Global Tracker choices

darkidoe

TheTracker wrote: »

I prefer buying separate ex-UK, UK, and EM trackers to an All-World tracker like the HSBC one you mention, buying UK and ex-UK in proportion to their global capitalisation. It's slightly cheaper (about 0.15% plus additional trading costs vs 0.2%), it allows me to have a small tilt to EM by giving it a slightly higher weighting, and I'm buying separate small cap, property, and value trackers as tilts anyway so its not any additional work. It gives me a little more flexibility to chase OCFs as they proceed further down, and exploit that competition, not only in funds but in platform charges. It just seems more future proof a strategy. Sure, trading costs are a little higher, but with a large enough portfolio not enough to substantiate choosing a higher OCF. Crank the numbers.

Or you could go the other direction with an even wider tracker to capture small caps, such as the FTSE Global All Cap Index instead of the FTSE All World index, by using a tracker like the new Vanguard FTSE Global All Cap Index Fund albeit at 0.24%, but may be appealing if the portfolio size is of the right size (i.e. small enough to be easily swayed by trading costs but large enough to be on a per-trade priced platform). Crank, crank, crank, ...

Just curious, what have you used for your small cap tracker? I have looked at the SPDR MSCI WOSC ETF. Haven't found a comparable etf on the justetf website. I am debating the use of actives for small caps tilt as well.

HarryFlatters

If you're not wedded to an ETF Vanguard have a Global Small Cap Index Tracker with an OCF of 0.38, not much else out there.

TheTracker

That's the fund I use.

Linton

The Vanguard Global Small Cap fund is 60% US. You may be happy with that, otherwise you could lower the % with the help of specific geography Small Company funds.

TheTracker

I still hold some iShares MSCI UK Small Cap at 0.58% OCF but am no longer contributing to it.

darkidoe

Linton wrote: »

The Vanguard Global Small Cap fund is 60% US. You may be happy with that, otherwise you could lower the % with the help of specific geography Small Company funds.

Are active funds in this sector something worth looking at?? Any examples that I can compare with the passive ones?

TheTracker

darkidoe wrote: »

Are active funds in this sector something worth looking at?? Any examples that I can compare with the passive ones?

There's been many a thread on this forum, usually with myself and Linton disagreeeing, over whether active management has a special place in the small cap sector. You can guess our positions. I do not recall, however, any specifically nominated funds. So I am all ears!

Linton

darkidoe wrote: »

Are active funds in this sector something worth looking at?? Any examples that I can compare with the passive ones?

Active funds are definitely worth looking at either because they are good or simply because trackers have great difficulty in this area. A true Small Company tracker would need to buy into a lot of small companies whose shares may be rarely traded or not readily available in the quantities a major fund may require. Also a tracker buys its shares based on company size. This means that most of its investments are in the largest companies in its markets. An SC fund that mainly holds large small companies seems a little bizarre.

On the other hand an active fund can cherry pick a relatively small number of companies that it believes are worth investing in. So for an SC fund to be successful I believe the manager needs to understand the companies it holds. For that reason I would be suspicious of an active Global SC fund. There are a wide range of active SC funds in each of the main geographic areas - easiest to look on Trustnet. There are separate sectors for the UK, US, Europe and Japan small companies. The UK is a particularly strong here - in my view it's much more worthwhile investing in UK Small Companies than in the FTSE100.

If you really wanted to stay passive you could look at midrange trackers - eg HSBC have a FTSE250 tracker to cover the UK or there is a mid range Russell Index for the US for which you could probably find an ETF. I dont know of anything for Europe or Japan.

PS for information, not recommendation, I hold:
Baillie Gifford Japan SC
Threadneedle European SC
Marlborough Special Situations
Neptune Mid Cap (oddly this appears to be more of an SC fund than many funds called SC)
F&C US SC

Note that different funds have different definitions of SC.

darkidoe

Thanks to Linton and TheTracker. I might have come across some debates about this before but haven't really registered all the pros and cons. I will look out for the discussions as I trawl the forum for more info. It would be very useful for the next level of my education..

coyrls

darkidoe wrote: »

Are active funds in this sector something worth looking at?? Any examples that I can compare with the passive ones?

There are 119 funds in the Morning Star Global Small-Cap Equity category: http://www.morningstar.co.uk/uk/fundquickrank/default.aspx?category=EUCA000836