Vanguard Lifestrategy60 alternative?

Hello. Does anyone know of a single multi-asset ETF similar to Vanguard Lifestrategy60 but without the home bias that Lifestrategy has?

Ideally I’d like a single fund that tracks the MSCI World index and a global bond index. Lifestrategy60 seems good but I don’t want the 25% UK exposure on the equity side and 35% on the fixed income side that it has. Any ideas please? Thank you!

In a word: none. :frowning_face: At least not within InvestEngine’s universe of ETFs.

Even if you venture outside InvestEngine into all ETFs available on the LSE, there are just these 3 that are kinda close to your preferred allocation, each with its own quirk:

  • BlackRock ESG Multi-Asset Growth Portfolio (MAGG)
    Actively managed, not index tracking. Around 83% equity, 17% fixed income. Equity side: 59% North America, 3% UK.
  • BlackRock ESG Multi-Asset Moderate Portfolio UCITS ETF (MAMG)
    Actively managed, not index tracking. Around 47% equity, 53% fixed income. Equity side is like 62% North America, 3% UK.
  • SPDR Morningstar Multi-Asset Global Infrastructure (GIN)
    As the title implies, tracks a Morningstar index that is infrastructure-oriented. Split 50%/50% between equity and fixed income as the index dictates. Equity side: 64% North America, 3% UK.

If you are into MSCI World + a global bond index tracker, the lowest TER among InvestEngine’s MSCI World ETFs is 0.12%, while all of InvestEngine’s global aggregate bond ETFs have the same TER of 0.1%. Not bad compared to LifeStrategy 60’s 0.22%.

Also consider: if you agree with this recent WSJ article, frequent rebalancing is overrated anyway. So compared with the appealing buy-it-and-forget-it approach of a LifeStrategy fund, the extra effort involved is limited when you: 1. choose a MSCI World ETF; 2. choose a global aggregate bond ETF; 3. decide on the allocation of each; 4. reassess allocation / rebalance only when you feel like it.

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To keep things simple and probably saving on costs, you could go for a mix of VEVE and VFEM (10:1 ratio gives you about the same regional mix as VWRL at a lower TER). Then have the other X% of your investments in a global bond ETF (VAGP, SAGG, GLBL etc).

You can rebalance your portfolio super easily on InvestEngine, but doing so more than once every few months probably isn’t going to make too much of a difference in the long term, so don’t get too fixated on this.

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Thanks Christopher.

My idea was to uses SWGA and AGBP in 60:40 but I’ll have a think. Such a shame I can’t find a single-ETF solution. I wanted to make things simple to administer if I should pre-decease my wife. Please could you also make note of a “feature request” for accounts in joint names too ( for the same reason). Thank you

Alastair

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Thank you very much Frank, very helpful.

Alastair

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Managing a 3/4 fund portfolio with InvestEngine is easy once it’s all set up, so I personally wouldn’t worry about the complexity. It’s not quite “set and forget”, but you can invest automatically by weight, withdraw across the whole portfolio in one go, and rebalance with a click.

I joined IE because it was the cheapest, but have been really happy with its simplicity and usability so far. So much so, that I’m almost against seeing to many new features being added as the product matures.

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Thank you. Sounds doable! If only they had a joint account too!

I was interested in your statement that you can withdraw across the whole portfolio in one go. Their website says that for DIY portfolios: “If you want to withdraw funds that are invested in ETFs you will need to initiate the sale of the ETFs yourself”. Do you have a link to anywhere that discusses withdrawals in more detail? Thanks

There’s a menu button in “Options” called “Sell portfolio”, where you can sell some or all of your portfolio based on your set % allocations. Then you can withdraw the cash once said assets have been sold.

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Thank you Christopher

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More for general consumption rather than a specific answer to the original poster. There is freely available research done by Pensioncraft (via Youtube video) where Ramin shows that Lifestrategy can be reliably replicated by the use of 4 ETF’s at a substantial discount to the 0.22% charged by Vanguard. In fact, Ramin goes on to show how this can be done using Ishares etf’s or Vanguard ones.
Here is a link to the video, Vanguard LifeStrategy Review 2021 & Create Your Own Cheaper LifeStrategy Funds - YouTube

Very interesting video, well presented. To eliminate, rather than duplicate, Lifestrategy’s home bias I think it can be even simpler:

1

60% SWDA. iShares Core MSCI World UCITS ETF. MER 0.2%
40% AGBP iShares Core Global Aggregate Bond UCITS ETF. MER 0.1% total MER 0.16%

Or

2

HSBC Global Strategy - Balanced MER 0.17%

2 is simpler to administer but unfortunately has active management of its asset allocation

1 is completely passive but needs intervention to rebalance.

I went ahead and tried backtesting these 4 portfolios:

  • Vanguard LifeStrategy 60% Equity Fund A Acc
  • PensionCraft’s LifeStrategy 60% mirror using iShares ETFs
  • SWDA/AGBP 60/40
  • HSBC Global Strategy Balanced Portfolio Accumulation C

The 5-year results:

The trailing returns (as of today):

Period Vanguard LS60 iShares LS60 Mirror SWDA/AGBP 60/40 HSBC GS Bal
1M 2.0% 2.7% 1.8% 2.0%
3M 7.4% 3.0% -3.6% 5.3%
6M 2.2% 0.3% -0.8% 1.5%
1Y -6.9% -6.6% -6.8% -6.0%
3Y 2.2% 2.0% 2.6% 3.3%
5Y 3.7% 3.7% 4.9% 4.4%

So even the SWDA/AGBP combination seems to be doing an okay job of tracking LS60 performance, with more volatility of course, as it uses just 2 funds to do the heavylifting.

In case you wonder: I’ve certainly noticed my simulation of PensionCraft’s LS60 mirror doesn’t seem to track Vanguard’s LS60 as well as PensionCraft’s video shows. Possible sources of discrepancies:

  1. I don’t have access to PensionCraft’s actual allocations. I just made a rough guess at them by visual inspection of the bar chart in their video;
  2. I assumed annual rebalancing but that might not be what PensionCraft did for their video;
  3. Vanguard LifeStrategy funds are actively managed, so their allocations today will certainly be different from a year ago when PensionCraft designed their iShares mirror.
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That’s really interesting thank you Frank. I assume that the poorer short-term performance of SWDA/AGBP 60/40 over the last 6 months is because of LS60s home bias. When its good its good, when its bad its bad! On the whole I think I’d rather not have the bias. I might use the cheaper SPDR MSCI World instead of iShares SWDA, as you mentioned earlier. The fund size (1.86M EUR) is a lot smaller than the iShares one (46M EUR). Does that even matter?

Not in the case of MSCI World because it’s so mainstream.

For less mainstream ETFs though, fund size matters in 2 ways:

  • In general, you don’t want to invest in a fund that’s dwindling in size over time, lest the fund manager decides to give up and liquidate it;
  • If you’re investing in a niche fund, you don’t want the fund to grow too big, as too much capital makes it difficult for the fund manager to trade the underlying stocks without affecting their prices

A related issue is trading volume, which is often correlated to fund size. A fund with low volume may be difficult to trade or the bid-ask spread may worsen. This does not seem to affect SPDR MSCI World.

Hi,
I’ve done something similar to suggested here with IE ETFs to get a TER of 0.07%.

The ETFs are distributing, and auto invest is on, so this is a sort of poormans auto rebalance.

If you don’t like my home bias remove the UK trackers.

If you don’t like inflation protection remove the inflation linked bonds.