to iii. The first set of funds are held by my wife in a Fidlelity based ISA wrapper, circa £550 contributing direct debit £200 p/month. The second set of funds are held by myself in a Cofunds ISA wrapper, circa £2000 contributing £200 p/month by direct debit. Both ISA’s were opened in the current financial year.

    I would like to transfer my wifes holdings to Vanguards Developed World ex UK as an ISA continuing to pay £200 per month

    I would also like to transfer my own holdings to Vanguard LifeStrategy 80% continuing to pay £200 per month

    a. Can I transfer these funds now, and continue my ISA contributions?
    b. What would be the cost of moving these funds now?
    c. What would be the platform charges per year for each ISA?
    d. Could these be charges be reduced as part of a family linked account, if so, by how much?
    e. What would the ongoing platform charges be per year after moving the funds?

    Funds set 1
    HSBC American Index Acc
    HSBC European Index Acc
    HSBC FTSE 250 Index Acc
    HSBC All Share Index Acc
    Legal & General All Share Index Acc
    Legal & General All Stocks Gilt Index Acc
    Legal & General Global Emerging Markets Acc

    Funds set 2
    Fidelity Moneybuilder Uk Index Acc
    HSBC American Index Acc

  • 61 Peter November 1, 2013, 11:53 am

    Thanks for you excellent blog. I only came across it recently and it’s a real beacon of common sense light amongst the fog of so called informed commentators and expert advice – keep up the good work!

    Can you clear something up for me? I have a question about the costs of multi-funds/fund of funds like Vanguard Lifestrategy. The listed TER I’ve seen quoted is 0.31% for the 60% fund. Each individual fund listed within Vanguard Lifestrategy also attracts a TER of somewhere between 0.15% and 0.55%. So is the total cost to the investor the sum of both charges, about 0.6% on average over the mixture of funds, or is the 0.31% figure an average of the individual charges for each fund and the real total cost of the fund?
    Obviously this makes the difference between Lifestrategy being a really cheap option for diversification across investment classes for the passive investor and it being a rather more average option in cost terms.
    There’s nothing like trying to squeeze the last penny of compounding advantage out of your invested pound!

  • 62 The Accumulator November 1, 2013, 7:19 pm

    @ Paul – You’re covered up to 50K each per fund manager, so yep, I wouldn’t worry about it. Most of the answers you’re looking for can be found on here:


    Also, I think this piece will be worth your while:

    @ Peter – In the case of these Vanguard funds you are just paying the quoted TER circa 0.3%. There isn’t a sneaky extra charge for the individual funds too. Though you’re right to be wary, certain other fund of funds do work that way.

  • 63 Paul Claireaux November 1, 2013, 7:29 pm

    My understanding of the teacher’s pension scheme is – like many but not all public service schemes – it’s unfunded.
    That is to say there is no fund behind the scenes that’s being invested.
    however the benefits are pretty secure in that they’re paid for out of general taxation.
    You’ve got a good start with that one.

  • 64 smiling vulture November 27, 2013, 5:08 pm

    why no property,small cap in fund?

  • 65 Ans December 27, 2013, 11:39 am

    Hi Accumulator,

    I’m 36 and a complete newbie to investing. I teach private piano lessons for most of my working week while also being employed by a secondary school for one day a week, where up until now I have chosen not to pay into the teachers’ pension scheme.

    I’d like to begin investing in one of the LifeStrategy funds. However, given the recent rise in the stock market in general and the announcement of imminent QE tapering, I’m concerned that the stock market may be about to tank as it is about to lose it’s QE support. Your thoughts?

    If it is indeed a good time to begin investing in the LifeStrategy fund, what would be the best way to go about doing this for someone in my situation?

    Also, should I begin paying into the teachers’ pension scheme even if I’m only working in the school for one day a week? I have paid into teachers’ pension schemes before in a previous school but I don’t know whether any of this money I paid in has been tracked and is still there waiting for me. In a word: clueless.

    I’d appreciate your thoughts.



  • 66 The Accumulator December 30, 2013, 11:45 pm

    Hi Ans,

    Defined benefit pension schemes like the TPS are increasingly hard to come by because they’re a good deal. Obviously I don’t know anything about your situation and so can’t give you specific advice, but I’d be paying into the TPS if I could. Yes, the contributions you’ve made at previous schools should be tracked by the scheme. You can access your personal account online via the TPS website. Go to the website and get in touch with the TPS, register for online access and bring them up to date with your current address etc. They should be able to match you up with your previous contributions regardless of what paperwork you currently have.

    Re: the LifeStrategy fund. I’m guessing you wish to invest for the long term? 10, 20 years or more? If so, then don’t worry about what the stock market may or may not do next. There’s always a reason why the market might tank. And one thing you can be sure of: at some point it will. But if you’re investing for the long term then you can ride out short-term storms, knowing that the longer you’re in it, the better your chance of doing well.

    At this stage, I would say the best thing you can do is get yourself an investing education. This book is a great place to start:


  • 67 Ans January 5, 2014, 11:11 pm

    Thanks a lot for the advice. Very helpful. You are a marvel, sir!

  • 68 Teaboy January 14, 2014, 8:11 pm

    Hi Accumulator
    Would you invest 120K in a vanguard 100% equity life strategy fund and drip feed it with approx 900 per month? What two other low cost funds options would you also consider. And, finally which platform would you use?

  • 69 The Accumulator January 16, 2014, 6:30 pm

    @ Teaboy – that’s a very specific question which depends on so many personal circumstances that I can’t really offer any guidance. All I can say, is that if you’ve decided that suits your investment goals then there’s no reason not to.

    Here’s a piece on the cheapest brokers:
    For a portfolio of that size, take a look at the fixed cost brokers like Alliance Trust and Interactive Investor.

    Here’s a piece on the lowest cost trackers you can get:

    Good luck!

  • 70 dawn January 26, 2014, 9:20 pm

    hi accumulatoer
    just found your site and i love it!
    ive saved up £120,000 cash and its in deposit accounts. cash isa ns&i index linked premium bonds, im 50 next year and want to protect my cash from inflation.
    im planning on opening a ss isa after april and putting in £11880 alloawance then next year when im 50 moving accross about £50,000 from my cash isa.[its fixed till then] im thinking of going for vanguard life stratergy 60. as im 50 years old next year have i time???? if i was younger even 40 i wouldnt quibble . i plan on working until im 60
    any thoughts ? am i doing right??? with this years ss isa £5640 i opened a legal and general and put in emerging markets !!! as my wild card
    would appreciate your thoughts. dawn.

  • 71 The Accumulator January 27, 2014, 2:50 pm

    Hi Dawn,

    Thank you for your kind words about the site.

    In principle, there isn’t a problem with you being in the Vanguard LifeStrategy 60 as long as you understand that you could experience large drops in your wealth at times when the stock market falls.

    Although the equities component of that fund should help protect you from inflation over the long term, the conventional bond portion is less good at that and obviously equities are much more volatile than cash.

    Please drop by again for the post on Tuesday about constructing your own asset allocation – I think it will help give you more background.

    Also, if you want a good investing book that goes into more detail about what to expect from your investments then try Smarter Investing by Tim Hale.

  • 72 dawn January 29, 2014, 7:26 pm

    hi accumulator
    im aware equities can fall. i might just put in a FTSE all share uk tracker and a develped world ex uk tracker in a new isa from april and keep half my money in cash a 50;50 split which youve suggested as an option in tuesdays assett allocation blog. also ive ordered the tim hale book, smarter investing.
    as always, looking forward to all your insightfull advice on monevator

  • Mogul
    73 The Accumulator January 30, 2014, 9:12 am

    Cheers, Dawn. I hope it works out for you and you enjoy the book.

  • 74 Andrew February 15, 2014, 7:03 pm

    Hello Accumulator

    I currently hold my LifeStrategy fund in an ISA with HL. Being conscious about the 2014 changes in fees / charges is there a better alternative now?

    I currently have less than £10k invested and like to drip feed a little every month. Is it worth the bother in changing platform?

    Maybe an update article on choices for investors in trackers for all Monevator fans such as myself would be handy?

    Cheers, Andrew

  • Mogul
    75 The Accumulator February 16, 2014, 8:58 am

    Hi Andrew,

    Yes, the better alternative is Charles Stanley Direct who will charge you 0.25% per year as opposed to HL’s 0.45%. However, at less than £10K invested the difference is less than £20 per year. HL’s exit fees will cost you £55, which would take nearly 3 years to make up, so I’m dubious that it is worth it for you at this time. Some readers are reporting that HL are waiving exit fees if they ask impolitely enough, but again, a switch can be a fair amount of hassle.

    I’ve updated our broker comparison table here:


    And see this comment for my latest take on the cheapest platforms depending on your personal circumstances:

  • 76 Andrew February 16, 2014, 9:08 am

    Thank you so much, there simply isn’t anywhere else to get good practical information such as this. And such a quick response!

  • 77 Andy February 16, 2014, 2:59 pm

    @Andrew, I am in a similar situation to you. AFAIK the exit fee’s are only £25 per fund until June 1st. However I was unhappy with the increase in fees and wrote HL a complain letter and they agreed to waive the exit charges. It would almost certainty be better for you to transfer to another provider, especially considering HLs increase in exit fees which could make it costly to change if you don’t do it now (while you can switch for free).

  • 78 Paul February 18, 2014, 6:32 pm

    Hi accumulator,

    Just read the post on choosing cheapest platform step by step and come up with Charles Stanley direct. Lifted the phone to confirm dealing charges and gentleman added a bit more info for me.

    Charles Stanley will charge .25% on total value of portfolio per year, vanguard charge .24 % on each contribution ( in this case monthly) and vanguard charge a further .29% annual mgt fee. Thought I understood, now I’m confused again. I just want the cheapest platform for contributing £200 per month to vanguard life strategy, 80:20.
    My wife will also contribute exactly the same in a different isa, prob 60:40.

    Thanks in advance accumulator

  • 79 The Accumulator February 19, 2014, 2:29 pm

    Hi Paul, the 0.24% and 0.29% are the dilution levy and OCF charged by Vanguard to any broker. See their website. 0.25% is the broker component. So if you’re assets are below around £30K and you’re make monthly contributions then you won’t do any better than Charles Stanley right now. Over £30K and you’d be looking at Interactive Investor or iWeb or Halifax.

  • 80 EP February 20, 2014, 10:05 am

    Hi Accumulator

    I see that Vanguard has revamped the Lifestrategy Funds wef 31/1/14 in terms of both the costs (AMC & Dilution both now uniform across the range) and asset allocation (adopting a more global approach inc global bonds but still with a slight bias towards UK equities). All seems sensible to me albeit with a slightly increased curency risk – but what do your little grey cells think?

  • 81 Andy February 20, 2014, 2:26 pm

    @EP, on the subject of those changes, it doesn’t seem like the actual cost of the funds have decreased. At least according to HLs site all that has happened is a small amount from the AMC has been filed under “Fund Managers other expenses”. The cost of the AMC + other expenses is still the same as it was.

  • 82 Chris B March 9, 2014, 6:53 pm

    Hello there Accumulator.

    Thanks for some great articles on this site, I have looked at so many now. I have a question which I think you answered before in a different post. I intend to invest my isa max limit amount in vantage life strategy 60% for 3 years as I have a lump sum every time the new financial year starts. I then want to out £400 a month into this over the next 20 years. Firstly, what are your opinions on this? And secondly is hargreaves and lansdown a good option given I only have 1 fund, is this cost effective with fees as I will not be actively trading or have any other funds.

    Kind regards
    Chris b

  • 83 Lee March 22, 2014, 10:09 am


    I am an Australian expat, new to investing, new to this blog, so please be gentle with me.

    I would like to invest GBP5000 with a monthly contribution of GBP200 to the Vanguard LifeStrategy fund i.e. the 60% Equity or 80% Equity Fund.

    Presently, I have GBP5000 in my ISA account. What I would like to know is firstly, how do I go about using the GBP5000 in the ISA to buy shares in the above funds?

    Secondly, why can’t I buy one of the above mentioned funds directly with Vanguard instead of through a third party such as Alliance Trust or Hargreaves Lansdowns?

    Thirdly, what are the benefits of using one of the platforms mentioned i.e. Alliance Trust or Hargreaves Lansdown to get Vanguard funds?

    Thank you.

  • 84 The Accumulator March 22, 2014, 11:51 am

    Hi Lee,

    You’ll need to get your ISA transferred to the platform you want to use. This amounts to filling in a form that will be present somewhere on the broker’s website – look for ‘transferring to us’ type links.

    You can’t buy directly from Vanguard because their UK arm took a business decision not to expand in this country through that route. They’ve only been operating in the UK since 2009 and I remember reading that they felt direct dealing added an extra layer of complexity to their business that they weren’t ready for. Notionally, they will trade directly if you can throw £100,000 a time at them.

    I would suggest taking a look at Charles Stanley Direct who are more cost effective for your requirements than AT or HL.

    Here’s a post you might find useful:
    (Ignore the bit about being able to avoid annual charges with the right broker. That’s no longer the case.)

    This comparison table will give you a fuller picture of the platform market:

  • 85 dawn March 22, 2014, 12:22 pm

    hello chris
    i think i can answer you from what ive learnt recently, im new ti investing too.
    you cannot invest directly into vanguard funds with less than £100,000
    so you have to go through a platform your £5000 must be in a stocks and shares isa which has just changed this week the new isa is both cash and stocks . you need a platform for your isa that offers vanguard funds to invest in. most do and then just lookin the funds list for vanguard LS 60 or 80 and deposit your money.make sure you choose the acc [ accumulation] fund not dis [ distribution] then your profits get reinvested and build!! im going to use i web as my platform in april when i open a new isa their fees are only £25 to open and nothing after that but you have to physically log in every month to your account to deposit your £200 a month contributions, they dont offer a direct debit service from your bank account. i think ive answered correctly for you i hope monevater reads this and corrects me if im wrong. good luck

  • 86 dawn March 22, 2014, 12:25 pm

    sorry above was for Lee not Chris and monevater got in there before me to answer you !!!

  • 87 Lee March 22, 2014, 10:42 pm

    The Accumulator

    Hi and thank you so much for your prompt response. Thank you especially for your informative website.

    I would appreciate if you can please confirm this process:

    1. Need to open an ISA S&S account after I have identified a cost effective platform i.e. Charles Stanley Direct or i web (as suggested by Dawn – thanks, Dawn)

    2. Set up direct debit from bank account which will allow me to buy Vanguard fund (and this is where I am confused….can I set up an ISA S&S account with Charles Stanley Direct or is CSD a broker that I use to buy Vanguard fund?

    3. After setting up an ISA S&S in bank account, “choose the acc [ accumulation] fund not dis [ distribution] then your profits get reinvested and build!!” (thanks again, Dawn)

    4. Carry on with life. 🙂

  • 88 Lee March 22, 2014, 10:48 pm

    Hi Dawn

    Thank you so much for sharing your experience as a new investor.

    May I ask why you choose i web as your platform instead of Charles Stanley Direct?

    Is i web more cost efficient than CSD because you have to manually deposit each month?


  • 89 The Accumulator March 23, 2014, 8:17 am

    Lee, you’re right about the process bar one thing. The S&S ISA is set up with the broker not within a bank account. The answer to your question in point 2 is ‘both’. You set up the ISA with the broker then buy the fund through the broker and the fund then nestles in your ISA which is stored by the broker.
    Given the level of investment you’ve quoted, CSD is more cost efficient for you than iWeb because you won’t pay monthly dealing fees with CSD.

  • 90 Lee March 23, 2014, 8:45 am

    G’day The Accumulator,

    Thank you so much for clarifying the process.

    A couple more questions. I am not sure how long I will be a resident in the UK. There is a possibility that I may leave end of 2014 or early 2015, so in your opinion, should I invest in Vanguard fund or should I just max out the ISA cash?

    As investing in Vanguard fund is for the long haul, should I perhaps look at investing in ‘blue’ chip shares instead?


  • 91 dawn March 23, 2014, 12:47 pm

    hi lee
    im thinking of i web as my platform because last time i spoke to them it was a £25 opening fee for an isa and no more costs after that apart from the fund costs. i will have to check again. if they charge each time you deposit money in, last time they said no charge but you have to do it manually and log on to put money in your fund yourself. CSD i believe wanted 0.25% of your total fund value each year . but this year theres been big changes in all this and it might not be completely sorted yet, the platforms might still change their minds on their fees. im going down the blue chip route for the uk equity part of my portfolio as i have a
    lump sum of £30,000 and i want it” in the market”. but monevator recommends tracker funds which i think are better if you not got a lump sum and your going to drip feed money in for years, i dont think you can go wrong. im 49 years of age so ive not got 30 years like some, but i do have a huge amount in a cash isa thats fixed til lnext year then ill transfer half and put it in ek uk tracker funds. ill use vanguard cos they have a great name. thats why i dont want a % based platform like CSD Im looking for fixed fee platform. as for going back to aus im not sure could you move your vanguard LS fund to a paltform over there?

  • 92 dawn March 23, 2014, 12:53 pm

    just re read my post and i meant “transfer half and put it in EX uk tracker funds” good lord dont want uk tacker and blue chips aswell !!! monevater will think ive gone mad !!

  • Mogul
    93 The Accumulator March 23, 2014, 9:23 pm

    Lee, any investment in stocks and shares is for the long haul so don’t invest in them if you think you’ll have to cash out within two years.
    Dawn – trading at iWeb is £5 a throw but from what you describe you’re in the right place. CSD is more appropriate for Lee if he’d like to trade monthly and has a total investment under £30K.

  • 94 Chris B March 23, 2014, 11:09 pm

    Hi a. Uvula got,

    I have £40,000 to invest. I was going to use charles stanley direct with the 0.25% annual commission. I was going to then invest £750 a month. Plan on hitting £240,000 at today’s prices that will give me £900 a month £270k total) at 4% withdrawal as I have £30k in cash also. That would be enough to be financially independent in 13 years at 5% real interest. I am not sure if this is expecting too much from a passive index fund but we will see I guess.

    My question would be, would iWeb then with the £5 monthly fee and £25 isa opening fee be cheaper. I guess it would.


  • 95 Chris B March 23, 2014, 11:10 pm

    Sorry, that was supposed to say accumulator. Shouldn’t be using iPad 🙂


  • 96 The Accumulator March 24, 2014, 8:58 am

    Ha ha. Interesting greeting. Is that Klingon? Yep, iWeb or Interactive Investor are likely to do the trick. Your plan isn’t outrageous, with a fair wind and low costs you could do it or be within touching distance. The trick will be lowering your equity exposure as you close in on your target.

  • 97 Lee March 24, 2014, 9:32 am

    Hi again

    I would be quite happy to leave it to grow but just wondering whether if the small investment of say, GBP10,000 will eventually be eroded by management fees? Any idea?

  • 98 dawn March 24, 2014, 1:14 pm

    hello chris b
    im intrested in your plans!
    how are you going to get 40k in an isa at £15,000 a year or are you doing it out side an isa? or do you have it in cash isa and going to transfer in a ss isa?
    and what tracker funds do you think you’ll invests in? uk only or going global?
    would love to know as in similar position myself

  • 99 Chris B March 24, 2014, 8:09 pm

    Hi Dawn,

    I have £5700 in a stocks ISA that I will transfer to whoever I choose to go with, I still want to take a couple weeks to decide to be honest. I will put in £15k into chosen fund/funds in the new tax year and the following year 15k which I will put in a normal shares account will be transferred hopefully with gains over to the ISA. I will do this again the following year with the other £4300 until it is all in the ISA wrapper.

    I will leave £30000 in cash for quick access and because I don’t like the idea of having all my money in stocks. Just the majority.

    I am tempted to put 75% of my money into vanguard life strategy 80% accumulation and 25% into a couple of active funds (jupeter strategic bond fund, artemis income possibly). The high dividend rate and good history is tempting me. I know most active funds fail to compete in the long run but some funds do do well. That will be my riskier shares perhaps. I still want to stick to funds though.

    I am still reading a couple of books before I fully decide what to do. But financial independence in 13 years is my target. £900 a month at today’s money will pay all my bills, outgoings and give me a little to spend each week. I however still intend on working but the freedom of not needing to work will allow me to really chose the job I want and the hours I want, doing part time etc. financial independence not retirement per say. I will be 40 years old.

    Chris b

  • 100 dawn March 24, 2014, 9:07 pm

    chris b
    thankyou for sharing
    you sound very sensible
    I hope you do well

  • 101 Chris B March 25, 2014, 9:59 pm

    Thanks dawn, I wish you the best also. Let me know if you have any other questions :).

  • 102 LegalBeagle April 9, 2014, 5:45 pm

    Hi The Accumulator

    First of all congratulations on a fantastic site! A wonderful resource for us novices.

    I am a 30 year old with about £10k in cash (I have a mortgage and a pension too) which I am thinking of putting into Vanguard Lifestrategy 80 through Charles Stanley. I was also thinking of topping this up with a property fund as it seems to be an obvious omission and I have an interest in it as a sector. The TERs all seem to be more expensive and I wondered if you had any recommendations on a solid global fund with low fees?

    On a separate note, I hope to have £2,000 in cash in a separate instant access ISA at any given time for emergencies and the like. Just wondering if other people do this or do they throw it all in to their portfolios and ‘cash-in’ as and when required? Any obvious advantages/disadvantages to either approach? If ither people hold cash, do they reduce their bond allocation accordingly? £2,000 would be 16% of my total holdings if I were to include it when calcualting the weight of my portfolio.

    Keep up the good work!

  • 103 The Accumulator April 9, 2014, 8:42 pm

    Hi Legal,

    I’m glad you’re finding the site useful. Good to hear. The only property index fund available is BlackRock Global Property Securities Tracker D. There are a couple of ETFs out there too but they are more expensive and you would incur dealing fees which aren’t worth it for you at this stage. These funds track an index composed of property REITs and other firms whose business is property.

    Most people hold their emergency fund in cash. If you held it in other asset classes then you’re exposed to volatility and it could be worth, say, £1000 when you need it most.

    I wouldn’t treat this cash as part of my main portfolio because you’re holding it for a different purpose, therefore its size, time horizon and asset allocation are not the same as the rest of your holdings. It is effectively your emergency fund portfolio: objective ’emergency liquidity’ asset allocation: 100% cash.

  • 104 Paul May 16, 2014, 8:07 pm

    Hi, long time fan here, making my first steps into passive investing. I was wondering about the merits of putting at least some of my bond allocation into the Vanguard Global Bond Index fund. My thinking is that this will limit my exposure to the looming UK interest rate rise. It’s hedged, so I assume currency fluctuations won’t be an issue ands comprised of a mix of gvt and corporate bonds, so I guess I’m getting a little more volatility and yield compared to gilts. The TER doesn’t seem much worse than other bond funds. Is there anything I’m missing?

    I appreciate that this is attempting to time the market to a certain extent, but I frankly can’t bring myself to get 100% into gilts at the top of what (to me) looks like a bubble.

    Any thoughts will be vastly appreciated.

  • 105 The Accumulator May 18, 2014, 12:30 pm

    Hi Paul,

    Your analysis is spot on. Global Bonds allow you to diversify interest rate risk and the compromise is that you’re taking on more credit risk. Vanguard’s UK Gov Bond fund is invested purely in AA gilts whereas their intermediate Global Bond fund invests in some securities rated BBB and the average credit quality is AA-

    The Global Bond fund’s average duration is significantly shorter than the UK fund too. 6 vs 9.5 so if interest rates went up 1% then the Global Bond fund would lose 6% versus 9.5% for the UK fund.

    Given the fact the fund is hedged I don’t think you’re missing anything about using it as a core fixed income allocation.

  • 106 Paul May 24, 2014, 9:15 pm

    Thanks Accumulator, keep up the good work!

  • 107 Westerly Falcon July 3, 2014, 1:24 am

    If I’m renting and have £200k cash, should I keep some money in cash earning 0%? Or if I have no plans to invest a significant chunk in the next few years can I put a big % of this money in the Vanguard LS fund? I’m 24, no dependents.

  • 108 LangJohnnyMore July 16, 2014, 10:10 am

    First off: I have only recently started investing and think this site is dong a fantastic job, both in terms of practical help and intellectual stimulation, More power to your elbow!
    I have become confused over the allocations for the Lifestrategy funds. I thought that (as is set out in target article above) the bonds were limited to UK bonds (and have read justification for this in a Vanguard fact sheet). However, when I look at the fund factsheet via Hargreaves Lansdown pages for these funds it looks like the bond allocation DOES include non-UK bonds. For example the 20% equity fund has underlying vanguard trackers for non-UK govt bonds and non-UK corporate bonds ie when clicking on “fund factsheet” from this page :


    Does anyone know why there is this apparent anomaly?

  • 109 LangJohnnyMore July 16, 2014, 2:30 pm

    Oops, sorry for last post, I have answered my own question: Vanguard have very recently changed their bond allocations for lifestrategy and have gone very global. That is, the change seems like more than just a tweak, e.g., UK Gilts were very large percentage (45% of bonds) and are now only approx 16%. These changes will be made for pre-existing investments in Lifestrategy funds as well as new investments.

  • 110 David P September 20, 2014, 3:12 pm

    Hi, just found this site, great news as I need some advice.
    Totally new to investing but have been looking into index trackers, when I found vanguard life strategy.
    I am 51 yrs of age and hope to retire at 60.
    I have approx £40k to invest, but am cautious, but interested in long term 10-15 yrs investment.
    Would lifeguard be a good bet or coupled with another index tracker 50% each. Look forward to any advice.

  • 111 The Accumulator September 20, 2014, 9:38 pm

    Hi David, The LifeStrategy funds can suit anyone. The trick is knowing what mix of bonds and equities suits your needs. You can find more info on making these decisions by working through the links on this page: http://monevator.com/category/investing/passive-investing-investing/

  • 112 David September 22, 2014, 12:49 pm

    Thanks for your prompt reply The Accumulator.

    Would you suggest as I am a cautious investor spreading the total sum between 2 or more index funds. If so which do you think would be compatable.


  • 113 David September 22, 2014, 1:20 pm

    Hello again -I feel I should have mentioned as a cautious investor that I am veering towards the 40%equity vanguard life strategy fund
    also as I have used all of my and my wifes isa allowance for this year would it be best to drip feed so as to be able to use my allowance next year my instinct as its only 40% and its a 10-15yr plan one fund is fine but I would appreciate your thoughts

  • 114 The Accumulator September 23, 2014, 3:05 pm

    @ David – I’d be inclined to keep to one fund with £40K as you’re not breaching any of the FSCS compensation limits. A second fund could be a bond tracker if you wanted to decrease your exposure to equities as you approach retirement.

    Take a look at: http://monevator.com/asset-allocation-strategy-rules-of-thumb/

    On drip-feeding, it just so happens that we’ve covered that in our latest piece which you can find here: http://monevator.com/lump-sum-investing-versus-drip-feeding/

    If you want a good book that will help you pull everything together then I recommend Tim Hale’s Smarter Investing.

  • 115 David September 23, 2014, 8:58 pm

    The accumulator

    Thank you for all your help.
    Much appreciated.


  • 116 phil October 1, 2014, 7:12 am

    Im a bit of a beginner who uses the Fidelity platform for a S&S isa. They don’t offer the LS60 but do offer some Vanguard funds. I’d like to build the equivalent of LS60 on my own. Could someone recommend a six pack from the funds that Fidelity do have in their supermarket. Thanks.

  • 117 phil October 6, 2014, 3:39 pm

    I asked Fidelity same question I posted above.
    Seems that they do now offer the Vanguard LS funds.

  • 118 allie October 7, 2014, 7:39 pm

    Phil, thanks for the info re Fidelity. It appears they have recently added many more Vanguard funds, even Vanguard U.S. Fundamental Fund Acc which I know very little about. Looks like a non index fund. Anyway, good news.

  • 119 David October 24, 2014, 7:21 pm

    Hello again -I am nearly there honestly slight change I now realise I have 65k in my cash isa not 40 as I previously stated the Accumulator mentioned compensation limits but being a novice ive no idea how much this is could you help. Iassume its the for savings

  • 120 The Accumulator October 24, 2014, 7:35 pm

    Hi David, here’s what you need to know about compensation: http://monevator.com/investor-compensation-scheme/

  • 121 David October 24, 2014, 9:21 pm

    Thank you the Accumulator. My thoughts are this 45k into 60/40 vanguard life strategy from my cash isa now and in april 25k into 40/60 fund in my wifes name. I realise this may seem ultra cautious as I plan to hold these funds for 10-15 years as I still have spare

  • 122 David October 27, 2014, 1:12 pm

    Hi A small step for mankind but a big step for a 52yr virgin investor. Being a little cautious I went for the 60/40 Vanguard life strategy fund as a long term investment for the full amount as stated in other posts.But would like to supplement this with £200 monthly contributions lasting 8yrs although I would not need the cash at that time.Which funds would would compliment the above. Iam considering the40/60 L.S. as a cautious investor but would appreciate any advice-

  • 123 David October 31, 2014, 9:29 pm

    Apologies I need to clear up one thing is this a bad time to buy bonds with interest rates probably going up next year choice of 60%/40 %
    equities/bonds or the other way.
    10yrs investment thanks for any help

  • 124 David October 31, 2014, 9:33 pm

    I should have mentioned I am investing in the Vanguard life strategy funds no more questions I promise

  • 125 The Accumulator November 1, 2014, 11:39 am

    Hi David, 60:40 equities/bonds or 40:60 – you don’t choose your allocation based on whether you think interest rates are going up. That’s market timing and neither you nor I nor virtually anyone else can do that with any hope of consistent success.

    People have thought interest rates are going up for the last 5 years and yet…

    Choose your allocation based on your best estimate of your risk tolerance. Remember bonds aren’t there to make you money, they’re there so you can hold on and not sell up at the worst possible time when the market nose-dives. They’re there to soften down turns so that you’re able to stick with your plan until the market recovers.

    No one can tell you what to do so arm yourself with knowledge. Here’s 3 pieces to read and one book:




    Smarter Investing by Tim Hale – the best book a UK passive investor can read.

  • 126 David November 3, 2014, 10:08 pm

    Thanks the Accumulator I really do need to read up

  • 127 Gordon November 10, 2014, 2:19 pm

    Looking at the charts has the FTSE All Share not outperformed every Vanguard Life Strategy fund for the last 3 years? Is the FTSE All Share inherently more risky than a high percentage Life strategy fund? I ask as an amateur looking to invest and was set on the FTSE All Share when I came across the Life Strategy funds

  • 128 David November 11, 2014, 3:52 pm

    Hello – Firstly to the Accumulator not only did I buy the book I also read it. What it reinforced is that passive well diversified funds would be my route. Being cautious the L/S 40 %e is for me on looking on Vanguard web site the 40 and60% funds have the same risk number 4 out of 7 I rang but they didn’t know why. could someone give an insight
    as I thought more equities more risk. Unfortunately I didn’t gleam much more from Tim not my usual reading material as im sure you have gathered thanks

  • 129 David November 11, 2014, 4:30 pm

    Does this make sense 40% L/S 40%equitty 15yrs /30% 20%equitty L/S /
    10% NSI /20%cash [represents savings] also to contribute £200 monthly out of earnings for 8yrs to gilt fund I realise this may be ultra cautious happy to stay ahead of the game tobeat inflation plus a little more any thoughts appreciated

  • 130 The Accumulator November 17, 2014, 11:10 pm

    @ Gordon – it’s just the FTSE had a good run for a few years.

    @ David – Congrats on getting the book and reading it! I know many who’ve fallen at that second hurdle 😉 You’re right that more equities means more risk. I wouldn’t worry about tick box risk numbers – they don’t tell you anything, they’re an artifact of compliance. Presumably a 20% jump in equities isn’t enough to push the fund over some threshold or other. But you don’t need risk ratings once you’ve read Hale.

    Can’t unravel your last comment’s asset allocation but it’s been a long day. Cheers!

  • 131 David November 19, 2014, 2:46 pm

    The Accumulator thanks for all your replies a great help I now intend to reread Tims book for thoughts on a second passive fund no doubt questions will follow regards David

  • 132 Paul November 19, 2014, 6:51 pm

    Tried to replicate one of the passive strategies from Hale (x6 funds, ranging in weights 5%-30%) through charles stanley but was faced with a £500 pm minimum investment. Any cheaper/alternative suggestions pls? I have £200 p/m max to invest.

    “The minimum monthly investment for any fund on our platform is £50, so on an absolute minimum basis if you invested equally in all six funds, a minimum of £300 total is required (6 x £50). Using the weights provided, since you can’t go below £50, the 10% that you wish to invest in the Blackrock Property Securities Equity Tracker fund would necessitate a £50 investment, meaning that the 30% weight for the Vanguard FTSE UK Equity Index would need £150 minimum spend and any 15% weight would require £75. Using the weights you provided, this would bring a total minimum spend on a monthly basis to £500.

    If you wished to invest the £200 over each of the six funds, you will need to raise it to £300 to invest the minimum of £50 equally in each fund, otherwise you could reduce the number of funds you wish to invest in to four although the weights would be equally split (25% into each fund).”


  • 133 The Accumulator November 20, 2014, 9:43 am

    Hi Paul – Use the Vanguard LifeStrategy fund detailed on this page and accept it’s asset allocation or invest in one or two funds at a time and then switch to the other funds in your allocation later in the year.

  • 134 David December 1, 2014, 9:45 pm

    Hello I am in the process of transferring my cash isa into vanguard life strategy 40%equity fund I have a further sum to invest before I call it a day and concentrate on savings and spending. my question is this should I diversify further and use another vanguard index fund im cautious so bonds or stick to the above thanks

  • 135 Paul December 8, 2014, 9:08 pm

    Hi Accumulator,

    I asked one of my colleagues the following question but I’m afraid to ask them to translate at risk of sounding foolish, can you help?

    “I was wondering if the new pension arrangements impact on teachers in any way? In other words, do we have access to a lump sum at retirement, do we still need to purchase an annuity?”

    “The Teachers Pension scheme in its current form will not necessitate the purchase of an annuity as it is based on a formula of time/service and salary. The amended version post April 2015 will still work on this principle.

    A lump sum is available post 2015 by commutation ie lowering the pension by £1 to create £12 in tax free cash, it is no longer automatically built up. I hope this helps.”

  • 136 David December 9, 2014, 5:43 pm

    This also applies to the n.h.s. pension

  • 137 David December 9, 2014, 5:57 pm

    There are two parts to the scheme 1 tax free lump sum 2 taxable monthly pension there is an upper and lower limit to these figuries that you can as a lump sum or anything inbetween the higher the lump sum the lower the monthly pension it takes 12 years approx. to even out both if you take a large pension

  • 138 Christopher January 5, 2015, 2:23 pm


    I am currently investing in the LifeStrategy 80% Equity Fund via Charles Stanley Direct.

    In twenty years, when I’m after less risk, how would I switch to the 60% Equity Fund for example?

    Thank you.

  • 139 Sam Priestley February 10, 2015, 3:04 pm


    Do you regularly invest? When I want to start swtiching I just change my regular investing to another one of the other funds. For instance you could start putting money into the 20% equity in order to bring down your overall equity %. Then when you hit the desired 60% put your money into the 60% equity.


  • 140 Nick April 9, 2015, 4:52 pm

    Hi Accumulator,

    I’m wondering if you have any general advice for someone on the edge between going LS of any flavour or DIY (slow and steady rip off adjusted for risk I’m comfortable with in my case)?

    I’ve been going over it all for too long, devouring this site and others. I’ve also read Smarter Investing, as well as a handful of others around the topic.

    To me DIY is always going to work out cheaper, however I ran some past performance scenarios on trustnet and was suprised to see LS100 coming ahead of my risky 4-fund for performance over the last year and few months. They were close but it indicated to me maybe I’m best with LS100? My fund choices if curious were:

    Vanguard Dev World Ex UK -35%
    Vanguard UK All Share – 40%
    Vanguard Small Cap – 15%
    Vanguard Pacific excluding Japan – 10%

    Thanks for any advice you can provide, I imagine its a common battle working out if you should go LS or DIY. I’m certainly curious in learning this stuff but with my money on the line it makes me a bit anxious..

  • 141 The Accumulator April 9, 2015, 8:22 pm

    Hi Nick,

    I remember that sense of hesitation when I was on the verge of making my first investments. I was exactly the same and it seems to be very common.

    Run your own portfolio if you think you will enjoy the exercise.

    Go LifeStrategy if you think you will find investing a hassle or if you have any doubt about your discipline when it comes to rebalancing or by chasing the performance of the latest hot fund.

    Don’t let past performance guide your decision as it essentially tells you nothing about how this match-up will work out in the future.

    Re: fund choices – you’ll get the Pacific countries in your Dev World ex UK fund, so I’m wondering whether you’re really looking for Emerging Market Exposure with this choice.

    40% in the UK is a pretty massive tilt too. UK is only worth about 7% of the global market.

  • 142 Nick April 10, 2015, 10:32 am

    Hi Accumulator,

    thank you very much for the prompt response, I certainly appreciate it. Do you remember when that hesitation went away or was the only thing that resolved it to get in the game so to speak?

    I think I’m certainly not a hobbyist like yourself, I just want to maximize what my money is doing for me and certainly don’t want to get sucked into spending a large amount of time investigating the market. My interests lie elsewhere unfortunately for me.

    LifeStrategy is tempting but the higher costs put me off slightly, as well as all of the effort I’ve put in so far to learning this area going to waste. It is also tempting in terms of the long-term, when I have 32k+ and want to keep fund choices on iWeb minimal to avoid costs.

    However, I’m not worried about my discipline, I’m certain I’ll be able to handle the market tanking but then again there’s only one way to find out if that’s truly the case..

    If I do go DIY I essentially want to decide on my funds, re-balance yearly and other wise not touch it other than putting more money in

    Thank you for calling out my error in fund choice, I’d been switching small cap and emerging markets in order to keep it to four funds and knew something wasn’t right!

    May I be cheeky and ask what allocation you would use considering those four funds I mentioned (with emerging markets swapped in.) The high UK allocation was just home bias and currency risk reasons, though as you can tell I’m certainly not a seasoned investor!

    I’m guessing something like:
    World – 50%
    UK – 20%
    Small Cap – 10%
    Emerging – 20%

    I’m 27 so as I get older I would introduce a property fund for a few years then bonds….depending on market conditions at those times of course.

  • 143 The Accumulator April 11, 2015, 12:23 pm

    The asset allocation you suggest is entirely reasonable assuming your objective lies a good decade or two away. You are making some high-octane choices though so the big question is whether you can handle the rollercoaster. That’s impossible to truly know if you’re untested by the markets. Bonds will take the edge off the volatility and the biggest decision you are taking is not including any (or cash). I’m reminded of some wise advice which goes along the lines of “Be as conservative as you can handle.”

    It would be presumptuous of me to suggest a different allocation based on zero knowledge of you or your goals but here’s a couple of posts that can help you refine your rationale:



    I got over analysis paralysis when I realised that after researching investing for something like two years, the next six months of fact-finding I had in mind was just procrastination. I had to wake myself up to the fact that there wasn’t any perfect solution waiting to be discovered and that the best thing to do was to get stuck in.

  • 144 Nick April 11, 2015, 1:20 pm

    Hello The Accumulator,

    thank you once again for the quick response, you’re certainly correct about timeline, as mentioned I’m 27 and I wish to start this as a retirement pot outside my pension. As you say I’m certainly taking the high risk route but given the timeline I have, I’m not remotely concerned as I’d say there will be a number of crashes during my lifetime to ride and also take advantage of.

    As you might expect I’ve already devoured those great articles but refreshing myself isn’t a bad idea.

    As usual you are spot on. I’m going to put my money into my DIY portfolio, in the long term the lower costs will hopefully outrun LS100 and it will only require infrequent re-balancing.

    Thank you for your words of wisdom Accumulator, please keep the great articles coming!

  • 145 Chris April 11, 2015, 2:20 pm

    Hi Nick.

    I was just thinking to myself today about how it’s very easy to feel like we will easily stomach a bear market but until it actually happens. It will be unknown how we will really handle it. I think loosing 30,000 of your hard earned money for example could really hurt however if you have the mindset that if you only use cash you will probably be guaranteed to lose in the long run.

    I personally always keep a minimum of £10,000 in cash. The rest goes in a 60% life strategy fund through iWeb. I personally like the hands off approach and pretty much never look at the amount. Only the general news detailing a huge pro longed crash would let me know that it’s tanking. I am impressed that I can do this as I didn’t think I would have it in me when I first got into this which was about a year ago now.

    Having 75k in investments would have scared me in the past. Nowadays, I’m just the arm chair investor that only cares about the long term. I think what keeps me comfortable is the idea (how really true who knows) that for me to lose all of my money long term – that the world would probably be in ruin and money in the bank would probably not mean that much either. As I feel my money is tied up in human flourishing in an economic sense and all the worlds companies and the governments with bonds. If that’s all failing – money is the least of my worries?

    I’ll see how I feel though in 20?? When I lose a large amount how I then feel 😀

  • 146 Jonny April 15, 2015, 1:38 pm

    I got over analysis paralysis when I realised that after researching investing for something like two years, the next six months of fact-finding I had in mind was just procrastination. I had to wake myself up to the fact that there wasn’t any perfect solution waiting to be discovered and that the best thing to do was to get stuck in.

    Amen! I’ve had a recent similar realisation on a separate (non-investing) project I’ve been procrastinating working on.

    So is there any alternative to the LifeStrategy funds for those who already have them but want to diversify further across providers (i.e. to another provider)?

    I read your 2014 http://monevator.com/passive-fund-of-funds-the-rivals/ article, which gave me brief hope that the HSBC World Index may be a contender, though on reading the 2012 HSBC article (http://monevator.com/hsbc-world-index-portfolio-fund-of-funds/) it seemed pretty negative!

    I fear there is no alternative, and the next step would be creating a diverse portfolio of separate tracker funds. Unfortunately that could easily lead to higher trading costs, increased complexity in implementation, and worst still probably more analysis paralysis (deciding on allocations, and then funds to fit those allocations)!

    Is there anything else for those of us who just want to get back to our grapes?

  • 147 The Accumulator April 16, 2015, 7:14 pm

    @ Jonny – here’s the alternative paired with a bond fund: http://monevator.com/how-to-chooose-total-world-equity-trackers/

  • 148 Simon May 7, 2015, 11:27 am

    As a lay investor I get the concept of investing monthly, ie when values drop your buying low and when they rise again your levelling out earlier losses.

    What is the risk in these passive funds when you are investing a 1 off lump sum. Is timing a consideration how do you avoid an initial loss? Or am I barking up the wrong tree.

    I have a memory of transferring a slow growing managed fund into a supposedly better performer and the .com bubble killed it, never really recovered. I understand passive is safer than managed, but how protected am I with a lump sum?

  • 149 The Investor May 7, 2015, 11:32 am

    @Simon — Passive investing isn’t safer particularly than actively managed, except in as much as you’re investing in line with the market (/benchmark) so there’s not the chance of a huge divergence that you might get in an actively managed fund if the manager goes on a bender (/decides to invest in some exotic asset class or gear up with lots of debt or what have you).

    In some cases passive funds may be riskier, if compared to a similarly exposed fund where a manager is temporarily holding more cash or lower-volatility assets, for example.

    The idea with passive investing is that you benefit from low costs, and from the fact that over the long-run manager decisions (such as that holding more cash I mentioned) seldom add enough value to beat that low-cost advantage.

    As for lump sum versus drip feeding, it’s a lottery.

    The odds are on your side, because *usually* the market goes up more than it goes down. But there’s no saying you won’t put the lump sum in just before a crash.

    See this article:


    Please remember this is NOT personal financial advice, just reading for your own research and your decision making. 🙂

  • 150 harry_hindsight May 15, 2015, 12:12 pm

    Great site.

    I’ve not spent quite so much time mulling things over as Nick has. I’m 28/london, and on the back of what I’ve read on monevator, opened a charles stan direct account a couple of nights ago, with intention of putting 1k in to Lifestrat 100Equities Acc, and drip feeding in 50 or 100/month thereafter. Just getting in to good habits.

    Whenever I make a purchase from here on out, I’ll be thinking about Warren Buffet and his 1950’s sofa dilemma.

    Assuming the market takes a 30% dive at some point, I won’t bat an eyelid. As far as I’m concerned the money I’m putting in is written off for the next 20 years at least. If the market crashes and stays crashed, well at least everyone else around me will be in dire straits too.

  • 151 Ben G May 19, 2015, 12:45 pm

    Does anyone know when Vanguard will be introducing Target date funds into the UK? I’m currently investing in a Lifestrategy fund and have read the ways to do this manually, but in the interests of not spending too much time looking at my investments, I’d love a one stop shop, to save me the worry and the temptation to mess with things.

  • 152 Sam July 8, 2015, 9:19 am

    Hi I currently own the 80% LS fund and I was just wondering if it would be worth also investing in a fund with more global exposure like a global small cap?

  • 153 The Accumulator July 9, 2015, 9:25 pm

    Hi Sam,

    That move should make you a little more diversified and increase your expected return a smidge. The downside would be increasing costs a tad and a likely increase in volatility. Also a slight increase in the complexity of managing your portfolio. As with anything in investing it’s a balancing act and the outcome is uncertain, it’s a question of how you want to skew the characteristics of your portfolio.

  • 154 Richard September 4, 2015, 11:54 pm

    I have about £40k in a M&G UK FTSE Index tracker in an ISA. I really like the sound of these funds; would it be worth me transferring my ISA to hold one of these funds?

  • 155 Sal September 19, 2015, 3:14 pm

    Hey, the accumulator, Really amazed and what i’m reading.

    Found your superb site by way of the fantastic mr money moustache, and i’m so glad to see a british perspective on investments.

    I have two questions about vanguard lifestrategy,

    1) i wanted to know how much is the minimum buy in to actually own a LS fund? (looking at 20% fund, i’m a graduate and have limited money to play around with)

    2) Second question is how can i find out about the ethics of the funds that are invested in, from a faith based perspective?

    So for example i know MSCI does catholic and islamic indexes to review what areas are being invested in, but i wanted to know if vanguard is okay or not to invest in from that usuary-averse background i’m coming from?

    i’m muslim and i can see that vanguard seems to be much more professional and easy to use than any other fund but i wanted to know how to check what they are investing in is in line with my requirements.

    I recognise that i may have flubbed up a lot in terms of using terminology incorrectly etc [a sure sign someone should not invest if they dont know what they’re doing] but i want a starting point to work with.

    So for instance if i knew that in order to get a LS fund i’d need atleast 1K (probably vastly underestimating, i imagine its something like 50k) then i could work towards that.

    secondly if the ethics are right, then also it would give me a bit of understanding that i could lock away a part of my money in this fund safe in the knowledge that 20 years down the line it would pay dividends for me.

    I’m 27, with the exception of student loans [taken at the time when pay back costs were less than inflation] have 0 debt, how do i start?




  • 156 The Accumulator September 19, 2015, 3:44 pm

    Hi Sal,

    Thank you for your kind words about the site. I’m glad you’re finding it useful.

    The minimum amount required to buy into a fund depends on the broker who holds it for you. Many will allow you to buy in from as little as £50. However, it’s advisable not to allow trading costs to exceed more than 0.5% of the total transaction, so I’d only buy in at the £50 level if your broker didn’t charge dealing commissions. This series is a good starting point for making your first investments:


    For a more general starting point on investing, try this:


    Vanguard UK doesn’t offer any catholic or islamic indexes. It does provide this product which it describes as socially responsible:


    iShares offers a small number of ETFs that follow MSCI Islamic indexes:


  • 157 Nick October 6, 2015, 9:58 pm

    Hi Accumulator,

    apologies for returning with more questions but this time its short, I promise 🙂

    a page back I picked your brains on my DIY portfolio which was largely stolen from your Slow and Steady portfolio. My allocations were worked out as:

    World – 50%
    UK – 20%
    Small Cap – 10%
    Emerging – 20%

    At this stage I only have a small amount invested but we all have to start somewhere. Hopefully in several decades I will pat past Nick on the back rather than curse him!

    Anyway, I also have 12k in a company pension which is in FL BlackRock (40:60) Gl Eq Idx (Aq C) as this seemed the most diverse, yet risky option available. Previously I hadn’t considered to additional skew towards to UK for example (40%) in the BlackRock fund. When considering diversification, would you consider your pension separate or include everything in the same picture?

  • 158 The Accumulator October 9, 2015, 7:21 pm

    Hi Nick,

    If it’s all devoted to the same objective e.g. retirement, then count it all as part of the same picture.

  • 159 Grant October 19, 2015, 4:53 pm

    Hello Accumulator,

    Firstly, thank you for an excellent resource regarding passive investing, and for putting me onto Tim Hale’s Smarter Investing – it has been a revelation.

    I am 40 and want to move my £160k Stakeholder Pension with Standard Life and £27k Hargreaves Lansdown ISA to Interactive Investor. Having done my research, this will be the cheapest platform to execute my 15 to 20 year plan.

    The plan is to make regular monthly investments into LifeStrategy 80 for the SIPP and LifeStrategy 100 for the ISA.

    My question(s) is/are this…

    As a passive investor, market timing is not supposed to come into play, however, with the sum of money involved in the SIPP, and the fact that the lion’s share of the investments in the index are riding close to all time highs, would I not be better waiting for the index to drop significantly before dropping the £160k into the fund so that there is room for growth?

    I have also considered the option of making a replica portfolio of Vanguard ETF’s and just buying the items where the index is low just now (i.e. Emerging Markets), and building the portfolio as and when the time seems more sensible over the next 12 to 24 months. Does this strategy appear sensible?

    I am also mindful of the fact that the money will not be working for me in terms of dividend yield etc while I wait for the right time to invest, so was considering putting it into a UK Gilts / Bonds fund such as iShares Core UK Gilts UCITS ETF in the meantime, but I am worried about the short term ‘eggs in one basket’.

    I would appreciate your take on this strategy.


  • 160 The Accumulator October 24, 2015, 12:46 pm

    Hi Grant,

    The question you need to ask yourself is: how will you know when the right time to invest is?

    If you’re sitting in cash or bonds and the market is going up and away from you, what will you do? Make good the mistake knowing you’ve missed a chunk of growth or double-down and wait for the market to bend to your will? If the market lurches down, will that be the right time to invest, or will you decide that further falls must follow?

    It’s the impossibility of forecasting future market movements coupled with human instincts that tend to fail in the face of investing dilemmas coupled with the plain fact that markets trend up over time that drive the passive philosophy of ‘devise your plan and then stick to it’.

    Essentially your plan is based on a gamble dressed up as prudence.

    But, it’s completely normal to feel queasy at moving enormous amounts all at once. If it’s currently invested and you can transfer it ‘in specie’ then why change that? But if during the process you end up in cash and can’t overcome the psychological hurdle of reinvesting in one go then try doing it in stages: e.g. 25% a time for the next 4 quarters.

    Studies show that on balance investors are better off investing a lump sum all at once, because the market tends to rise over time. But certainly a pound cost averaging approach will work better during certain periods when the market tumbles – you just can’t know in advance which conditions will apply. Here’s a bit more: http://monevator.com/lump-sum-investing-versus-drip-feeding/

    I should also tell you that a lot of Monevator readers have complained about Interactive Investor’s service over the last 12 months. See the comments section here:

  • 161 Grant October 24, 2015, 8:01 pm

    @Accumulator, thanks for your reply.

    While I agree in most part with what you are saying, I feel that it is possible to make certain educated gambles on what may happen.

    Looking at the S&P 500 chart over the past 20 years and it is plain to see that we are riding the crest of a very big wave, the size of which has never been seen in it’s history. Based on the fact the lions share of the the world trackers / ETF’s are invested in this market, and that we are the end of 7 years of developed world QE, with rock bottom interest rates, and I feel that it stands to reason that a correction is soon to come.

    I am changing from a managed pension to a self managed passive portfolio, so I need to make sure that I enter the market at a time when the existing funds have room to grow. I don’t believe that I have ‘edge’ or will make the best market timing decision ever, but I do believe that I can handle sitting in cash for the next 12 months while I watch what happens. If nothing
    I am all for taking the passive route

  • 162 Grant October 24, 2015, 8:12 pm

    oops, I hit the submit by accident – to continue…

    If nothing changes then I am happy to take the passive route with my regular investments in the meantime. But, I think holding the sizeable lump sum as cash / bonds in the short term (1 year) is a prudent gamble.

    Thank you for the heads up re. II. Based on the fact that they have been around a while and recently updated their pricing, I hope that they are a reasonable bet for the foreseeable future. Using their regular investment plan keeps things as cheap as possible with a £150k+ portfolio. Selftrade do look good, but as @TheRhino mentioned in your comparison post, they have been bought by Equinti with a promise to hold the current pricing structure for 12 months.

  • 163 The Accumulator October 24, 2015, 8:29 pm

    Good luck to you, Grant. You are right that it is a gamble. It’s not passive investing. If you accept that you don’t have edge then the logical conclusion has to be that the risks you list are already known to the market and baked into the price.

    The US may well just dish out anaemic returns for the next 10-years rather than crash. It may well crash but for reasons as yet unknown, or hits the skids beyond the next 12-months, just after you’ve got in. Perhaps the US defies expectations or is balanced by results in the rest from the rest of the world.

    The market is littered with the bones of investors who believed the market was bound to unfold as they expected hence the old quote: the market can stay irrational longer than you can stay solvent.

    Just one example: commentators have predicted rising interest rates since 2009. Still hasn’t happened.

    Anyway, I do wish you well. You do face a tough decision and I appreciate that. Let us know how things turn out.

  • 164 Grant October 24, 2015, 9:05 pm

    I have read Tim Hale’s book. I have read many posts on your blog. I have read many other websites. In my mind the logic cannot be argued with – passive investing is the way to go. I think I just need to jump in and see it through.

    If I was starting from scratch this would be a no-brainer. It is just the lump sum that bothers me. Perhaps, I need to take a leap of faith. I have 15+ years in the market ahead of me. What could go wrong? 😉

    As an aside, would you consider this too complex a portfolio? There is definite home bias, and fairly risky on the weight of EM and SmallCap, however, I think it has all the ingredients that I am looking for. Using £1.50 regular investment fees it is not too expensive to maintain:

    Developed World Equities
    Vanguard FTSE Developed World ex UK Equity Index Acc – 21%
    UK Equities
    Vanguard FTSE U.K. All Share Index Acc – 15%
    US Equities
    Vanguard US Equity Index Acc – 13%
    Emerging Markets
    Fidelity Emerging Markets W Acc – 9%
    Vanguard FTSE Developed Europe ex UK Equity Index Acc – 7%
    UK Small Cap
    Aberforth UK Small Companies – 6%
    Global Small Cap
    Vanguard Global Small-Cap Index Acc GBP – 6%
    iShares Core Japan UCITS ETF – 4%
    Asia Pacific
    BlackRock Pacific ex Japan Equity Tracker D Acc – 4%
    UK Index Linked Bonds and Gilts
    BlackRock Index Linked Gilt Tracker D Acc – 8%
    Global Bonds
    Vanguard Global Bond Index Hedge Acc GBP – 7%

    Or, do you believe the KISS principle is the way forward:

    World Equities
    Vanguard FTSE All-World UCITS ETF – 80%
    Global Small Cap
    SPDR® MSCI World Small Cap UCITS ETF – 5%
    UK Government Bonds
    Vanguard U.K. Government Bond UCITS ETF – 15%

  • 165 The Accumulator October 25, 2015, 4:30 pm

    Yes, the first one seems unnecessarily complex as the individual country funds are all contained in the Dev World fund bar the UK, of course. A halfway house would be:

    Dev world ex UK
    Emerging markets
    UK small cap
    Global small cap
    Inflation linked bonds
    Nominal bonds

    Of course, even that is a magnitude more complex than just using a Lifestrategy fund.

  • 166 Grant October 25, 2015, 4:48 pm

    Thank you for your thoughts @TheAccumulator. Most appreciated.

    I have spent some time thinking this all through and I will go with a drip feed into the LifeStrategy fund alongside my regular investments.

    Thank you once again for your input, and keeping this blog running.

  • 167 Finster November 1, 2015, 9:22 pm

    I notice that HSBC have released their “HSBC Global Strategy Funds” which are built on passive funds. There are “Cautious”, “Balanced” and “Dynamic” versions containing 25/75, 65/35 and 80/20 allocations respectively. The OCF is between 0.17% and 0.20% and rebalancing is done quarterly.

    Just wondering if anybody has any thoughts on using these in addition to the LS funds, for diversification?

  • 168 The Accumulator November 7, 2015, 8:07 am

    Hi Finster,

    Looks like they are a rebrand of these:

  • 169 Tado May 26, 2016, 5:52 pm


    Like many people here, I am on my early 30´s and had virtually no savings. Suddenly I got a compensation of £80K which is chilling on a current account at Barclays at the moment. I was thinking about the LifeStrategy 80% because I want to invest long term and I have a couple of questions (never invested before):

    · I don´t know the needed steps from my bank account to investing into Lifestrategy
    · I have been told that for a single portfolio on Lifestrategy, with a single entry the best course of action is a platform with an annual flat rate if the investment is over £20K. Is that true? (pe. Halifax´s Share Dealing is £12,50 per year against Hargreaves & Lansdown´s approx 0,70% per annum).

    Thank you very much in advance!

  • 170 The Accumulator May 26, 2016, 6:26 pm

    Hi Tado,

    Well done on tucking some money away. I was a bit older than you before the penny dropped for me.

    When you open an account with your broker you’d normally move cash in with a debit card. I guess that sort of money could set off alarm bells so probably a good idea to ring up the broker and talk it over.

    Yes, at £80K flat-rate is the way to go. Some more options here: http://monevator.com/compare-uk-cheapest-online-brokers/

    This is another Vanguard all-in-one fund that’s just becoming available now and worth knowing about: http://monevator.com/vanguard-target-retirement-funds/

    More on investing basics: http://monevator.com/category/investing/passive-investing-investing/

  • 171 edel July 19, 2016, 8:40 pm

    quick question what is the FTSE equity income index that vanguard uses in the life strategy 100 or what does it comprise off? many thanks

  • 172 Andrew Porter July 28, 2016, 3:43 pm

    To a new person investing initially sounds quite simple but the more you read the more complicated it gets!

    I would imagine there are three main ways new people may want to invest:

    – A Pension with regular contributions
    – An ISA with regular contributions
    – A large lump sum (with no contributions)
    – A small lump sum (with no contributions)

    Whatever you want to and however you want to invest things get very complicated when trying to find the cheapest broker.

    – Question: Is there a way to avoid the ‘middle man’ broker and invest directly with the Index Fund or ETF?

    From all the things I’ve read on this blog it is suggested that the best thing a lazy, virgin investor should invest in an All World Index. The problem with this is that Vanguard doesn’t do any All World Indexes, only an All World ETF and I understand that there are reasons not to use ETF’s although I’m not sure exactly why (I heard from one person that ETFs track daily moves then reset each day which can mean that if the market goes up 20% you only end up with 10% of the move). They don’t include emerging markets so you would need to purchase a tracker for that. You would also need to buy some bonds if you didn’t want 100% equity.

    – Questions: Are emerging markets covered?
    Are small caps covered?

    This means that perhaps a Vanguard LifeStrategy Fund should be the next best call but the problem with this is that it doesn’t replicate the market and has a home bias (too high an allocation of UK shares). Also it doesn’t cover commodities, property, and small-cap and value shares.
    If both of those are ruled out then you need to look around and find an Index tracker for each area of the market and invest with the correct allocation, although the problem with this is that you need to rebalance every year and you might be tempted to play around with the allocations. Perhaps a combination of:
    – Vanguard FTSE Dev World ex-UK Equity Index
    – Vanguard FTSE UK All Share Index Trust (GB00B3X7QG63)
    – Vanguard UK Government Bond ETF (VGOV)

    Do I have everything right and does that about sum the basic options up?

  • 173 The Accumulator August 9, 2016, 6:33 pm

    Yes you can invest directly with some index fund providers. For example, you can invest with Vanguard directly if you’ve got over £100K. You will of course be restricting your choices to Vanguard products and you should read this: http://monevator.com/investor-compensation-scheme/

    That ETF rumour you heard applies to a very niche set of ETFs that should be avoided but aren’t representative of all ETFs. You need to do a lot more research. This is a good place to start: http://monevator.com/category/investing/passive-investing-investing/

    Vanguard’s All World ETF and LifeStrategy funds both contain a small amount of emerging markets and small cap in so far as they’re captured by their indexes. That’s not the same as a small cap tilt though where you invest in a small cap fund to push your portfolio towards an asset class that has historically earned superior returns than the plain market (sometimes, maybe, not guaranteed. Do more research).

    Your separates portfolio misses emerging markets. Lifestrategy has some property exposure in so far as REITs are part of the broad market index. Don’t worry about commodities, small cap or value until you’ve done much more research – even then they’re a complication that’s not for everyone.

    Hope that helps a bit.

  • 174 Paul Stansfield August 15, 2016, 2:28 pm

    Hi Accumulator,

    I have a request for an article! I am passive and totally lazy and want my cake and I want to eat it now.

    In the various articles you cover a massive range of investments, but some, like ETF’s are simply not lazy enough for me as they require me to do stuff like re-invest dividends and do balancing and stuff.

    I would really like an article that covered funds that are ACC (accumulate totally lazily) that are low cost (very passive) and would be options to diversify into areas that Vanguard for example does not, or where I have an interest…

    Couple of fund examples for me are HSBC’s FTSE 250 ACC, Blackrock Global Property and Blackrock Natural Resources. (I had a hard-on for BHP in the 90’s and can’t seem to kick it, even if I am a bit wiser about the medium these days!) I wanted the latter two to diversify into some cyclic’s beyond the ‘general’ equity sphere (my vanguards are lifestyle 80% and US equity ACC’s) even though I have kind of double bubbled, I can live with it!

    The above covered my interests in diversification, but I sure there are others out there who, whilst being as super lazy as me, would welcome a well researched article on the cheapest places to play. (a bit like your ETF’s article but fund’y. ACC’y and more lazy…..;-)

    many thanks


  • 175 Andrew Porter September 3, 2016, 1:40 am

    Thanks for the info.

    I was also wondering about how using something like Moneyfarm compares with just buying Vanguards LifeStrategy if you are investing say £5,000. Any amount below £10,000 is fee free so going with them saves you the 0.25% or so platform fees and then you can transfer out once you are above £10,000 and they start charging 0.6%?

  • 176 dlp6666 October 13, 2016, 10:57 am

    I know that a 60/40 equity/bond split was the traditional recommendation (thus Vanguard LS 60%) but now that bonds are so expensive, should the Vanguard LS 80% (with only 20% bonds) really be the ‘default’ option?


  • 177 HelenB October 15, 2016, 2:53 pm

    I have been convinced by the passive investing arguments and in particular I’ve found this site very helpful, so thatnkyou muchly for all the helpful advice and articles.

    The life strategy funds have been a godsend to me as I’m just not that interested in learning everything possible about the market. On the other hand I’m very much in favour of saving up for the future.

    I’m now wondering though if the Life Strategy is diversified enough or maybe too heavily weighted ot the UK?

    I am British but expatriated in the EU. Given both Brexit and our family situation I think it is very unlikely I will be moving back to the UK any time soon (or ever) but I still have investments in the UK and I have so far been continuing to invest some other income into lifestrategy funds in the UK via a UK online broker.

    Given the likely change in our plans I’m now not sure if I should move some of that into an equivalent here or even if there is an equivalent based here? It seems that Vanguard’s standard indexes are available but not the lifestrategy funds. (I’m happy to be corrected on this if anyone knows differently), in which case I could imagine buying into an extra index based on Europe ex UK for example.

    I would be happy to hear your comments on this – I guess there must be a fair few British expats in this kind of quandary and as the UK government starts to use us and our EU compatriots in the UK as “playing cards” (Thank you very much Liam Fox), it’s hard to know what will happen in the future but the current 25% ish weight in lifestrategy in the UK seems a little over-exposed right now…

  • 178 The Accumulator October 15, 2016, 8:02 pm

    Hi Helen, yes, Vanguard Lifestrategy has home bias and Vanguard themselves generally argue against it. They do know, however, that UK investors are more likely to buy a home biased product…
    Whether overweighting the UK proves to be the right call or not though, that’s a crapshoot. Equity returns and economic performance are poorly correlated. Valuations and expectations are stronger drivers e.g. if everyone sells the UK market cos they expect it to underperform – driving prices down – then it’s entirely possible to do very well – i.e. you buy UK equities on the cheap and then the UK does better than expected.

    A World ex-UK fund is the obvious rebalancing tool, but if you wanted to introduce a different kind of home bias and that home is likely to be Europe then, yes, Europe ex UK makes sense.

  • 179 HelenB October 16, 2016, 12:51 pm

    Thanks for the reply – that’s very interesting – so the home bias is deliberate for marketing purposes basically then? Does it also partly reduce the effect of currency shocks perhaps?

    I clearly need to do more research!

  • 180 brexit shy investor October 17, 2016, 11:25 am

    I have bought into passive investing and have a chunk of money in Vanguard Lifestrategy.
    I have just come into some money and would like to invest more ~£100k.

    The problem is that after brexit the price is up significantly which I can only assume is due to the conversion into the poor pound so I held out waiting to see if the pound would recover (i guess i am trying to time the currency market here but there you go…)
    Clearly my hesitation hasn’t helped as VGLS has rocketed further due to the falling pound.
    I feel I do need to jump in ASAP but see future currency corrections as a worry.
    Is there a way I can hedge the currency risk of the pound recovering in the future (such as shorting the pound?) which I can buy for the long term with minimal cost (and hassle)? What options are open to me?

  • 181 The Accumulator October 17, 2016, 8:05 pm

    @ dlp – your bond allocation should be a function of your risk tolerance, here’s a piece to help you gauge: http://monevator.com/how-to-estimate-your-risk-tolerance/

    If you were previously a 60:40 kind of a guy but are worried about bond risk then take a look at shorter-term gov bond ETFs (there aren’t any fund equivalents) rather than cutting back the allocation by 20%. Shorter-term bonds are less volatile in the face of interest rate rises.

    @ brexit – that’s the least convincing buying into passive investing I think I’ve ever heard 😉 But I do sympathise. It’s not easy throwing in that amount of money all at once. The problem is there will almost always be some kind of market upheaval making you second guess yourself. It’s important to realise you are facing a psychological hurdle rather than a financial one. If you’re investing for the long-term then today’s currency gyrations will soon be swamped by other developments. Here’s some ideas for drip-feeding which you may find easier to do than going all in right now:


  • 182 B November 5, 2016, 11:50 am

    Hi, some very interesting reading here especially when sat in a very quiet office at work on a Saturday morning!

    I am an absolute beginner in terms of investment. I am interested in the LS 60/80. Currently I have a small amount ( 8k ) in a cash ISA and thus not a very good return ( £7.50 a month ) I have spoken with a IFA who says I should switch to stocks and shares isa with standard life. For this they want to charge me an initial £300 and then 1.19% ( i think ) per annum.

    Does this sound good and are these fees fair? I thought an initial £300 at nearly 4% of my pot was very high – would I get this back in 1 years interest?!

    Would I be better off buying LS 60 or 80 myself thru a platform like HL?

    Any thoughts appreciated 🙂

  • 183 The Accumulator November 5, 2016, 1:22 pm

    Hi B,

    Those fees are very high and you’d need to know whether that’s all the fees you’re buying. Have they for example counted the fund manager’s fees too? If you bought from say Cavendish Online, you’d pay 0.25% (platform fee) plus Vanguard’s fund fee, so around 0.55% per year.
    If you consider that LS 60 might be expected to make a 4% real return per year (on average, over a long period of time, and no guarantees) then you’d be giving up more than 25% of your returns to your IFA and Standard Life. That’s a huge chunk and helps illustrate why it’s so important to minimise the fees you pay.

    Here’s a piece on the cost of costs:

    Here’s some help with your research into buying your own funds:

    Here’s a broader overview on DIY investing:

    Best of luck and glad you’re putting your Saturday morning to good use 😉

  • 184 B November 5, 2016, 2:42 pm

    Thank you for your reply & the additional reading. I will have a good read over the weekend.

    I thought those charges sounded expensive but it’s great to hear your thoughts.

    Has anyone had any experience with moneyfarm? Looks to be an interesting option for newbies like myself with almost being a half way house between using an IFA & sorting things out yourself?

    Any thoughts great fully received!

    Thanks B

  • 185 Neil Callander December 7, 2016, 12:02 pm

    I am thinking about investing 8k into Vanguard Lifestrategy 80% and drip-feeding £100 a month into it for say the next 10 years.
    Is this wise or can anyone recommend using other Vanguard funds to give a better overall return.
    Having tried active funds before, I found that I meddle and now want a simple investment life and I can check on once a year and let it do the re-balancing for me.

  • 186 Jamie December 29, 2016, 2:20 am

    I’ve recently started building a small portfolio and have found the advice on this blog invaluable so thanks for all of your great work. I have just bought a range of equity index funds so far as it’s taken me a while to get my head around bonds. Following a comment on one of the other articles I am thinking of using Vanguard Lifestrategy 20 to cover my bond allocation (I would use a lifestrategy fund with 100% bond allocation if this existed). I notice their bond allocations have changed quite a lot since this article was written with much smaller allocations to gilts, especially index linked, and the greatest allocation now being to global bonds. Does anyone know if the global bonds are hedged to sterling? I would rather not take on the additional currency risk, especially with the pound currently so unusually low, but I can’t seem to find any information on this in the Vanguard literature.

    Incidentally does anyone know the reason Vanguard made these changes? I wanted to avoid allocating too much to gilts due to concerns I’ve seen raised about there being a bubble and also due to the long duration of index linked gilt funds so I wondered if the changes were based on similar thinking.

  • 187 The Accumulator December 31, 2016, 12:20 pm

    Hi Jamie,

    Yes, they are hedged. You can see the funds that sit within the LifeStrategy ‘package’ as separates here: https://www.vanguard.co.uk/uk/portal/investments/all-products?productType=indexFund

    They are listed as hedged.

    Vanguard produced a paper that explains their reasoning: https://www.vanguard.co.uk/documents/adv/literature/going-global-with-bonds-tlor.pdf

    Principally they’re attracted to greater diversification and avoidance of country-specific shocks. For example, raging inflation in the UK could badly damage gilt returns while the rest of the world experiences kinder conditions.

  • 188 Jamie January 3, 2017, 4:04 pm

    Thanks for the links. I’ve decided to follow their thinking re global diversification with bonds (+ also influenced by your recent article on index linked gilts). I’m going to allocate 1/3rd each to UK Gilts, Global bonds and Global inflation linked bonds. I decided against LS20 in the end as fees are higher and it doesn’t really simplify things if you have to take into account the 20% equity too.

    I’m just looking for a value equity fund now to complete my portfolio and then forget about it. I can’t find anything other than ETFs (my portfolio + monthly allocation is too small to warrant the dealing fees) or Dimensional funds (I’d prefer not to go through a financial advisor). Does anyone know of an OEIC value fund? If not I’ll probably stick with what I have until my portfolio is big enough to make a VVAL ETF worthwhile.

  • 189 The Accumulator January 3, 2017, 5:06 pm

    Hi Jamie, the only OEIC value options I know of are by 7IM. It gets complicated though because they don’t have a single global value fund but split out:

    UK – 7IM UK Equity Value Fund C
    Europe ex UK
    Emerging markets

    That’s a lot of work for a small portfolio and may well take you below minimum contribution levels on your platform.

    Another option is to invest in Vanguard’s Global Small Cap fund. It’s not value but does expose you to a risk factor.

    There may well be a global value fund somewhere among the active set and available for a cheapish price. I’ve rooted around before and not come up with anything I liked but you may do better.

  • 190 Jamie January 9, 2017, 9:35 am

    Ah yes, thanks. I had seen someone comment on the 7im value funds before but couldn’t find them on my platform (Cavendish). I’ve now realised they are available, they just don’t appear on the fund researcher part of the site. I’ll have a look into them. Cheers

  • 191 Joe January 18, 2017, 11:32 am

    I’ve been tracking the Vanguard Lifestyle 80 options in my watchlist for the last few days and am about to jump in.

    Today the accumulator version is down -1.85% but the income version is up 0.41%.

    Can someone explain this difference? I understand that one pays out dividends and one reinvests them but if anything I’d have thought the former would therefore grow in capital value? Thanks.

  • 192 The Accumulator January 18, 2017, 7:19 pm

    Take a look at the difference over the last 3 years or 5 years. Difference over a couple of days – doesn’t matter.

  • 193 Joe January 18, 2017, 7:22 pm


    I’m more just curious about the mechanics. I assumed both funds would have identical holdings and so would rise and fall at the same time.

    But is this not the case?

    Am I also right in thinking that their price isn’t linked to the demand for the fund, like it would for an individual stock, but for the value of the underlying indeces they are tracking? Thanks.

  • 194 The Accumulator January 18, 2017, 7:27 pm

    They should be identical and this has come up before but I can’t remember the details now. Could be some minor difference in dividend treatments or dates or the measurements being taken at slightly different times. You’ll often be able to find different results for a fund just by looking at different sources.

  • 195 TT January 18, 2017, 11:59 pm
  • 196 Jon January 19, 2017, 8:57 am

    Thanks for the article – very interesting. I’m just starting to dabble in investing after having sat on low interest savings accounts for the past 10 years. An interesting point on Vanguard Lifestrategy Vs moneyfarm. Appears that they essentially do the same ‘job’ (albeit with different asset classes) but Moneyfarm has no fees depending on amount invested. Any comment on the two different strategies?

    Also, I can’t seem to get my head around dripfeeding and cost – how do I access the single transaction cost fee? My current platform looks like it will charge £5.95 for every transaction…

  • 197 Simple_socrates March 15, 2017, 7:42 am

    The returns chart on VG 80/20 acc is showing a return of 27.48% for year March 2016 to March 2017. At the risk of sounding stupid, is this figure from inception as I’m in the fund for the past year and the returns are no where near this figure.

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