How Vanguard manages the investments in your Managed ISA

New to our Managed ISA or just want to know more about how it all works? We answer your frequently asked questions on how we manage your portfolio.

Whether you're just starting out or already invested, you might lack the time or confidence to choose and manage your investments. That's why Vanguard launched the Managed ISA in December 2022.

As part of this service, we take care of your investments for you so you can focus on doing what you love. 

But how exactly do we do that? Below, we answer our clients’ frequently asked questions on how we manage your portfolio, from changing your risk profile to navigating choppy markets.

What is Vanguard’s Managed ISA?

The Vanguard Managed ISA is a Stocks & Shares ISA that invests in a selection of our funds. 

Unlike our self-managed ISA, where you choose funds yourself, or our LifeStrategy range, where you invest in a pre-built selection of funds, our managed ISA service select funds that align with your risk profile and manages your portfolio. 

Who is it for?

The Vanguard Managed ISA is designed for investors who are willing to take on investment risk but don’t have the time, expertise or inclination to manage their own investments. The goal is to grow the value of your investments over the long term.

How does it work?

The Vanguard Managed ISA offers five portfolios, each tailored to a specific risk profile: very cautious, cautious, moderate, adventurous and very adventurous. Your risk profile is determined based on the answers you give about your feelings towards risk when you sign up to the service.

The main difference between the portfolios is their percentage split between share and bond¹ funds (see ‘What is my portfolio invested in?’). Shares generally offer higher potential returns but come with greater swings in prices. Bonds, on the other hand, are typically more stable but offer lower potential returns. 

Each portfolio contains up to 12 low-cost index funds² which invest in shares and bonds (or just shares in the case of the very adventurous portfolio) across the globe. By investing in funds that spread your money across different regions and industries, you’re not overly exposed to downturns in specific parts of the market. 

The weighting towards each fund is designed to create a globally diversified portfolio that reflects the current make up of global markets. For example, you might notice that the largest geographical allocation in your portfolio is the US. This is because the US represents a significant part of the world’s companies.

The index funds within these portfolios aim to mirror the performance of a particular index. For example, the Vanguard US Equity Index fund aims to track the performance of the S&P Total Market index. 

When and why might you adjust the geographical exposure of my portfolio?

We review the geographical split of the managed portfolios every year to ensure they remain as closely aligned to global markets as possible. 

What is my portfolio invested in?

Currently, the very cautious, cautious, moderate and adventurous portfolios each invest in six Vanguard funds focused on shares and six Vanguard funds focused on bonds. The proportion of shares and bonds varies according to the risk profile, as detailed in the table below. The very adventurous portfolio invests solely in six share-focused funds.

Risk profile	Shares	Bonds
Very cautious	19%	81%
Cautious	43%	57%
Moderate	61%	39%
Adventurous	81%	19%
Very adventurous	100%	-

When and why might you buy and sell funds in my portfolio?

Our primary goal is to make sure your portfolio is always appropriately aligned with your level of risk. We therefore review portfolios daily to determine whether we need to buy or sell funds. This will typically be driven by market moves which may see the proportion of shares and bonds in your portfolio change. If it moves by 5 percentage points or more we will rebalance the portfolio.

For instance, imagine that after a strong year in the stock market, the value of shares has risen whereas the value of bonds has remained stable. This would mean your portfolio is more heavily weighted towards shares which, as mentioned above, are generally riskier than bonds.

It’s important to maintain the mix of investments that’s right for you and reflects your attitude to risk. To do that, you would need to sell some shares and buy some bonds – this is called ‘rebalancing’ your portfolio. We do this for you.

How do I see which funds you’ve bought or sold?

You can view your account to see if we have bought or sold any funds. To do this, select ‘Transactions’, and then ‘Orders’ in your Managed ISA account dashboard. Please note that with our managed service, you will not be able to buy or sell funds yourself.

Can I change my risk profile?

While you can change your risk profile at any time, this is typically done in response to a change in your circumstances, such as a shift in your financial goals, such as a new goal or a change in time horizon (and not simply due to feeling nervous or confident about markets). You can check what risk profile you are aligned to in your account dashboard and we also remind you in your annual check-in and quarterly updates. You should consider your options carefully before changing your risk profile solely based on market conditions. We do not recommend reacting to market events.

Why does the value of my portfolio change?

Financial markets will inevitably experience ups and downs, which means that the value of your investments can also fluctuate. As with any type of investing, including our managed service, where we manage your investments for you, you could get back less than you invested. 

There’s a term in investing called ‘risk premium’, which is the additional return that investors get for taking on extra risk. When you invest, there’s a risk of losing some or all of your investment, but there is a premium to compensate for this. Put simply, higher returns for being invested is the reward for taking risk. 

Should I do anything if and when markets fall?

The best thing to do when markets fall is to remain calm and think long term. Market fluctuations are a normal part of investing. While we can’t predict when these ups and downs will occur, we know they are inevitable. It’s important to consider staying invested during these periods because, over time, markets have historically delivered strong results. 

What does Vanguard do if and when markets fall?

Our managed service does not make short-term decisions about where to invest based on market movements. Instead, we take what is known as a ‘strategic’ approach to the split of shares and bonds in your portfolio. This means we invest in a pre-set mix of shares and bonds depending on your attitude to risk (as we showed in the table above). 

We don’t change the mix of shares and bond based on a short-term view of what will happen in markets. Markets can be unpredictable and difficult to forecast, so we do not make short-term changes to the portfolio on that basis (unless the portfolio moves out of line with your level of risk). 

What will happen to my portfolio when markets are turbulent?

We invest your portfolio in a mix of share and bond funds that aligns with your attitude to risk to help smooth out the ups and downs of investing. By holding a globally diversified portfolio of investments in different regions and industries, you can benefit from growth opportunities in some parts of the market, while reducing the impact of downturns in others. This helps to avoid unnecessarily large losses and provide more stable returns over time. 

It’s important to remember that while shares can experience greater price fluctuations than bonds, they usually deliver better returns over the long term. Bonds are typically less risky, so having some exposure to bonds can help to smooth out overall returns.

Apart from our highest-risk managed ISA portfolio (very adventurous), all our managed risk profiles include a mix of share and bond funds.

 

¹ Bonds are a type of loan issued by governments or companies, which typically pay a fixed amount of interest and return the capital at the end of the term.

² An investment fund that aims to closely match the returns of a specified market index. The fund may hold all of the constituents of the particular index or buy a sample of those constituents so that its performance is as close as possible to the index.

Last updated: 17 April 2025