AJ Bell fee etf Vs fund

Usa2019

 as etf annual fee is capped, I will be saving money with etf Vs going with fund. 

I want a cheap ocf but also cover global large cap blended equity so I got eye on developed world , it is missing emerging market but all world is 0.22% , I will make it up on my SSISA. But I had to go with ajbell for the Lifetime ISA.

VANGUARD FTSE DEVELOPED WORLD UCITS ETF (VEVE)

As for bond, I looked at 

VANGUARD GLOBAL AGGREGATE BOND UCITS ETF (VAGP)

I haven't looked at the fund product yet.

Is etf a wise choice?

Are there better etf on ajbell platform?

Alexland

Yes I agree Vanguard's All World ETF is expensive compared to HSBC's tracker fund for the same index and the cost of underlying building blocks.
For our capped AJ Bell LISAs we just hold the Lyxor LCWL World ETF at 0.12% with the benefit that it accumulates income for simplicity.
To keep trade volumes down we tend to contribute into the LISAs in some months and the S&S ISAs in other months. We also use the trick of setting up a regular trade for £1.50 then cancelling after the first run to avoid paying the £9.95 trade fee.
Vanguard VEVE World ETF is a good product (and is my single biggest holding via another platform) but it distributes dividends which then need reinvesting.
Similar to your plans we hold our EM elsewhere via our workplace pensions. You might want to do similar for bonds.

Usa2019

Yes I agree Vanguard's All World ETF is expensive compared to HSBC's tracker fund for the same index and the cost of underlying building blocks.
For our capped AJ Bell LISAs we just hold the Lyxor LCWL World ETF at 0.12% with the benefit that it accumulates income for simplicity.
To keep trade volumes down we tend to contribute into the LISAs in some months and the S&S ISAs in other months. We also use the trick of setting up a regular trade for £1.50 then cancelling after the first run to avoid paying the £9.95 trade fee.
Vanguard VEVE World ETF is a good product (and is my single biggest holding via another platform) but it distributes dividends which then need reinvesting.
Similar to your plans we hold our EM elsewhere via our workplace pensions. You might want to do similar for bonds.

I did looked at LCWL, but I read it is a sub-fund, no idea what it means, so went with VEVE as it is on vanguard main UK page. 

Can you explain more how you do that? With real date and product example , and what it achieve

EthicsGradient

There is now an accumulating version of 'VEVE', with code VHVG, available on AJBell.

Usa2019

I saw that too, but it is a sub fund, I wasn't sure what this meant

underground99

Usa2019 said:

I saw that too, but it is a sub fund, I wasn't sure what this meant

When you build an open ended fund product or an ETF you do not create a brand new company for every fund you create, because it would require more cost and administration.

You have one big 'umbrella' fund and then within the fund you have separate, segregated 'sub-funds' which each have their own assets, strategy and issued shares. There can be multiple share types per sub-fund (e.g. an accumulating class of shares and a distributing class of shares) which have their own price per share. Each sub-fund has its own legally separate pool of assets and liabilities so if one sub fund goes up or down it doesn't affect the other funds.

Vanguard FTSE Developed World UCITS ETF is a 'sub fund' of Vanguard Funds plc; Vanguard Funds plc is an investment company in Ireland with variable capital constituted as an umbrella fund with segregated liability between Funds. Vanguard Global Aggregate Bond UCITS ETF is another sub fund under the same umbrella 

Alexland

Usa2019 said:

I did looked at LCWL, but I read it is a sub-fund, no idea what it means, so went with VEVE as it is on vanguard main UK page.

Most ETFs are sub-funds of a bigger legal company structure for example VEVE sits under Vanguard Funds Plc it's nothing to worry about just reduces administration in each ETF being it's own legal company.

https://www.vanguardinvestor.co.uk/content/documents/legal/vanguard-full-fund-costs-and-charges.pdf

Usa2019 said:

Can you explain more how you do that? With real date and product example , and what it achieve

Basically AJ Bell normally charge £9.95 to trade an ETF but you can setup a regular monthly trade for £1.50 then cancel it after the first month.

https://www.youinvest.co.uk/lifetime-isa/charges-and-rates

https://www.youinvest.co.uk/our-services/regular-investments

EthicsGradient said:

There is now an accumulating version of 'VEVE', with code VHVG, available on AJBell.

As it's not traded very often HL data suggests an indicative spread on VHVG of 0.23% compared to VEVE at 0.07% and LCWL at 0.12% so you would be paying more each time you trade units to use it. It could be beyond the point where it is better to just pay reinvestment charges and have the benefit of holding something more liquid.

Usa2019

Right, I'm getting it now, so do you set up DD for the £4k allowance all at once, and pay £1.50 for etf and cancel DD after?

I can see the spread are higher on VHVG, but if I invest for a long time and one off, is this spread acceptable? Is the liquidity be a major problem when selling???

I guess I'm picking vanguard, as it has more holding, and brand I heard of lol

Alexland

The nice thing about AJ Bell's regular investing feature is that it uses the account cash balance so no need for a direct debit and it can be used against the bonus too. That's one of the reasons we switched our LISAs away from HL where they could only regularly invest a direct debit contribution and had no way of investing the bonus in an ETF at a reduced rate.

In terms of Lyxor they are a bigger player in the European ETF market than Vanguard. But then there's nothing wrong with VEVE we hold both with different platforms to give variety.

https://www.etfstream.com/news/which-etf-issuers-dominated-europe-in-2020/

On VHVG it could become a problem before selling if there aren't enough customers to make it viable and Vanguard close it returning the money as they recently did with their factor fund ETFs. It's also hard to see a very accurate price with low trade volumes. LCWL is probably the lowest liquidity ETF that I would consider and even then there are only a few trades each day. If you want large and liquid then SWDA is the leader.

Usa2019

How/where do you see if they are large and liquid???

Is it the net asset? 

Also what do you think of PRIW? They have shockingly low OCF 0.05%. why/how are they so cheap? Is it a good product to choose from???

Why should someone pay 0.20% for SWDA, when it's cheaper with LCWL/VHVG at 0.12%, when they have the same product in their portfolio.

underground99

Usa2019 said:

How/where do you see if they are large and liquid???

Is it the net asset? 

Net assets shows you if they are large (perhaps less likely to get shut down if they are popular).
The 'spread' or number of shares traded daily out of total number of shares in issue shows you how liquid or easy to trade they are (more expensive means there are fewer buyers and sellers so the market pricing is not as competitive). 

Also what do you think of PRIW? They have shockingly low OCF 0.05%. 

They track a different index (Solactive GBS Developed Markets Large & Mid Cap) which only has half as many holdings as FTSE All World (so cheaper to construct) and only covers developed markets rather than emerging markets (cheaper to construct, but may get you a result that's a few percent better or worse and may lag long term if the total return from emerging markets is higher than the weighted average of developed ones).

As a Luxembourg ETF there will likely be a little more performance drag from US withholding tax on the US dividends it receives than the Irish Vanguard fund; ETFs resident in Lux can't take advantage of the same tax treaty as individuals could, to lower the rate of WHT. Whereas Irish ones get it halved to 15% on US source income.

Why should someone pay 0.20% for SWDA, when it's cheaper with LCWL/VHVG at 0.12%, when they have the same product in their portfolio.

People can buy what they like.