• Vanguard LifeStrategy ETFs are multi-asset portfolios that combine stocks and bonds in different proportions to cater to the spectrum of investor goals and preferences.
• Advisers can select from four LifeStrategy ETFs, ranging from 20% equity to 80% equity, each providing global diversification at a competitive annual cost of 0.25%.
• Advisers that use LifeStrategy ETFs leverage Vanguard’s multi-asset expertise and client-focused approach.

In today's rapidly evolving investment landscape, financial advisers face an ever-growing challenge. With the complexity of investment options continually expanding and the time to evaluate these options increasingly scarce, professionals are under pressure to find efficient solutions that maintain high performance standards while simplifying portfolio management.

This environment demands tools that not only meet diverse client needs but also enhance decision-making efficiency, ensuring that advisers can focus on strategic oversight and client relationships.

Vanguard’s LifeStrategy ETFs (exchange-traded funds) offer a long-term solution to these challenges with a host of potential benefits to you and your clients.

What are LifeStrategy ETFs?

Vanguard LifeStrategy is an international family of multi-asset portfolios that offer uncomplicated and cost-efficient exposure to global equity and bond markets. Our LifeStategy offerings in the UK and Europe manage a combined €51.78 billion¹ on behalf of investors.

The LifeStrategy ETF range is exclusive to investors in Europe and launched in December 2020, including four portfolios that consist of Vanguard’s world-renowned ETFs. Each portfolio is defined by the proportion of equities and bonds it holds. For investors with shorter time horizons and/or a lower tolerance for risk, there is the LifeStrategy 20% Equity ETF, which holds 20% equities and 80% bonds, and the LifeStrategy 40% Equity ETF (40% equities and 60% bonds). At the other end of the risk-tolerance spectrum is the award-winning² LifeStrategy 60% Equity ETF and the 80% Equity ETF.

Each portfolio provides access to more than 20,000 individual securities³ for an annual ongoing charges figure (OCF) of only 0.25%⁴ a year. That means with only one multi-asset ETF advisers can provide clients with diversified exposure to global markets at a low cost.

With Vanguard LifeStrategy ETFs, investors reap the benefits of a global leader in multi-asset solutions with more than 45 years of index-investing expertise and experience in constructing multi-asset portfolios. Vanguard’s mutual, client-owned structure in the US⁵ aligns our interests with those of Vanguard investors globally. As a result, investors benefit from Vanguard’s stability, experience, low costs and client focus.

The benefits of strategic asset allocation

Research has shown that asset allocation tends to have a significantly greater impact on a portfolio’s long-term performance than factors such as stock selection or market timing⁶. That’s why the LifeStrategy ETFs maintain a fixed exposure to global equity and bond markets – we call this strategic asset allocation, in contrast to tactical asset allocation, whereby managers can change the mix of assets freely. By taking a strategic approach to asset allocation, not only do investors have a better chance of meeting long-term financial goals, but advisers and clients also know how their capital is invested at all times.

With LifeStrategy ETFs advisers only need to establish a client’s investment goals and risk preferences to then choose the most suitable equity-to-bond ratio – and leave the rest to Vanguard.

Once the most appropriate LifeStrategy ETF is chosen, Vanguard’s investment experts ensure that the portfolio maintains the target allocation to equities and bonds, rebalancing the portfolio appropriately on a regular basis. Not only does this process save advisers time, it also helps to guard against any tendency to chase returns by choosing assets based on recent short-term performance, effectively instilling discipline.

The principles underpinning the LifeStrategy range

The LifeStrategy range has been created in accordance with Vanguard’s four principles for investment success. These are:

• Goals: investors should first set measurable and realistic goals and then develop a plan to achieve them. LifeStrategy ETFs are available in four different variants for different client objectives and risk profiles.
• Balance: after choosing the appropriate balance of equities and bonds, LifeStrategy ETFs offer global market diversification that allows clients to participate in stronger-performing markets and sectors, while offsetting the negative impact of weaker-performing ones.
• Low costs: investors have no control over markets, but one thing they can reduce is their cost of investing. Every euro spent on costs and fees directly reduces the potential returns they realise.
• Discipline: investors should always address short-term fluctuations and the emotions they provoke by taking a long-term perspective and keeping an eye on the goals that have been set. LifeStrategy ETFs are broadly diversified so that they are particularly suitable for a long-term commitment. Automatic rebalancing within the portfolios also ensures that the targeted risk profile is maintained over a long period.

Peace of mind for clients and advisers

With LifeStrategy ETFs, advisers can leverage Vanguard’s expertise in portfolio construction and management at a low cost. For clients, this means a long-term investment that is designed to meet their financial goals and timeframes.

Effective communication also promotes trust among clients. This is why we regularly provide advisers with materials to aid client conversations by keeping them informed and helping to instil confidence. For example, quarterly portfolio performance updates and regular macroeconomic insights can help you provide clarity and context for clients, while behavioural coaching tips and aids can support effective conversations with clients during difficult and even sanguine market conditions.

With LifeStrategy ETFs, not only do advisers benefit from the knowledge that their clients’ capital is in safe hands, they are also able to free up time to engage in activities that provide additional support and value to their clients.

Look out for our next blog when we explore how LifeStrategy ETFs can help advisers spend more time on the services that investors value most.

¹ Source: Vanguard, as at 31 July 2024.

² The Vanguard LifeStrategy 60% Equity UCITS ETF (EUR Accumulating) won a Morningstar Award in March 2024 in the category: Germany – Best EUR Allocation Fund.

³ Source: Vanguard, as at 31 January 2024.

⁴ Source: Vanguard, as at 31 January 2024.

⁵ Vanguard Group Inc. (VGI) is owned by Vanguard’s US-domiciled funds and ETFs. Those funds, in turn, are owned by their investors. While we cannot replicate this structure in Europe, we believe that it drives the culture, philosophy and policies throughout the Vanguard organisation worldwide.

⁶ For example, see Gary P. Brinson, L. Randolph Hood, and Gilbert L. Beebower, 1995. 'Determinants of portfolio performance.' Financial Analysts Journal 51(1):133–8. (Feature Articles, 1985–1994).