FTSE All World UCITS ETF

bcfclee27

Afternoon,

After reading the below articles I have been considering investing in the Vanguard FTSE all world ETF.
Does anyone else invest in this or similar.

Are they a good option for investing and leaving for 20 years with a view to a decent level of growth ?


http://monevator.com/why-a-total-world-equity-index-tracker-is-the-only-index-fund-you-need/

http://monevator.com/how-to-chooose-total-world-equity-trackers/

ValiantSon

bcfclee27 wrote: »

Afternoon,

After reading the below articles I have been considering investing in the Vanguard FTSE all world ETF.
Does anyone else invest in this or similar.

Are they a good option for investing and leaving for 20 years with a view to a decent level of growth ?


http://monevator.com/why-a-total-world-equity-index-tracker-is-the-only-index-fund-you-need/

http://monevator.com/how-to-chooose-total-world-equity-trackers/

Would this be in addition to, or instead of, the HSBC Global Strategy/Vanguard LifeStrategy funds you had previously intended to invest in?

bcfclee27

ValiantSon wrote: »

Would this be in addition to, or instead of, the HSBC Global Strategy/Vanguard LifeStrategy funds you had previously intended to invest in?

This would be in addition to those funds.

Just trying to diversify as much as possible.

AnotherJoe

You wouldn't be diversifying at all in that case just buying more of the same ina slightly different ratio.

If you want to diversify you should buy something that's unlikely to be much represented in the other funds, , such as smaller companies, emerging markets or a slant on particular areas, perhaps biotech for example.

bcfclee27

AnotherJoe wrote: »

You wouldn't be diversifying at all in that case just buying more of the same ina slightly different ratio.

If you want to diversify you should buy something that's unlikely to be much represented in the other funds, , such as smaller companies, emerging markets or a slant on particular areas, perhaps biotech for example.

Thanks joe that's helpful.

Audaxer

I agree that to diversify more you would need to invest other areas not covered as much by your two global multi asset funds. However to do this will need a bit more research and the portfolio will need more active management and rebalancing on your part than just buy, hold and forget for 20 years. I think there is a lot more scope to get it wrong that way unless you are knowledgeable and experienced. For an easier strategy with less maintenance and a good chance of decent long term returns you should maybe just keep investing in the two globally diversified multi asset funds you already have.

ValiantSon

As AnotherJoe and Audaxer have said, this wouldn't increase the diversity of your portfolio. There are areas that AnotherJoe identifies that you could look at buying ETFs in, but on balance, I wonder if it would actually be all that beneficial given the more active management needed from you (not least with rebalancing). It is just my personal view, but if I were in your position I would simply stick with the multi-asset funds.

ColdIron

Don't forget that if you added a 100% equity tracker you would be reducing your bond allocation. You won't increase your equity diversification by adding the same stuff but you would be reducing your asset class diversification. Was this the plan?

bcfclee27

Audaxer wrote: »

I agree that to diversify more you would need to invest other areas not covered as much by your two global multi asset funds. However to do this will need a bit more research and the portfolio will need more active management and rebalancing on your part than just buy, hold and forget for 20 years. I think there is a lot more scope to get it wrong that way unless you are knowledgeable and experienced. For an easier strategy with less maintenance and a good chance of decent long term returns you should maybe just keep investing in the two globally diversified multi asset funds you already have.

Thanks Audaxer.

I'm reading up all the time but don't think I will ever have enough knowledge to do anything other than VLS etc.

My current portfolio is VLS & HSBC global strategy.
These funds I'm happy with as hold and forget for 20 years like you say above.

I'm aware emerging markets and small cap aren't very well held in these funds so was looking at investing in these areas to add to my current "portfolio".
However if I cannot just hold and forget emerging markets and small cap then I will leave alone as would be getting way out my depth.

Is this the case and why can I not just hold these like I would with say the vls60 ?

Thanks

Linton

bcfclee27 wrote: »

......

I'm aware emerging markets and small cap aren't very well held in these funds so was looking at investing in these areas to add to my current "portfolio".
However if I cannot just hold and forget emerging markets and small cap then I will leave alone as would be getting way out my depth.

Is this the case and why can I not just hold these like I would with say the vls60 ?

Thanks

You can buy and forget but....

Say you allocated 10% of your portfolio to Small Caps. Over time they may perform much better than the VLS 60 and their % in your portfolio could rise to 15%. To return your portfolio to your original %s you would need to sell some of the Small Caps and reinvest in VLS60. This is known as rebalancing.

This is what VLS60 does with the internal funds it holds, so for example it can keep the equity to 60%. But if you hold more than one fund directly, no matter whetther its Small Cap or EM or anything else, rebalancing is something that may need to be done.

Rebalancing has the advantage that if the price of Small Caps rises more than VLS60 you can then sell at a relatively high price and buy cheaper VLS60 units. Conversely if Small Cap then performed worse than VLS60 you would sell the high priced VLS60 to buy more low priced Small Cap. So you are always selling high and buying low, which is far more lucrative than the reverse.

Rebalancing isnt a major chore - it shouldnt be necessary more than say once a year.

Audaxer

Linton wrote: »

You can buy and forget but....

Say you allocated 10% of your portfolio to Small Caps. Over time they may perform much better than the VLS 60 and their % in your portfolio could rise to 15%. To return your portfolio to your original %s you would need to sell some of the Small Caps and reinvest in VLS60. This is known as rebalancing.

This is what VLS60 does with the internal funds it holds, so for example it can keep the equity to 60%. But if you hold more than one fund directly, no matter whetther its Small Cap or EM or anything else, rebalancing is something that may need to be done.

Rebalancing has the advantage that if the price of Small Caps rises more than VLS60 you can then sell at a relatively high price and buy cheaper VLS60 units. Conversely if Small Cap then performed worse than VLS60 you would sell the high priced VLS60 to buy more low priced Small Cap. So you are always selling high and buying low, which is far more lucrative than the reverse.

Rebalancing isnt a major chore - it shouldnt be necessary more than say once a year.

Rebalancing shouldn't be a major chore, but the OP would need to be fairly disciplined to rebalance by selling high and buying low. I think a lot of inexperienced investors would be tempted to do the opposite.

If you were adding single sector funds, I would have thought as well as rebalancing, the portfolio would need closer monitoring to ensure the funds continue to be the right funds and percentages for your portfolio? So if the OP just wants to buy and forget, would he not be better just sticking with his multi asset funds?