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

pip895

Another point - which you have probably considered but I will mention anyway is CGT. It is worth ensuring capital gains don't build up too far as you are building your investments outside of a tax wrapper. One possibility is when CG has built up to close to the allowance to swap the ETF in your F&S account for another similar one or perhaps for the cheaper VEVE or HSBCs HMWO you could then add in a bit of separate EM & SC at that point.

EM is well catered for by vanguards etf but I personally prefer an active fund for SC. I use JMI - if that is a step too far VMID is good, but mid cap rather than small company.

pip895

IanManc wrote: »

He said in post #3 that he was going to invest every 3 to six months in a single fund.

Even if he did it every 3 months rather than six then the costs in his dealing fund would be £20 a year, and £20 a year in the ISA with IWEB.

He is saving into three separate accounts though ?? In any case I don't see a £25/annum saving as worth moving platform over - anyway iWeb don't do a LISA.

IanManc wrote: »

If someone is choosing passive investments and then deciding to overweight in something it means that you are making active decisions which by choosing to invest in a global passive index you have already decided not to make.

You say that emerging markets and small cap "are supposed to outperform over the long term". Says who? You? Do you have any edge over all the combined investors in the whole of the global market who aren't investing in expectation of that? No you don't.

Its may not be pure passive investing but its not that outlandish a suggestion - quite a few on here do essentially this including some much more experienced investors than me.:)

Ixel

IanManc wrote: »

You have no evidence that these areas will outperform. You just have one person's suggestion.

You made the decision to choose a global tracker which tracks an index based on market capitalisation. If you're going to depart from that then I would suggest that you should find a cogent and evidence based reason to do so before you do it. Otherwise it wouldn't "make sense" at all.

Oh, and never assume.

I would have done my own research as well, not just instantly go with an assumption or reply. The assumption was only made at the time I posted the reply, until I looked further into those options myself .

pip895 wrote: »

Another point - which you have probably considered but I will mention anyway is CGT. It is worth ensuring capital gains don't build up too far as you are building your investments outside of a tax wrapper. One possibility is when CG has built up to close to the allowance to swap the ETF in your F&S account for another similar one or perhaps for the cheaper VEVE or HSBCs HMWO you could then add in a bit of separate EM & SC at that point.


EM is well catered for by vanguards etf but I personally prefer an active fund for SC. I use JMI - if that is a step too far VMID is good, but mid cap rather than small company.

Indeed CGT had come into mind. That's something I will be keeping an eye on and will switch around the ETF accordingly. Good advice.


There's only one thing I'm not 100% sure on, which I'm making a guess for the moment. Regarding switching ETF due to CGT, I assume it applies for the current tax year, not for a longer term? For example, I could switch to another ETF I've never used in a tax year, and then when I'm near CGT threshold again in another tax year I have the option of switching back to the ETF I was using (assuming I wanted to do that). Does this sound right or am I missing some points regarding this?


https://www.investorschronicle.co.uk/funds-etfs/2019/11/21/go-to-the-right-class-to-avoid-unnecessary-fees/



I read this a little while ago, but it looks like it's talking about funds in that particular article, although I imagine similar applies to ETF's.


Thanks again for all the suggestions, advice and help given.

pip895 wrote: »

He is saving into three separate accounts though ?? In any case I don't see a £25/annum saving as worth moving platform over - anyway iWeb don't do a LISA.

Its may not be pure passive investing but its not that outlandish a suggestion - quite a few on here do essentially this including some much more experienced investors than me.:)

Yeah LISA is an important factor. Besides I could probably 'use' the regular monthly savings facility on HL to get the cheaper dealing charges (£1.50 each buy) if I'm prepared to wait a few weeks before that money is invested, at least I think I could, by opting to only have next month pay in a certain amount of money via this facility and then stop that again after it's done. At least that's an idea I had in mind.

pip895

You want to minimise switching with etfs - it is a bit easier with funds as its a cheaper process. VWRP has a spread of around 0.26% so switching does have a cost well above the fee. Much cheaper than ending up paying CGT though!

pip895

Re your other question you want to switch when your gains are close to the threshold of 12k. You are then fine provided you don't buy the same thing back within I think its 30 days.

You can buy an overlapping investment or related investment e.g swapping VWRP for VEVE is fine or VEVE for HMWO is also fine even though they are invested ultimately in much the same things.

ColdIron

Ixel wrote: »

There's only one thing I'm not 100% sure on, which I'm making a guess for the moment. Regarding switching ETF due to CGT, I assume it applies for the current tax year, not for a longer term? For example, I could switch to another ETF I've never used in a tax year, and then when I'm near CGT threshold again in another tax year I have the option of switching back to the ETF I was using (assuming I wanted to do that). Does this sound right or am I missing some points regarding this?

Nothing to do with the tax year. As long as you do not repurchase the same security within 30 days it counts as a disposal. Read up on Section 104 Holdings. You should really use your ISA allowance every year to shelter your investments for good. You will be doing very well if you push the £12,000 CGT Annual Exemption Amount on a £20,000 sale so switching may not be required

Ixel

Perfect, thanks for the clarification.

EthicsGradient

IanManc wrote: »

For the sake of less than 10 basis point in fees I don't think it makes sense to invest in "2 or 3 parts" by splitting your investments between different funds or ETFs.

But we're already looking at splitting, so that the eggs aren't all in one basket. This is another reason to do so.

So to correct those biases you would buy ETFs or funds to bring the figures back to those that would be found in a global index fund or ETF. Then you would have to keep rebalancing to make sure the proportions remain correct.

The global index fund does this automatically.

There's no rule that the balance one global fund has is "the correct" one to have forever. If you feel like tracking that global fund, then you can, but nothing says this is the best thing to do.

It think that "makes sense" compared with the work you would have to put in so that you might save up to 10 basis points on fees, while also incurring more dealing charges if you were on a platform which didn't charge custody fees.

The work would just be for your own satisfaction. But since they say "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)", then dealing charges are unlikely to be that great; but the long term growth, even of 10 basis points per year, is more significant.

pip895

ColdIron wrote: »

Nothing to do with the tax year. As long as you do not repurchase the same security within 30 days it counts as a disposal. Read up on Section 104 Holdings. You should really use your ISA allowance every year to shelter your investments for good. You will be doing very well if you push the £12,000 CGT Annual Exemption Amount on a £20,000 sale so switching may not be required

I rather assumed, but I'm not sure that the OP is using his full isa allowance every year and the fund and share account is just for the "overflow" income. If the S&S account is growing - i.e he is putting more money in than he is taking out, then capital gains can become an issue and he should use his CGT allowance.

We don't know what the OP is saving for, unless I missed it - He has a LISA - if a house might be in the offing within the next 5 -10 years then he is in very risky 100% equity funds which are not ideal. If he is saving for retirement then the allocation is fine but he should probably look at investing in a SIPP rather than unwrapped.

Ixel

I was originally into P2P lending but I have moved away from that. I haven't been investing in the stock market for a long time, somewhere around 2 to 3 years. My aim has been to make sure I use the full ISA allowance each year, to minimise tax.

I have no particular goal right now except to try and save for a long time (at minimum 10 years) and let the money saved hopefully grow and ideally beat inflation too.

I have no particular interest in buying a property within the next 10 years, though the LISA could be used for that much later on. Right now I'm using it primarily as the government provides an extra 25% which is £1,000 per year if I keep topping it up with £4,000 each year, at least that's on the basis that the policy isn't going to change in the near future.

I had considered a SIPP but then I'm locked in, and I don't like that feeling even if I wasn't going to use it until retirement. I realise there are benefits to using a SIPP but it doesn't really sit well with me, especially if my minimum intended time to invest is 10 years.