ETF advice

Manesova83

Hi all,

As a UK citizen living abroad, I finally got round to choosing an international broker service. When I lived in the UK, I had a Vanguard S&S ISA, with most of my money in the LS60 fund. It's still there, in fact. As I'm the sort of guy who likes to stick with what he knows, my plan is to invest in Vanguard ETFs through my new brokerage account. Unfortunately the LifeStrategy products aren't available.

If my goal is to diversify as much as possible and put my money somewhere where I can just forget about it and top up each month, would you recommend just picking one global ETF, like the Vanguard FTSE All World UCITS, or do you think it's better to mix and match? The ETF I mentioned is heavily weighted towards the US market, plus it doesn't really cover emerging markets and small-caps, so it would cover some things more than others.

Basically, I want to avoid over complicating things while still giving myself maximum opportunity to benefit from any gains in the global market. So what's better: one ETF to rule them all, or splitting my money between several.

Thanks in advance!

Edit: I should also add that I also plan to invest a proportion of my money in a bond ETF. Oh and I'm 35.

A_T

Manesova83 wrote: »

If my goal is to diversify as much as possible and put my money somewhere where I can just forget about it and top up each month, would you recommend just picking one global ETF, like the Vanguard FTSE All World UCITS, or do you think it's better to mix and match? The ETF I mentioned is heavily weighted towards the US market, plus it doesn't really cover emerging markets and small-caps, so it would cover some things more than others.

This ETF does not have small cap but it's weighting towards US and Emerging Markets is accurate to FTSE's measure of global market cap. If you choose different weightings you're basically saying you think you know better than the market.

If you want a fund that includes small cap then you could go for Vanguard FTSE Global All Cap Index fund - but it's not an ETF

masonic

It covers emerging markets and smaller companies based on their market capitalisation. If you want to overweight them, then you would need to mix and match as I don't believe there exists an ETF that makes active management decisions like that.

You can certainly get close to the weightings of VLS using a small number of ETFs, if that's your desire. But overweighting the UK (as in VLS) may not make sense for you if it is not your home country.

bostonerimus

You might want to think about some bond index too.

Vanguard FTSE All World is large and mid size global cap weighted index, do you have specific reasons for adding small cap or over weighting emerging markets?

Alexland

If you are now limited to ETFs not funds then consider a shares ETF and a bond ETF in the desired proportions and devise an efficient strategy to rebalance. For your shares ETF then yes I like the FTSE All World index as (compared to a World index) it has EM and a bit less US.

Alex

Manesova83

bostonerimus wrote: »

You might want to think about some bond index too.

Vanguard FTSE All World is large and mid size global cap weighted index, do you have specific reasons for adding small cap or over weighting emerging markets?

My thoughts around having a degree of small-cap exposure were purely about diversification. If I went for the Vanguard ETF mentioned, I'd be missing out on that segment of the market. Obviously, being a passive, inexperienced investor, I don't really know if that's desirable or not.

Manesova83

Alexland wrote: »

If you are now limited to ETFs not funds then consider a shares ETF and a bond ETF in the desired proportions and devise an efficient strategy to rebalance. For your shares ETF then yes I like the FTSE All World index as (compared to a World index) it has EM and a bit less US.

Alex

Yes, that's the way I'm leaning. On the subject of Bond ETFs, I don't think I have access to one that has global exposure, like the Vanguard Total Bond market ETF. So I'd have to pick one that is more specified, i.e. GILTs, US treasuries, corporate bonds, etc. I have literally no idea what the pros and cons are of these different bond types, so any recommendations on a safe bet?

Thanks!

Alexland

Does your new platform charge fees to buy and sell ETFs? If so you need to consider if any possible performance improvement would cover the cost of having more ETFs than necessary.

Sounds like you need to rummage around your platform for a bit longer to see what bond ETFs are available.

coastline

Chart below gives you an idea of how large and small cap have performed recently..

https://www2.trustnet.com/Tools/Charting.aspx?typeCode=NM990100,FI2X3

I look for full physical replication method and fund size over £1 billion. Basically the likes of VWRL.

Manesova83

Alexland wrote: »

Does your new platform charge fees to buy and sell ETFs? If so you need to consider if any possible performance improvement would cover the cost of having more ETFs than necessary.

Sounds like you need to rummage around your platform for a bit longer to see what bond ETFs are available.

Yes, but they are nominal. Plus I get one free ETF trade per month, which is about all I'll need.

Sorry, just one more question for anyone out there: does it matter which country an ETF is listed in? It seems in some cases I can choose the same ETF listed on a different stock exchanges. My brokerage account's base currency is EURO.

coastline

Manesova83 wrote: »

Yes, but they are nominal. Plus I get one free ETF trade per month, which is about all I'll need.

Sorry, just one more question for anyone out there: does it matter which country an ETF is listed in? It seems in some cases I can choose the same ETF listed on a different stock exchanges. My brokerage account's base currency is EURO.

might get a few answers here.?

https://www.justetf.com/uk/

https://www.justetf.com/uk/news/etf/the-effect-of-currencies-on-etfs.html