Opinions on a single global/world ETF instead of more than one global/world ETF (110k+ invested)

Ixel

Hi all,
This may sound a bit of a silly post, perhaps, but I was wondering if I could ask for some opinions on whether what I'm currently doing is potentially alright, or whether I should consider doing something else.


Basically I have an account with HL and in that account I have:
- Stocks & Shares ISA currently investing in a VWRP ETF at around nearly £47k
- Lifetime ISA currently also investing in a VWRP ETF at around nearly £18k
- Fund & Share currently investing in a VWRL ETF at around nearly £46k


I chose VWRP for ISA's as it's accumulation, while VWRL for non-ISA is income/distribution (easier to work out for tax returns I imagine).


Now, my main question is whether I'm potentially risking a lot by putting it all effectively via Vanguard, and if so then should I consider splitting it up by moving some of it to another 'global/world' ETF that's not Vanguard in order to diversify a potential risk of putting it all via Vanguard (unlikely for them to currently go out of business all of a sudden I imagine )?


Hope I didn't make things sound complicated, if you have any questions or other suggestions please let me know. Thanks in advance for any opinions/feedback regarding my question.

pip895

Many have substantially more in vanguard- I personally don’t think there is any point in adding a non vanguard global tracker. I would question if you might want to diversify in other ways like perhaps adding a bit of EM or small companies exposure - that’s a different question though.

Ixel

I see, many thanks!


Nice idea regarding the emerging markets and small cap exposure, something I didn't really consider but seems like a good idea. I'm currently looking around at the various ETF's to see what might be the best deal, for emerging markets from what I can see it looks like I should go for either VFEM or XMMS (one being accumulation and the other being income, like how I've done VWRP and VWRL for ISA and non-ISA). Still exploring though, then I need to see what's around for small caps and finally consider what a reasonable rough percentage of the split should be.


One other thing I probably need to consider is the dealing charge, 11.95 GBP to buy outside of regular savings, or sell, so if I were to make some changes I'd have to either consider doing it all now (more costly upfront) or alternatively slowly invest more via regular savings (1.50 GBP each deal which is far cheaper) into an emerging market ETF and small cap ETF until I'm around the target percentage for balancing the ETFs. All in all I believe the latter choice is likely the best one due to how much I'm saving on dealing charges.


Regarding the percentage balancing, I'm not entirely sure what an ideal approach would be, but I assume I won't want to really put a lot into emerging market and small cap. So, I guess something like 80% VWRP/VWRL, 10% VFEM/XMMS and finally 10% to whatever small cap ETFs I consider might be a reasonable approach?


Hopefully I'm not being a bit naive or making it appear simpler than it actually is .


If some kind of a risk profile helps, I'm planning to invest for at least 10 years and am prepared for the considerable potential drops in the stock market. I know if I stay in for the long term that such significant drops should likely recover within some years, I won't pull out and panic and if possible I will continue investing during such events as well. I won't be investing too regularly though, probably every 3 to 6 months, more or less in a bulk amount. I'm also fairly young (nearly 32).


Thanks in advance.

Ixel

Oh, that's good then. I have no need for getting another ETF for EM. I guess I just need to consider a little in small cap as I don't see a mention of that.

barnstar2077

Probably the hardest thing for me regarding investing is resisting the urge to tweak my plans constantly! Mainly because it is boring to stick to the plan, and everyone hates boring don't they! : )

Ixel

True, for me the high dealing fees outside of 'regular investing' (or monthly savings as HL calls it) also help with resisting such temptation though.

dd95

hi Ixel,

May i ask the methods as to how you've managed to save such a good amount for a 32 year old? Very impressed!

Please do not divulge anything personal if you do not wish i am just impressed with the amount saved and looking for tips myself!

Thanks

Ixel

IanManc wrote: »

So far you have £111k invested in a very widely diversified global capital weighted index tracker.

That is a good choice, and you've even done your research and chosen accumulation for tax wrapped products and income for unwrapped to make it easier to work out your tax, so you've made an excellent start.

Thanks . Yeah I did as much research as I could into investing and what a reasonably efficient and fairly simple method would be.

IanManc wrote: »

Seeing you are only going to trade every 3 to 6 months you might in time consider moving your ISA and dealing accounts from a percentage based platform like HL to something like IWEB, part of Halifax sharedealing, which charges £5 for each deal and has no percentage custody charges, so the dealing charges are all you pay. As the value of your investments grows over the years this could save you a lot of money.

That's a good suggestion, I did think of transferring to another platform but I guess I'm a bit hesitant because I'm used to HL and I don't want to go through all the 'prove my identity' stuff again. It's something I will strongly consider for attempting early this year though as overall I could then save more money on the charges, especially over the long term.

IanManc wrote: »

Personally I wouldn't worry about small cap at the moment with the total amount of money you've got invested. As of 30.11.19 VWRL/VWRP is invested in 3371 companies and in the smallest one of those holdings 1.11p of your £111k is invested.

https://www.vanguardinvestor.co.uk/investments/vanguard-ftse-all-world-ucits-etf-usd-distributing/portfolio-data?intcmpgn=equityglobal_ftseallworlducitsetf_fund_link

If you really want to be even more diverse than you already are then you could take a look at the Vanguard Global All Cap Index Fund (not an ETF) which tracks the FTSE Global All Cap Index. That invests in 6439 companies worldwide, but on £111k then the total sum you would have in small caps would be small, even though it would be in proportion to their capital weight in the world market.

https://www.vanguardinvestor.co.uk/investments/vanguard-ftse-global-all-cap-index-fund-gbp-accumulation-shares/portfolio-data?intcmpgn=equityglobal_ftseglobalallcapindexfund_fund_link

Your investment is already very diversified and you're investing in a large number of companies across the world. You could drive yourself nuts wondering what else you should be doing when in fact you're already doing the right thing.

That's an interesting idea, something I will also consider even if it's something to do for a little later this year or somewhere within the short term. Indeed, but it's good to know that I'm mostly doing the right thing already .

dd95 wrote: »

hi Ixel,

May i ask the methods as to how you've managed to save such a good amount for a 32 year old? Very impressed!

Please do not divulge anything personal if you do not wish i am just impressed with the amount saved and looking for tips myself!

Thanks

Hi,
Well, I currently run a small company which has a nice turnover at the moment. I've also inherited a little bit. Nothing super amazing or extraordinary. The only debt I have is my student finance loan but as I'm on plan 1 I'm letting that get slowly paid off instead of me overpay it with the money I currently me. I also have credit cards both of which have a reasonable credit limit but I always pay those off in full every month, while just reaping the rewards (e.g. Sainsbury's for nectar points). I also have an emergency fund which should last a little more than six months, most of which is earning a little interest in a combination of some current accounts and some regular monthly savings accounts. To further save a bit on expenses I currently live at home with parents rather than renting or getting a mortgage on a place of my own.



I don't imagine the above is really helpful as tips, but that's pretty much all I've done. As I say, nothing amazing or really out of the ordinary I guess .

EthicsGradient

Vanguard has very low ongoing charges for developed world products (see https://www.vanguardinvestor.co.uk/articles/latest-thoughts/investing-success/fee-cuts-show-vanguard-commitment ), 0.12% or less, while their FTSE All-World ETF (VWRP or VWRL) is 0.22% - the same as their Emerging Markets ETF. So it would make sense to do future investments in 2 or 3 parts - Developed World via Vanguard, and emerging markets and/or small companies separately, either via Vanguard or other providers whose ETFs have competitive charges.

pip895

IanManc wrote: »

Seeing you are only going to trade every 3 to 6 months you might in time consider moving your ISA and dealing accounts from a percentage based platform like HL to something like IWEB, part of Halifax sharedealing, which charges £5 for each deal and has no percentage custody charges, so the dealing charges are all you pay. As the value of your investments grows over the years this could save you a lot of money.

As the OP is invested in ETFs he wont save much if anything moving from HL - their ISA charges are caped at £45 and there is no custody charge in a fund & share account. I'm not sure iWeb have any regular dealing reduction in charges so his monthly purchase costs could go up from £1.50 to £5. Moving to vanguard could be more expensive as well, their cap is £375 though he would at least save on dealing. HL is also one of the only platforms to have a LISA.

I shouldn't have used the word diversify when I mentioned SC & EM - its more that as these areas are supposed to outperform over the long term he might want to over weight them.

Ixel

All good points. Indeed, HL's annual charge of 0.45% is capped with ETF's at £45 for an ISA (each ISA I think, so £90 in total if so, of which I need at least £10,000 in each ISA to hit the cap - which I'm over ). Fund & Share as you've mentioned has no annual charge for ETF's so I make a nice saving there. The LISA is also an important factor for me. Overall it sounds like I should stay where I am, with HL, unless for some unexpected reason I plan to deal regularly (instantly that is, not via the regular monthly savings facility). I don't anticipate that I'll be needing to instantly deal on a regular basis.


Regarding the emerging markets and small cap, I see. That's interesting to know and will do a bit of studying in these areas. More than likely given I'm planning to be in it for the long term then it would make sense for me to put a little more weighting into both of these areas on the assumption that they are supposed to outperform in the long term.


Thanks for the suggestion!