VLS 100 - Stick or twist

noclaf

I've been drip-feeding a VLS 100 in my Vanguard S&SISA for the last few years. Due to selling some VLS 100 units earlier this year and transferring some of the proceeds to my LISA (Yes I know, amateur but we live and learn), the S&S ISA is under-utilised and I plan to top it up next year before end of current tax year.
Before I commit to the top-up have been wondering if it's worth considering a switch to 'FTSE Global All Cap Index Fund - Accumulation'.
The All Cap fund seems more 'balanced' in its market allocation with the smaller UK weighting though that in itself is not a huge factor for me, it's newer and smaller than VLS 100 though slightly more expensive with the 0.23% OCF Vs 0.22% for VLS.
Would appreciate people's thoughts on the above switch and if you have any different views e.g: would I need to consider another fund alongside the All CAP if I switch?
I should add that I am not looking to 'time' the market due to Brexit or any other short term events...it's just that I'd rather switch now before topping up rather than after etc. 
I am 39 so willing to take some risk with higher Equities exposure.
Thanks

Ciprico

For an experimemt, work out the compound fees you would be saving if you used a passive tracker (HMWO or VWRL) against 
a VLS product. You'll possibly be surprised.
Easy to find a compound interest calculator on the web.
Might not give you an answer to your question, but may raise other interesting considerations  !

barnstar2077

I guess it would depend on how you think the UK economy is going to do over the next x amount of years.  Personally I am buying VLS100 because I think once brexit is out of the way and people realise that the sky hasn't fallen in that people will be happy to invest in UK companies again.  There will be others that think that it is all going to end in tears of course.  There is no right or wrong approach at the moment, as no one knows what will happen.  You just have to go with what you think personally.

noclaf

123mat123 said:

For an experimemt, work out the compound fees you would be saving if you used a passive tracker (HMWO or VWRL) against 
a VLS product. You'll possibly be surprised.
Easy to find a compound interest calculator on the web.
Might not give you an answer to your question, but may raise other interesting considerations  !

Thanks I noticed HMWO isn't offered on the UK Vanguard platform or at least I couldn't find it. VWRL appears to have a similar OCF to VLS but comparing to the All Cap fund, it's seems to be less diversified based on no. of stocks it's invested in..roughly by half...

noclaf

barnstar2077 said:

I guess it would depend on how you think the UK economy is going to do over the next x amount of years.  Personally I am buying VLS100 because I think once brexit is out of the way and people realise that the sky hasn't fallen in that people will be happy to invest in UK companies again.  There will be others that think that it is all going to end in tears of course.  There is no right or wrong approach at the moment, as no one knows what will happen.  You just have to go with what you think personally.

I did wonder if going 50:50 in VLS 100:FTSE All CAP would give me the best of both but likely to be a lot of overlap and at the amounts involved here not sure it warrants two funds....not against the idea but not sure if it's necessary either

grumiofoundation

noclaf said:

123mat123 said:

For an experimemt, work out the compound fees you would be saving if you used a passive tracker (HMWO or VWRL) against 
a VLS product. You'll possibly be surprised.
Easy to find a compound interest calculator on the web.
Might not give you an answer to your question, but may raise other interesting considerations  !

Thanks I noticed HMWO isn't offered on the UK Vanguard platform or at least I couldn't find it. VWRL appears to have a similar OCF to VLS but comparing to the All Cap fund, it's seems to be less diversified based on no. of stocks it's invested in..roughly by half...

Vanguard platform only offers vanguard funds so you wont find HMWO (HSBC MSCI WORLD UCITS ETF) on it. 

Depending on how much and how often you are investing then buying ETFs on a platform(s) which charges to deal may well not be the best option versus investing in funds with no transaction fee. 

noclaf

grumiofoundation said:

noclaf said:

123mat123 said:

For an experimemt, work out the compound fees you would be saving if you used a passive tracker (HMWO or VWRL) against 
a VLS product. You'll possibly be surprised.
Easy to find a compound interest calculator on the web.
Might not give you an answer to your question, but may raise other interesting considerations  !

Thanks I noticed HMWO isn't offered on the UK Vanguard platform or at least I couldn't find it. VWRL appears to have a similar OCF to VLS but comparing to the All Cap fund, it's seems to be less diversified based on no. of stocks it's invested in..roughly by half...

Vanguard platform only offers vanguard funds so you wont find HMWO (HSBC MSCI WORLD UCITS ETF) on it. 

Depending on how much and how often you are investing then buying ETFs on a platform(s) which charges to deal may well not be the best option versus investing in funds with no transaction fee. 

Ah my bad! Didn't even realise that was a HSBC fund......I will consider HMWO for my S&S LISA and see how the charges compare to other global ETF's.
I have a single buy transaction each month for the Vanguard S&S ISA along with much less frequent ad hoc transactions e.g: a top-up transaction next year.

Herbalus

One of the complexities of investments is how everything needs adjusting as you go. Vanguard is a great platform for lower amounts but as your investments increase then a switch may be worthwhile. For example £30k in Vanguard at 0.15% platform fee is £45 per year. Let’s double that for the example and it’s £90/year on £60k invested. Moving into etfs at that point mean a capped structure at places like Hargreaves Lansdown (which isn’t the cheapest) will be beneficial as they cap etfs at £45/year. So if you have £60k, Vanguard at £90 plus OCF of 0.22% or 0.23% can be beaten by Hargreaves at £45 plus OCF of 0.15% or whatever HMWO is for example.

Of course it’s then more complicated if you buy regularly as etfs will have individual transaction charges whereas fund purchases are usually free, so that will be a factor if you buy every month, but you get the idea!

noclaf

Herbalus said:

One of the complexities of investments is how everything needs adjusting as you go. Vanguard is a great platform for lower amounts but as your investments increase then a switch may be worthwhile. For example £30k in Vanguard at 0.15% platform fee is £45 per year. Let’s double that for the example and it’s £90/year on £60k invested. Moving into etfs at that point mean a capped structure at places like Hargreaves Lansdown (which isn’t the cheapest) will be beneficial as they cap etfs at £45/year. So if you have £60k, Vanguard at £90 plus OCF of 0.22% or 0.23% can be beaten by Hargreaves at £45 plus OCF of 0.15% or whatever HMWO is for example.

Of course it’s then more complicated if you buy regularly as etfs will have individual transaction charges whereas fund purchases are usually free, so that will be a factor if you buy every month, but you get the idea!

Yep I completely get this, as your total investment value rises then there is a threshold at which fixed Vs % platform fee means switching can be beneficial.
I don't think I'm at that stage yet as the amounts are relatively small. 
My dilemma at the moment is the VLS 100 is all good and well when the markets are going up but surely this can't last...there has to be a point when it retracts however this may not happen for a while..who knows right. So am wondering whether I need to switch my fund setup now to 'hedge' against a market drop in the next few years...or I could be overthinking it and when the market drops should be happy to get more units of VLS 100 due to the lower prices...if the market drops! 😁

Another_Saver

The differences between VLS 100 and FTSE global all cap are minor. Vanguard will probably be cheaper for the foreseeable future for you. By considering switching into the all cap fund you would be selling a fund that's 25% UK 75% global to buy a fund that's 5% UK 95% global (ish), in a way selling the 20% extra UK low to buy global high.

I don't like that vanguard has taken this arbitrary decision to upweight the UK in this fund range, but personally for my own reasons I think the UK can do better than the rest of the world over the next decade or so, the short explanation is because of how crap it's done lately. There have been a few threads about this recently just search the past few pages. So I don't see VLS as a bad choice because of the the extra uk weight which is the main difference between it and the all cap fund (besides which, you can compare their performance history to see that in spite of the differneces they will behave very similarly).

If you did switch, you could consider buying vmid, the FTSE 250 tracker. Again this and the reasons for and against have been mentioned plenty in recent threads just search vmid, 250 and FTSE 250.

noclaf

Another_Saver said:

By considering switching into the all cap fund you would be selling a fund that's 25% UK 75% global to buy a fund that's 5% UK 95% global (ish), in a way selling the 20% extra UK low to buy global high.

Thanks, the section of your paragraph I quoted above is interesting and I never would of thought it of it this way.
Would it be pointless holding both the VLS 100 and All Cap fund due to duplicated coverage? I appreciate they are not the same 'type' of investment product so maybe not comparing apples with apples; one being a 'basket' of funds and the other a fund in itself. 
Next year I need to top up by around £13k to maximise my S&SISA allowance for the current tax year( I think it's £13k or there abouts). Typically lump sum contributions tend to be favoured to maximise time in the market but I wonder if it's worthwhile splitting the £13k over a few months to smooth out the peaks and troughs next year? (I suspect but of course can't predict for sure that markets might be a bit jittery going into next year).