Vanguard LifeStrategy™ Funds –
a simple and low-cost 'buy and forget' investment
Vanguard LifeStrategy™ funds are ‘funds of funds’ – a ready-made diversified portfolio of index funds, automatically rebalanced for you.
You effectively buy the whole market: No need to choose a fund manager and hope they make the right decisions at the right time. You don’t look for the needle, you buy the haystack.
You get global diversification with no hassle: A mix of shares from developed to emerging markets and a blend of bonds from companies and governments. You don’t have all your eggs in one basket.
Your portfolio is rebalanced automatically: It keeps the same split of equities and bonds you choose so you always have the same risks and potential for reward whatever happens in the markets.
68% cheaper than investing in an actively managed fund: As there’s no fund manager to pay, these portfolios cost just 0.24% a year, compared to 0.75% a year, the average cost of an actively managed fund. No other fund manager expenses or hidden charges. Ours and platform charges are the same as with actively managed funds.
Just one simple decision – that’s all you need to do
There are five funds to choose from, each with a different mix of equities and bonds. Equities (shares) tend to be riskier than bonds. So, a cautious investor could have a greater portion of bonds, whilst an adventurous investor could opt for a greater proportion of equities. Most investors choose the traditional ‘balanced’ mix: 60% equities (shares) and 40% bonds.
|Vanguard LifeStrategy™ 20% Equity||Vanguard LifeStrategy™ 40% Equity||Vanguard LifeStrategy™ 60% Equity||Vanguard LifeStrategy™ 80% Equity||Vanguard LifeStrategy™ 100% Equity|
|Read KIID (accumulation)||Read KIID (accumulation)||Read KIID (accumulation)||Read KIID (accumulation)||Read KIID (accumulation)|
|Read KIID (income)||Read KIID (income)||Read KIID (income)||Read KIID (income)||Read KIID (income)|
|For shorter-term investing (3 - 5 years) and investors with less tolerance for risk||For medium to longer-term investing (5+ years) and investors with a moderate tolerance for risk||For longer-term investing (10+ years) and investors with a higher tolerance for risk|
All index funds aim to track the market, but they’re not all the same.
Some track a particular index, e.g. the FTSE All-Share, by owning shares in some or all of the constituent companies. So, if company ABC represents 5% of the index, 5% of the fund is invested in company ABC shares.
Other funds don’t hold shares. They use complex financial instruments, ‘derivatives’, to mimic index shares’ movement. This could result in more accurate tracking but expose investors to additional risks.
Vanguard funds invest mainly in shares to minimise risks. They track the index returns as closely as possible by holding a greater number of constituent shares than most other funds.
Vanguard is an investment company like no other. It’s not owned by shareholders, but by its US funds, so, by all those who invest in them. Vanguard created the world’s first index fund in 1976 and is now the world’s second largest investment group.
The value of investments can fall as well as rise so you could get back less than you invest. Income or growth are not guaranteed. This information is not personal advice. You must decide for yourself if an investment is right for you. If unsure, please seek advice.
Image credit: Stuart Isett / Fortune Live Media