New to investments - monthly payments

Bravepants

My current strategy is to use VLS 60% and Fidelity World Index to make up 70% stocks and 30% bonds, since Vanguard don't do a VLS 70. When I turn 50 in a couple of years I may dump the World Index into VLS 60 too.

P

Dird

grey_gym_sock wrote: »

this approach is performance chasing, i.e. picking whatever's done well recently.

Did you select the funds with the worst performance at the time then? Of course not.
Reasons Fidelity > LS:
1. Consistency: Weighted by market cap so geographic allocations unlikely to change much. LS is basically whatever they predict will be a good % allocation to each of their index trackers with UK % changing quite a lot since exception. With LS you're hoping their team are smarter than the average active portfolio in determining geographic allocations
2. Cost: 0.13% vs 0.22%

grey_gym_sock

Dird wrote: »

Did you select the funds with the worst performance at the time then? Of course not.

yes, sometimes ... it all depends why they've done badly. for instance, if it's because the charges are very high, then that will always be a drag on performance, so it's a good reason to steer clear. but if it's because the area / style of investment a fund focuses on has been out of favour, then it may come back into favour (unless it's a "style" that has some serious flaw), and in this case worse performance could even be a good sign, because there can be "reversion to mean" - i.e. laggards may tend to bounce back; though this is not a sure thing.

presumably "UK is pretty !!!!" is a technical way of saying that you expect UK equities to give lower returns than ex-UK equities in the future. there's not much reason to believe that, and certainly not on the basis of the UK having given lower returns in the last 5 years or so. 5 years is a short time in investing.

Reasons Fidelity > LS:
1. Consistency: Weighted by market cap so geographic allocations unlikely to change much. LS is basically whatever they predict will be a good % allocation to each of their index trackers with UK % changing quite a lot since exception. With LS you're hoping their team are smarter than the average active portfolio in determining geographic allocations

that's a better reason.

2. Cost: 0.13% vs 0.22%

i thought fidelity index world was 0.15% ... it may depend which site you're looking at.

in any case, not a lot in it. and vanguard are more likely to trim their charges when they can, since they are not-for-profit.

another difference to mention is that the fidelity fund excludes emerging markets. you may prefer that, but it should be a deliberate decision to include or exclude them.

you can also get funds that cover both developed and emerging markets (but are otherwise like the fidelity fund, in the sense that they don't overweight the UK). e.g. vanguard FTSE global all cap (costing 0.24%), or HSBC FTSE all-world (0.20%).