Developed World ex-UK ETF

Reg_Smeeton

Hi all, I’m looking ahead to the new tax year and will be rejigging things a bit across accounts to help keep a lid on costs. I’m looking ideally for a Developed World ex-UK ETF, if there is such a thing? Google throws up IWXU which appears to now be delisted, otherwise nothing obvious springing out. Can anyone offer suggestions? Ta

bowlhead99

DWS have an All-world ex-uk ETF in their xtrackers range - https://etf.dws.com/en-gb/IE00BM67HJ62-ftse-all-world-ex-uk-ucits-etf-1c/ 

Ticker is XDEX. It's not particularly large (£35m) and low trading volumes on LSE, and it follows all-world ex UK rather than developed world ex- UK so you will get a few percent of China etc. So, not ideal and the OCF is 0.4%, but perhaps something you could live with if you really must have an ETF.

Vanguard have a UK OEIC which tracks FTSE Developed ex-UK, and it has a pretty competitive 0.14% OCF. If you held it on Vanguard's own platform with their platform fee of 0.15% and no subscription or redemption charges it would only be 0.29% all-in. You might struggle to find an ETF at that cost. They have £7bn AUM in that fund so can afford for it to be cheap per pound invested.

Another OEIC is L&G's International Index Trust which is 0.13% but is not quite what you want due to being FTSE World exUK rather than Developed World exUK, so you get some of the 'advanced emerging' markets too.

AnotherJoe

I used to have one, cant recall what it was but i wouldn't do it again. if you consider that UK is only 5% or so global GDP, and that in a global investment the U.K. companies do most of their business globally anyway, I'm don't think you'd see  much difference over time between two funds which other than ex U.K. held the same mix of international companies, so I wouldn't bother I'd just hold a global fund as mentioned above. 

Reg_Smeeton

Thanks both, didn’t realise it would be so niche... rationale is to only have one or maybe two largest holdings as ETFs in my LISA with HL, then hold the others across Vanguard and Cavendish to reduce costs. Think I will find a large, liquid Developed World ETF as suggested!

bowlhead99

Reg_Smeeton said:

Thanks both, didn’t realise it would be so niche... rationale is to only have one or maybe two largest holdings as ETFs in my LISA with HL, then hold the others across Vanguard and Cavendish to reduce costs. Think I will find a large, liquid Developed World ETF as suggested!

You were looking for developed world ex UK for this one large holding in the LISA.

But I don't see any obvious reason to exclude emerging markets and the UK from a long term LISA investment. 

If you got an MSCI ACWI or FTSE All World tracker, the emerging markets and UK would only be a few percent each, and quite possibly less than most people would want. So the solution might be to add extra funds in those areas. But to cut them both down to nil by using an ex-UK, ex-Emerging markets fund when you could use an All-World fund instead, doesn't make a lot of sense to me.

Am I missing something clever in this strategy for your LISA?

Reg_Smeeton

I want a bit more EM and UK than would be in those indexes, but they would still be small holdings in my overall portfolio (8-10% each). I want to take advantage of the £45 ETF cap at HL but I realise the dealing charges are quite expensive (particularly on smaller amounts), hence was going to keep the other holdings in an ISA at Vanguard or Cavendish.

bowlhead99

Reg_Smeeton said:

I want a bit more EM and UK than would be in those indexes, but they would still be small holdings in my overall portfolio (8-10% each). I want to take advantage of the £45 ETF cap at HL but I realise the dealing charges are quite expensive (particularly on smaller amounts), hence was going to keep the other holdings in an ISA at Vanguard or Cavendish.

If you want more exposure to those areas than you would get in an all world ETF, so that you will need to buy some extra exposure elsewhere, the solution wouldn't need to be to pick a product for the LISA that gives you even less exposure to the two areas, taking your LISA even further away from your objective of having a balanced allocation in there.

The more logical route would be to use a product in the LISA that follows MSCI AWCI or FTSE AllWorld (e.g. the iShares or Vanguard ETF products at 0.31 or 0.22% OCF respectively) and then you get closer to what you want overall than if you had used an ex-UK, ex-EM product. Even if it gives you only 5% in each of UK and EM when you would prefer 10% to each, it's closer to your target than 0% would be. And allows you to reduce the level of 'top up' that would be needed using the other products in your other accounts.

The LISA is a different beast from an ISA, SIPP or unwrapped account. The restrictions on how much you would be able to pay in (low annual limit and not after age 50) and when you can take it out (not before 60 without a penalty) means it is less practical to 'rebalance' the holdings in a LISA across with the holdings you have elsewhere. On that basis, it makes more sense for the LISA to be a self-contained decent bag of diversified assets in itself.

As such, deciding to deliberately exclude UK and EM from the LISA entirely, just because the simplest global ETF product had too little exposure for your liking, really doesn't make a whole lot of sense.

Reg_Smeeton

Thanks bowlhead, your suggestion makes a lot of sense! 

colba

Have a look at HSBC MSCI World ETF (HMWD). It is developed world but not excl UK, although UK accounts for only about 5%. Seems like low cost and has 4 stars from Morningstar. As per the index heavily weighted with US tech stocks.

Tom99

Reg_Smeeton said:

I want a bit more EM and UK than would be in those indexes, but they would still be small holdings in my overall portfolio (8-10% each). I want to take advantage of the £45 ETF cap at HL but I realise the dealing charges are quite expensive (particularly on smaller amounts), hence was going to keep the other holdings in an ISA at Vanguard or Cavendish.

Halifax don't charge any holding fee for a non-ISA dealing account and you can buy shares, ETFs and funds for a £2 dealing fee using a one off regular investment.

ISAs are £12.50pa admin fee so will still be cheaper than Cavendish or Vanguard for a portfolio over £8,333.

pip895

As we are discussing global etf's what are peoples views on the following ETFs:-

HMWO   GBX
HMWD   USD
IWDG    GBX   Hedged

My main investment in my ISA is in HMWO purchased a couple of years ago but at the beginning of 2019 I decided to purchase IWDG because I felt at the time sterling was rather undervalued and might appreciate against the dollar.  Graphing all three of these funds IWDG actually mirrors HMWD very closely.  I'm not sure what the differences are in practice - GBX listed rather than Dollar listed - would there be additional currency conversion costs associated with the dollar denominated fund?   Glancing at the documentation HMWD is un hedged whilst IWDG is hedged - I'm confused - why is HMWD so different to HMWO and why does it appear to track my hedged IWDG?