Cheaper alternative to Vanguard Lifestrategy 80

At the moment the total expense ratio for the Vanguard Lifestrategy 80 fund is 25 basis points (0.25%) annually. A more cheap alternative would be the following:

70% Lyxor Core MSCI World DR (0.12% TER)
10% HSBC MSCI Emerging Markets (0.15% TER)
20% iShares Core Global Aggregate Bond (0.10% TER)

The total cost of this portfolio will be 0.119% per annum (more than 2x cheaper), while having almost the same profile as the Vanguard Lifestrategy 80.

Any of you guys have a combination that could be interesting (either cheaper or more diversified)?

You could probably do it marginally cheaper by replacing the Lyxor ETF with funds for Europe, Asia Pacific, Japan and the US. For example, SPXS, which charges 0.05%, would make up about 50-60%, bringing your costs down further.

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True, though you would be missing Canada, which is about 2.4% of the global investable market.

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Yeah, there is VNRT which includes Canada but it’s double the cost at 0.10% and I doubt it would make much – if any – material difference.

It could be worth adding WLDS/WSML for small cap exposure but that would increase your costs. You could also break out the bond exposure by adding a US treasury ETF and so on.

That said, you’d be splitting hairs really and it’s probably best to go with a three-fund solution as above for simplicity’s sake.

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If you DIY, how would you know when to rebalance or not each position? I.e. you are proposing matching the composition now, do you plan to monitor and do the same on an ongoing basis?

Yes, you would rebalance, but not that often, and only in between bonds and stocks. Since if the share of EM in this portfolio increases or decreases, its share in the MSCI ACWI would also increase or decrease respectively (it’s not 100% the same, since both the equity ETFs lack small caps, but probably close enough).
A rule could be that you rebalance when the share of bonds goes below 10% or above 30%.

is there Vanguard Lifestrate 80 in Trading212 if I want to spend more? Couldn’t find it…

T212 won’t be offering the OEICs anytime soon, but I’d imagine the equivalent ETFs will be on the platform before too long. In the interim, you could just chuck VWRP/VWRL and VAGS/VAGP in a pie to achieve more or less the same thing.

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This could be another option. It tracks a random index though, so there may be some overlap with the MSCI emerging markets one. Some classify Korea differently, for example.

Another thing to watch out for with Amundi and Lyxor ETFs is whether they have UK tax reporting status and where they are domiciled. If it’s not Ireland or Luxembourg, there can be tax implications but I think these two are OK.

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Yes, indeed the Amundi tracker is cheaper but the Solactive GBS Developed Markets Large & Mid Cap USD includes Poland as a “developed” economy, whereas MSCI sees it as an “emerging” market. Of course Poland’s share is only 0.1% of the global market cap, so the difference is probably minimal.

Swapping the Lyxor fund for the Amundi fund results in a TER of 0.07% per year (the same as Vanguard’s S&P500 UCITS fund, with this portfolio being much better diversified)

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Since April 2020 HSBC FTSE All World Index accumulation fund is reporting an OCF 0.13%…

It is equivalent to VLS100 rather than VLS80.

You could make it VLS80 with no fee to pay by put aside 20% into high interest Regular Saving Account (RSA), High Interest Current account. In the UK for instance, you could still get RSA for 2% a few are even paying 3%. The intest rate might be increasing with the bank start increasing their interst rate. About 3-4 years ago you could get RSA, High Interest current accounts paying 5% interest. Alternatively if you are fancy to pay OCF 0.15% Vanguard Global Bond Index Fund.

The advantage of put aside 20% into high interest Regular Saving Account (RSA), High Interest Current account; it is easily accessible. You will have to do this anyway for emergency cash.

I am investing in VLS100 but seriously considering to move it to S&P500, FTSE 250, Russell2000 (if available) and do the rest with self-composed actively traded portfolio to comprise high growth stock emerging market, penny stocks with potential runners and multi baggers.

S&P 500 is arguably is still global portfolio as the companies within S&P are global companies with international exposure and revenues comes from multiples countries. I have done self composed portfolio since lat year and will keep adding more in the future.

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Thats an OEIC right, so you’ll have platform fees as well for anywhere that offers it?

It will be beneficial of those who already have account in HL or want to have account in HL (for instance for SIIP purposes) as you will have to pay this fee anyway.

AFAIK, there is No Dealing Charge for OEICs in HL

Regular savers are great for ekeing out a little more interest, but you’re only earning the headline rate on relatively small amounts as contributions are usually capped at £300-500.

Due to the diminishing rates, I tend not to bother nowadays. If you want to squirrel away a four- or five-figure sum, it’s a lot of hassle to open multiple accounts. With some, you’ll lose interest if you withdraw early too.

I do admire the min-maxing though. When I was saving for a despoit, I had like 20 bank accounts!

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