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Evaluate my (revised) plan

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As some of you know, I've recently started investing, putting £20k into a Vanguard S&S ISA.  Rightly or wrongly, I want to fully utilise this pot within Vanguard whilst I'm still learning, whether it all remains there in years to come remains to be seen.  I'm reluctant to go down the bonds route as I see no definitive benefit to me given my circumstances and objectives, so my plans are heavily slanted towards equities.

Currently, £10k is invested within LS100.  So I have another £10k that I want to put to work.  I was thinking about small-cap however quite a few sites advise a potential downside is trying to offload, can be a more arduous process than medium/large-cap?  I'm unsure (still learning!) as to how accurate that advice is, however I might park my ideas around small-cap for now.

Rather than just put the other £10k into LS100, I'm toying with the idea of splitting it across the following 4 funds:

US Equity Index
FTSE UK All Share Index
FTSE Developed World ex UK Equity Index
S&P 500

These are the 4 largest funds within LS100 based on %.  My rationale is, as oppose to spreading the £10k across the entire LS100 portfolio, I'm raising (albeit slightly) my % across the aforementioned funds and disregarding the remainder.

The combined OCF for these 4 funds is 0.37% vs LS100's 0.22%, I'm not sure if this has any bearing/adverse impact on my plan, however given my sums are low the OCF difference and consequences of would be minimal?

I get the fact this is small beans to most of you, however I'd be interested to know if my plan makes sense based on remaining within the Vanguard product suite?

Comments

  • george4064
    george4064 Posts: 2,928 Forumite
    Part of the Furniture 1,000 Posts Photogenic Name Dropper
    edited 13 April 2021 at 3:10PM
    In short, plan doesn't make much sense at all (looks like you're trying to underweight emerging markets and subsequently doubling down on US equities?) and I'd just stick it in the Vanguard LS100 you have already.
    "If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes” Warren Buffett

    Save £12k in 2025 - #024 £1,450 / £15,000 (9%)
  • eskbanker
    eskbanker Posts: 37,182 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    edited 13 April 2021 at 3:15PM
    The combined OCF for these 4 funds is 0.37% vs LS100's 0.22%, I'm not sure if this has any bearing/adverse impact on my plan, however given my sums are low the OCF difference and consequences of would be minimal?
    Putting to one side the wisdom or otherwise of your approach, from a simple maths perspective you don't combine OCFs by adding them all together like that, you average them, so your average OCF of the four funds is 0.0925%, which is the figure you'd compare with the LS100's 0.22%.  This assumes an equal split of your £10K across the four, but if you'd be splitting any other way then you'd take a weighted average....
  • Albermarle
    Albermarle Posts: 27,875 Forumite
    10,000 Posts Seventh Anniversary Name Dropper
    So you save around 0.13% but bring yourself more effort and probably a less well balanced investment.
  • Thanks guys, message received and understood :)
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