World Index Fund ETF or OIEC

Sue58

I have no experience in investing in passive index funds but my son is just starting his journey into investments and has no time for research so he has decided on initially investing in a world index fund. He will be investing the full £20K into a S &S ISA from money he has accumulated in cash ISA's paying very little interest. It is a long term investment.

At the moment he is trying to decide on whether to invest in an ETF such as VWRL or HMWO or go with an OIEC like the HSBC FTSE All World Index Fund. Is there any other ETF's or OIEC's he should consider before making a decision? Also, I think some platforms cap their charges for ETF's so that may save on some costs. Am I right in thinking that ETF's have no FSCS protection? Any views/ opinions would be appreciated

Alexland

Over the long term I would choose HSBC FTSE All World Index fund in an iWeb ISA.

£25 account setup, £5 trade, 0.16% ongoing fund fee and no ongoing platform fee.

https://www.iweb-sharedealing.co.uk/products/our-accounts.asp

ETFs are not covered under FSCS protection, VWRL costs more and HMWO is developed world (not 'all') only.

Hopefully he has the stomach to see losses of around 40% on his journey else consider a mixed asset fund.

Alex

A_T

Alexland wrote: »

Over the long term I would choose HSBC FTSE All World Index fund in an iWeb ISA.

£25 account setup, £5 trade, 0.16% ongoing fund fee and no ongoing platform fee.

https://www.iweb-sharedealing.co.uk/products/our-accounts.asp

ETFs are not covered under FSCS protection, VWRL costs more and HMWO is developed world (not 'all') only.

Hopefully he has the stomach to see losses of around 40% on his journey else consider a mixed asset fund.

Alex

Also VWRL and HMWO distribute dividends rather then reinvest them

Alexland

A_T wrote: »

Also VWRL and HMWO distribute dividends rather then reinvest them

Good point it doesn't sound like he needs the income so this would just cost trade fees to reinvest.

MPN

As well as the HSBC FTSE All World Index Fund he may also want to look at the Vanguard Global All Cap Fund as an alternative OIEC.

ozaz

I have a very similar decision to make having decided to move all my stocks and shares investments into one or two passive funds. So this is a very timely thread for me. Thanks for starting, @Sue58.

Alexland wrote: »

ETFs are not covered under FSCS protection

I was not aware of this downside of ETFs, thanks. Aside from the ability to trade instantly (which isn't really a consideration for long term holdings), are there any benefits to ETFs over OEICs?

short_butt_sweet

Alexland wrote: »

Over the long term I would choose HSBC FTSE All World Index fund in an iWeb ISA.

£25 account setup, £5 trade, 0.16% ongoing fund fee and no ongoing platform fee.

a good suggestion.

though some people might prefer to exclude emerging markets, which could be done by choosing fidelity index world (class P), again in an iweb ISA.

the ongoing fund fee would be 0.13% (instead of 0.16%), and other charges would be the same.

ozaz wrote: »

Aside from the ability to trade instantly (which isn't really a consideration for long term holdings), are there any benefits to ETFs over OEICs?

another advantage is that some platforms have lower charges for holding ETFs than OEICs (if you are investing relatively large sums, and not frequently buying and selling). but other platforms (e.g. iweb) have no difference in charges for ETFs and OEICs.

Alexland

short_butt_sweet wrote: »

though some people might prefer to exclude emerging markets, which could be done by choosing fidelity index world (class P), again in an iweb ISA.

the ongoing fund fee would be 0.13% (instead of 0.16%), and other charges would be the same.

True and I get the frustration that EM countries 'never quite emerge' but holding All World gives the investor an added level of confidence that whatever happens they have it covered. If you only hold World then you might always have that niggling doubt that developed countries might be in decline as globalisation redistributes wealth. Being confident in your choice is important when times get tough.

Alex

MoneyGeoff

Some are mentioned here:

http://monevator.com/low-cost-index-trackers/

Such as Fidelity Index World Fund P (GB00BJS8SJ34) OCF 0.13% and L&G International Index Trust I (GB00B2Q6HW61) OCF 0.13% (this one excludes UK though).

Sue58

Thanks everyone for your views, I have passed all the information on.

Glen_Clark

Alexland wrote: »

Over the long term I would choose HSBC FTSE All World Index fund in an iWeb ISA.
......... 0.16% ongoing fund fee

Just wondering if I'm looking at the same fund as the one I'm looking at says 0.18%