All world V All cap

Dh6

Hi,

Can someone explain in Laymen’s terms the difference between the HSBC all world global tracker and the Vanguard all cap tracker please?

I’ve just paid the max into my LISA for this year and already hold the HSBC tracker but I’m wondering whether to add the Vanguard fund to my holdings.

Kind regards,

DH

A_T

Vanaguard FTSE Global All Cap index fund includes small cap companies whereas the HSBC fund doesn't. Over the last 10 years the FTSE Global All Cap index has returned about 0.5% per annum more than the FTSE All World. 

underground99

The Global All Cap will also include an allocation to smaller companies that don't qualify for the All World (the latter is basically just FTSE Global Large Cap plus FTSE Global Mid Cap)

It goes-

FTSE Developed: $55.2tn of market capitalisation

FTSE World: $58.6tn (adds advanced emerging markets like Mexico, Brazil, South Africa)

FTSE All World: $62.3tn (adds other emerging like China, India) - covers about 4000 companies total

FTSE Global All Cap: $69.8tn (adds 5000 smaller companies for about 9000 total).

https://www.ftserussell.com/analytics/factsheets/home/search

george4064

underground99 said:

The Global All Cap will also include an allocation to smaller companies that don't qualify for the All World (the latter is basically just FTSE Global Large Cap plus FTSE Global Mid Cap)

It goes-

FTSE Developed: $55.2tn of market capitalisation

FTSE World: $58.6tn (adds advanced emerging markets like Mexico, Brazil, South Africa)

FTSE All World: $62.3tn (adds other emerging like China, India) - covers about 4000 companies total

FTSE Global All Cap: $69.8tn (adds 5000 smaller companies for about 9000 total).

https://www.ftserussell.com/analytics/factsheets/home/search

Where does the MSCI World Index fit in that scale?

Ibrahim5

The fees on the Vanguard FTSE global all cap are higher at 0.23% whereas HSBC FTSE all world are 0.13% so they end up pretty close. There really isn't much in it.

underground99

george4064 said:

underground99 said:

The Global All Cap will also include an allocation to smaller companies that don't qualify for the All World (the latter is basically just FTSE Global Large Cap plus FTSE Global Mid Cap)

It goes-

FTSE Developed: $55.2tn of market capitalisation

FTSE World: $58.6tn (adds advanced emerging markets like Mexico, Brazil, South Africa)

FTSE All World: $62.3tn (adds other emerging like China, India) - covers about 4000 companies total

FTSE Global All Cap: $69.8tn (adds 5000 smaller companies for about 9000 total).

https://www.ftserussell.com/analytics/factsheets/home/search

Where does the MSCI World Index fit in that scale?

MSCI World is like FTSE Developed: large and midcap companies across 23 developed markets, about 1600 companies, $54tn market cap. FTSE developed is about 2200 companies but similar spread of countries and industries because they all agree on the big ones. There are some differences between what FTSE and MSCI classify as developed vs emerging.

MSCI's ACWI is similar to FTSE All-World, including both developed and emerging.

Alexland

Dh6 said:

I’ve just paid the max into my LISA for this year and already hold the HSBC tracker but I’m wondering whether to add the Vanguard fund to my holdings.

As above both good funds although the all-cap is more volatile but as they are so similar then I wouldn't bother holding both in the same account just pick one for your LISA and then maybe hold the other one in a different account. Also worth noting that if your LISA is getting larger there's a point it's worth considering moving to ETFs for capped platform charges with some providers.

Dh6

Thanks for the above information, I was wondering whether to add the all cap so I’d gain exposure to the small caps but I suppose the more successful smaller caps would become mid caps and be bought buy the all world fund anyway.

There’s also the argument that the smaller caps benefit from active management which I’m trying to keep away from currently.

@ Alexland, my LISA will be around 16k once bonus arrives. Around what stage will it become more cost effective to change platforms ( Currently with AJ Bell )

Kind regards 

DH 

Ibrahim5

The thing with small caps is that they are small. So they don't make much difference.

Alexland

Dh6 said:

@ Alexland, my LISA will be around 16k once bonus arrives. Around what stage will it become more cost effective to change platforms ( Currently with AJ Bell )

Depends on which ETF you choose but probably at least another year away. We moved to an ETF on AJ Bell when our LISAs got to £20k each. It's a bit of a faff with the scheduled trades and if you are going to keep making contributions for many more tax years then it will be well worth it eventually provided you are happy with the lack of FSCS protection on an ETF.

I am slightly tempted to switch our LISAs from an ETF to Bankers IT. Too much of our money is in global trackers which are doing unbelievably well recently and have already switched some of our S&S ISAs to Murray Income IT for some home bias which has also been doing well. Just about everything is going up at the moment.

Dh6

I’m happy for the foreseeable future being in just global trackers. I’m relatively new to investing and my total across my LISA, ISA and pension is less than 50k.

I’m aiming for a passive approach so the less faff about the better for me.

Kind regards 

DH