Overlap with Vanguard Funds

Marcusian

So I have my vanguard 60/40 fund set up, regular payments, long ish term horizon (at least 10 years), just let it build etc. 
But i was potentially looking at investing something a bit different (i guess riskier) also, with just any odds and sods money i get (I do freelance personal training work cash in hand for example). I would ideally like to do this through vanguard, I do have a GTA account with Freetrade, but would prefer it in one place. 
Now, feel free to tell me to just keep putting in the core fund (i am happy with this), or switch to the 100 equity fund, but if i wanted to invest in something like the Global small-cap index fund, would this not have too much overlap with the 60/40 fund?
I see people investing in different funds on vanguard and even a total beginner like me can see that they are essentially 'duplicating' their investments that are largely covered in the lifestrategy. 
At this stage i am just fact finding, so any advice on what is worthwhile to invest because it doesn't overlap too much on vanguard would be appreciated. 

AnotherJoe

They wouldn't be overlapping but I woudlnt invest in a small cap index fund. Pick a managed one.

The 'rule' about indexes outperforming active doesn't apply to small cap.

Which likely rules out Vanguard as an option.

ivormonee

I don't think I've come across many trackers for global small caps. And there don't seem to be all that many active funds in this category either. A search on Trustnet seems to show 26 but they're not all global. And of the ones that are, Vanguard is generally somewhere in the middle, on average, which is more or less to be expected. This is 1,3 and 5 year cumulative performance for what appear to be the global funds:

2	[]	Allianz Global Small Cap Equity RT NAV GBP						47.3	41.9	105.6
4	[]	Vanguard Global Small-Cap Index Acc GBP						28.5	33.8	95.4
5	[]	GS Global Small Cap Core Equity Portfolio R Snap GBP						24.6	27.5	87.7
6	[]	Federated Hermes Global Small Cap Equity F Acc GBP						20.6	25.5	85.4
7	[]

It's far too small a sample size to draw any conclusions but gives a very rough idea of the past five years and how these four funds compare.

As for global small cap, or any small cap, there don't seem to be any ETFs.

eastmidsaver

hi,  as you're interested in small cap, i don't think there will be much overlap with the VG LS 60 / 40.
however,  i do think a managed fund might be a better choice for small cap, although i am no expert on the matter. 
there are quite a few global small cap funds available, but if you want to use VG then the small cap index should still be fine. just remember small caps are riskier, but also have more potential for gains too.

barnstar2077

I know VLS 100 is the "riskier" of the VLS funds, but in your position I would rather increase my equity percentage in one of the VLS funds than I would place a bet on a niche fund.

Marcusian

barnstar2077 said:

I know VLS 100 is the "riskier" of the VLS funds, but in your position I would rather increase my equity percentage in a one of the VLS funds than I would place a bet on a niche fund.

Yes that is what i am going to do I, will make a new lump sum investment and then switch from 60/40.

ivormonee

eastmidsaver said:

however,  i do think a managed fund might be a better choice for small cap, although i am no expert on the matter. 
there are quite a few global small cap funds available, but if you want to use VG then the small cap index should still be fine.

I provided the findings from my research in my post prior to yours, above, and as you can see I was only able to locate four such funds. When you say "there are quite a few global small cap funds available" I'd be interested to know what they are.

Also, you say that "a managed fund might be a better choice for small cap" but, over the three timescales in my table, from Trustnet, the index tracking fund comes in at second place. So not sure on what basis a number of posters are commenting that an actively managed fund performs better. Is there any evidence/ are there any other funds that did not come up in search results on Trustnet (as summarised in my post above)? And there are no ETFs covering small caps either that I could find on any searches.

Prism

ivormonee said:

eastmidsaver said:

however,  i do think a managed fund might be a better choice for small cap, although i am no expert on the matter. 
there are quite a few global small cap funds available, but if you want to use VG then the small cap index should still be fine.

I provided the findings from my research in my post prior to yours, above, and as you can see I was only able to locate four such funds. When you say "there are quite a few global small cap funds available" I'd be interested to know what they are.

Also, you say that "a managed fund might be a better choice for small cap" but, over the three timescales in my table, from Trustnet, the index tracking fund comes in at second place. So not sure on what basis a number of posters are commenting that an actively managed fund performs better. Is there any evidence/ are there any other funds that did not come up in search results on Trustnet (as summarised in my post above)? And there are no ETFs covering small caps either that I could find on any searches.

There are not many global small cap funds and some of them are pretty new. You could have a look at Baillie Gifford Global Discovery, Montanaro Better World,  ASI Global Smaller Companies and Liontrust Global Smaller Companies all of which have got long term experience of smaller companies even if the fund itself is quite new.

I would also suggest looking at investment trusts where you find Smithson, Herald and Edinburgh Worldwide.

aroominyork

ivormonee said:

I don't think I've come across many trackers for global small caps. And there don't seem to be all that many active funds in this category either. A search on Trustnet seems to show 26 but they're not all global. And of the ones that are, Vanguard is generally somewhere in the middle, on average, which is more or less to be expected. This is 1,3 and 5 year cumulative performance for what appear to be the global funds:

2	[]	Allianz Global Small Cap Equity RT NAV GBP						47.3	41.9	105.6
4	[]	Vanguard Global Small-Cap Index Acc GBP						28.5	33.8	95.4
5	[]	GS Global Small Cap Core Equity Portfolio R Snap GBP						24.6	27.5	87.7
6	[]	Federated Hermes Global Small Cap Equity F Acc GBP						20.6	25.5	85.4
7	[]

It's far too small a sample size to draw any conclusions but gives a very rough idea of the past five years and how these four funds compare.

As for global small cap, or any small cap, there don't seem to be any ETFs.

I just ran Trustnet for global companies and, on a five year view, searched for the word ‘small’. It brought up seven funds:

 -         Liontrust Global Smaller Companies +187% (US/tech-centric)

-          ASI Global Smaller Companies +136%

-          Kempen (Lux) Global Small-cap +119%

-          Allianz Global Small Cap Equity +106%

-          Invesco Global Smaller Companies +105%

-          Vanguard Global Small-Cap Index +100%

-          McInroy & Wood Smaller Companies +100%

ivormonee

Interesting that three of us have done searches and and we are finding some different funds; it seems dependent on what search filters or keywords we might be using. For example Prism's Baillie Gifford and Montanaro funds didn't come up for us, my Hermes didn't come up for Aroominyork and their Kempen and McInroy didn't come up for me.

Regardless though, the list isn't massive, whoever's list we look at. Even if we amalgamate all of our searches I think we get a grand total of perhaps no more than ten funds! And only one is a tracker!

Looking at Aroominyork's list the standout returns have come from Liontrust, ASI and Kempen; the remaining four funds are much of a muchness. And in my Trustnet table of four funds, the Vanguard fund came second.

Nothing much can be concluded from such a small sample size though or from one timeframe.

In terms of the OP's post, if they decide to add a small holding of global small caps alongside their VLS60, VLS 80 or VLS100, they can possibly see the lists we've provided above as a starting point in their research and decision-making.

coyrls

If I go on Morningstar Fundscreener and choose Morningstar Category "Global Small/Mid-Cap Equity" and select the "Small" row of the Equity Style Box and Investor Type "Retail", I get 107 funds returned, although many are share class variations.