Why Vanguard LifeStrategy model portfolios mean more value to advisers

March 2, 2023

Neil Cowell, Head of UK Intermediary Distribution, Vanguard UK

At Vanguard, we see our role as helping to make sure financial advisers have the choice of solutions and services they need to best serve their clients. In fact, our story in the UK began through our partnership with financial advisers – a strategy to which we remain wholly committed.

Nowadays, advice is no longer just about making good use of surplus financial assets. The reality is that clients are living longer and yields are expected to remain low by historical standards, making investing for retirement and inter-generational planning even more challenging.

With that in mind, we believe the need for good quality financial advice is only going to grow. Our research suggests clients greatly value the uniquely human skills advisers offer in providing the peace of mind that their investments are being managed well. They also value the emotional support and guidance that advisers can give through sometimes difficult economic conditions and financial decisions. At the same time, advised clients tend to favour automation for portfolio-related tasks, such as asset allocation and rebalancing[1].

Delivering value with LifeStrategy

Vanguard’s LifeStrategy offering is designed to give advisers more time back to focus on strengthening client relationships. Because Vanguard handles asset allocation, portfolio construction and regular rebalancing, advisers using LifeStrategy can spend more time building client relationships and other more complex, higher value-added tasks, such as estate planning, tax services and spending strategies, for example.

LifeStrategy is our flagship multi-asset offering and is one of the UK’s most popular investments, with more than £35 billion[2] invested across the mutual fund range since it was launched in the UK in 2011. The range has delivered value to more than 4000 adviser firms, freeing them up to focus on their client relationships. The funds are intended to serve as all-in-one investment solutions, or as the core of a broadly diversified portfolio, with five equity-to-bond ratios available to meet the needs of most investors.

As part of our ongoing partnership with advisers in the UK, we’re always looking for ways to help them deliver more value to their investors. We recognise that for some clients, advisers can prefer to use model portfolio solutions (MPS), so we’re delighted to announce that LifeStrategy is now available to advisers in both fund and model portfolio format. The LifeStrategy MPS range includes two versions: Vanguard LifeStrategy MPS Classic and Vanguard LifeStrategy MPS Global.

More choice, more value

The Vanguard LifeStrategy MPS Classic range includes five model portfolios that mirror the asset allocation of the Vanguard LifeStrategy mutual funds, providing broadly diversified, high-quality exposure to global equity and fixed income markets via a portfolio of underling index funds.

The success of the Vanguard LifeStrategy mutual fund range suggests many UK investors continue to hold a preference for their home market. As such, the Vanguard LifeStrategy MPS Classic range follows the same design; the portfolios have a tilt towards the UK with a 25% weighting to UK equities and a 35% weighting to UK bonds.

At the same time, we recognise that some investors might not want a tilt to UK investments.To meet this need, Vanguard is pleased to be launching the Vanguard LifeStrategy MPS Global range, which includes the same five equity-to-bond ratios without the strategic tilt to the UK, providing a purely global market capitalisation-weighted approach.

The LifeStrategy MPS ranges will be rebalanced on a quarterly basis, as opposed to the mutual fund portfolios, which are rebalanced daily, based on cashflows as well as certain thresholds.

We’re excited to be able to provide advisers with a preference for model portfolios access to Vanguard’s market-leading LifeStrategy offering. It’s all part of our mission to deliver value to investors and our appreciation for the role of advice in achieving that mission.

Investment risk information

The value of investments, and the income from them, may fall or rise and investors may get back less than they invested.

For further information on risks please see the “Risk Factors” section of the prospectus on our website at https://global.vanguard.com.

Important information

This article is directed at professional investors and should not be distributed to or relied upon by retail investors.

This article is designed for use by and is directed only at persons resident in the UK.

For further information on the funds’ investment policies and risks, please refer to the prospectus of the UCITS and to the KIID before making any final investment decisions. The KIIDs for these funds are available, alongside the prospectus via Vanguard’s website https://global.vanguard.com

The information contained in this document is not to be regarded as an offer to buy or sell or the solicitation of any offer to buy or sell securities in any jurisdiction where such an offer or solicitation is against the law, or to anyone to whom it is unlawful to make such an offer or solicitation, or if the person making the offer or solicitation is not qualified to do so. The information in this document is general in nature and does not constitute legal, tax, or investment advice. Potential investors are urged to consult their professional advisers on the implications of making an investment in, holding or disposing of [units/shares], and the receipt of distribution from any investment.

The Authorised Corporate Director for Vanguard LifeStrategy® Funds ICVC is Vanguard Investments UK, Limited. Vanguard Asset Management, Limited is a distributor of Vanguard LifeStrategy Funds ICVC

Issued by Vanguard Asset Management Limited, which is authorised and regulated in the UK by the Financial Conduct Authority.

[1] Source: Vanguard, as at 31 March 2022.

[2] Source: Vanguard. See P. Costa and J. E. Henshaw, 2021: ‘Quantifying the investor’s view on the value of human and robo advice’.