Blackrock Consensus

TheShape

dunstonh said:

......and this is where the discussion on why have you chosen VLS100 as your global equity fund would have been worthwhile.  I was hoping others would bite and point out some global equity funds that are better.  Perhaps they haven't as there have been several recent threads on this.    So, why have you not chosen a global equity tracker?    A simple option that can have lower charges, track the markets better with little or no management decisions.     That was where I was hoping the conversation would go.

I am possibly in a similar situation to the OP.  I opened a SIPP with HL and chose VLS100 as my choice of funds.  Having subsequently opened a LISA with HL I chose Blackrock Consensus 100 as my fund, switching my SIPP from VLS 100 to BC100.  Putting aside whether VLS100 was a good choice to begin with, switching to BC on the HL platform appeared to be a good choice as whilst the performance doesn't appear to have been too dissimilar, the cost of the Blackrock fund is roughly half (after the ongoing saving).

I couldn't explain much in the way of differences between the two (or at least not with the time I have available to research them) other than  BC having a far less heavy UK and Ireland bias compared to VLS100.

I'm thinking of making new investments (and switching) into a 'better' Global Equity fund.

Can someone check my thinking based on relatively simple criteria of performance vs cost and using just HLs Fund Finder.  Assume that I will hold only one fund or at most on fund alongside the Consensus 100 (perhaps the apple and orange as mentioned above).

Selecting Global, Accumulation, Tracker as the criteria gives 15 results.

As such I might chose Fidelity Index World (Class P) over BC100 based on the cost being very similar, the performance being better and noting that the geographical spread of the investments appears quite proportional (no large home bias etc).

I might instead choose LEGAL & GENERAL INTERNATIONAL INDEX TRUST CLASS C based on it's low charges and apparent strong performance whilst noting that there is very little UK equity exposure (is this a problem?).

VANGUARD FTSE DEVELOPED WORLD EX-UK EQUITY INDEX looks a potentially good option similar to the L&G fund above with slightly higher costs.

I've discounted LEGAL & GENERAL GLOBAL 100 INDEX CLASS C due to it's far smaller number of holdings, and perhaps AVIVA INV INTL INDEX TRACKING CLASS 2 due to higher costs.

How is my thinking, what am I missing, what filtering options in the Fund Finder give more results than the 15 shown?

Thrugelmir

TheShape said:

dunstonh said:

......and this is where the discussion on why have you chosen VLS100 as your global equity fund would have been worthwhile.  I was hoping others would bite and point out some global equity funds that are better.  Perhaps they haven't as there have been several recent threads on this.    So, why have you not chosen a global equity tracker?    A simple option that can have lower charges, track the markets better with little or no management decisions.     That was where I was hoping the conversation would go.

How is my thinking, what am I missing, what filtering options in the Fund Finder give more results than the 15 shown?

If you want a truly global fund as a single investment. Chose one with the broadest possible of diversification i.e. largest number of holdings. Past performance figures are distorted due to the influence of a few stocks (the US monoliths) in recent years. The higher their weighting within a fund (i.e. fewer number of holdings) the better the overall performance will appear. 

Billycock

Thrugelmir said:

TheShape said:

dunstonh said:

......and this is where the discussion on why have you chosen VLS100 as your global equity fund would have been worthwhile.  I was hoping others would bite and point out some global equity funds that are better.  Perhaps they haven't as there have been several recent threads on this.    So, why have you not chosen a global equity tracker?    A simple option that can have lower charges, track the markets better with little or no management decisions.     That was where I was hoping the conversation would go.

How is my thinking, what am I missing, what filtering options in the Fund Finder give more results than the 15 shown?

If you want a truly global fund as a single investment. Chose one with the broadest possible of diversification i.e. largest number of holdings. Past performance figures are distorted due to the influence of a few stocks (the US monoliths) in recent years. The higher their weighting within a fund (i.e. fewer number of holdings) the better the overall performance will appear. 

Quick question,
Holdings are?  number of stocks in fund?
Weighting is? percentage of distribution per sector, technology, industrials, financials etc?
Correct or not?

Thrugelmir

Yes

Weighting by free share float market capitalisation.  

TheShape

Thrugelmir said:

TheShape said:

dunstonh said:

......and this is where the discussion on why have you chosen VLS100 as your global equity fund would have been worthwhile.  I was hoping others would bite and point out some global equity funds that are better.  Perhaps they haven't as there have been several recent threads on this.    So, why have you not chosen a global equity tracker?    A simple option that can have lower charges, track the markets better with little or no management decisions.     That was where I was hoping the conversation would go.

How is my thinking, what am I missing, what filtering options in the Fund Finder give more results than the 15 shown?

If you want a truly global fund as a single investment. Chose one with the broadest possible of diversification i.e. largest number of holdings. Past performance figures are distorted due to the influence of a few stocks (the US monoliths) in recent years. The higher their weighting within a fund (i.e. fewer number of holdings) the better the overall performance will appear. 

How large is large?

Fidelity Index World (Class P) has 1587 holdings.  LEGAL & GENERAL INTERNATIONAL INDEX TRUST CLASS C has 2263 holdings.

older_and_no_wiser

TheShape said:

Thrugelmir said:

TheShape said:

dunstonh said:

......and this is where the discussion on why have you chosen VLS100 as your global equity fund would have been worthwhile.  I was hoping others would bite and point out some global equity funds that are better.  Perhaps they haven't as there have been several recent threads on this.    So, why have you not chosen a global equity tracker?    A simple option that can have lower charges, track the markets better with little or no management decisions.     That was where I was hoping the conversation would go.

How is my thinking, what am I missing, what filtering options in the Fund Finder give more results than the 15 shown?

If you want a truly global fund as a single investment. Chose one with the broadest possible of diversification i.e. largest number of holdings. Past performance figures are distorted due to the influence of a few stocks (the US monoliths) in recent years. The higher their weighting within a fund (i.e. fewer number of holdings) the better the overall performance will appear. 

How large is large?

Fidelity Index World (Class P) has 1587 holdings.  LEGAL & GENERAL INTERNATIONAL INDEX TRUST CLASS C has 2263 holdings.

65% US equity focussed. 

ColdIron

Fidelity Index World tracks the MSCI World Index (23 countries) which is developed markets only, no emerging markets if that's significant to you

JohnWinder

TheShape said:

Can someone check my thinking based on relatively simple criteria of performance vs cost and using just HLs Fund Finder.  Assume that I will hold only one fund or at most on fund alongside the Consensus 100 (perhaps the apple and orange as mentioned above).

Selecting Global, Accumulation, Tracker as the criteria gives 15 results.

As such I might chose Fidelity Index World (Class P) over BC100 based on the cost being very similar, the performance being better and noting that the geographical spread of the investments appears quite proportional (no large home bias etc).

I might instead choose LEGAL & GENERAL INTERNATIONAL INDEX TRUST CLASS C based on it's low charges and apparent strong performance whilst noting that there is very little UK equity exposure (is this a problem?).

VANGUARD FTSE DEVELOPED WORLD EX-UK EQUITY INDEX looks a potentially good option similar to the L&G fund above with slightly higher costs.

I've discounted LEGAL & GENERAL GLOBAL 100 INDEX CLASS C due to it's far smaller number of holdings, and perhaps AVIVA INV INTL INDEX TRACKING CLASS 2 due to higher costs.

How is my thinking, what am I missing, what filtering options in the Fund Finder give more results than the 15 shown?

 I'd say you're on the right track: equities; well diversified; cap weighted; low cost; index tracking; maybe some home bias; consider currency exchange rate changes effects.  A few caveats, just to consider…

You’re putting too much emphasis on performance - there’s a brave statement, since performance is almost everything. But let’s look at your performance specifics, and then some generalisations.

You compare BC100 with VLS100. One has 12% as UK equity, the other has >20%. One has property and bonds (not much), the other none. To draw any inferences about the relative future performances is to assume that whatever accounted for those past different performances will persist in their effect for another 30 years, even 5 years. No way.

You compare Fidelity with BC100. One is world cap weighted, the other has UK home bias. We can’t compare their performances meaningfully as they have substantially different holdings; their risks were not the same.

The LG fund excludes UK equities. Of course it will have a better performance as the US market has gone up well recently, so the LG fund is not being held back by UK stocks.

The next reason to ignore performance (as much as you can, or at least discount its value to an appropriate level) is that it does not tell you what the future holds. Every packet carries this warning for good reason.

Since we’re only considering index funds, we can wrap this up by suggesting that the performance you want to look at is how closely the fund tracks its index. Like costs, small differences between funds won’t matter much (but you can calculate it with compound interest online calculator) in the long run.

Forget return performance figures, attend to which index the fund uses and how well it tracks it; as well as costs, and which company, I don't think there's anything else to consider. A suitable index is very broad, by country (so developed and emerging markets), by stock size (so large, medium, small), and will or won’t have a home bias (up to you). https://www.bogleheads.org/blog/2020/03/02/50-years-of-investing-in-the-world-part-3/

If you had to, you could skip emerging markets (14%) of global as it wouldn’t be the end of the world; they have been a little bit higher risk and higher reward than developed markets, but their equity market fortunes fluctuate like anyone else’s. You could skip small cap if you had to (about 14% of the market again) with needing to feel any shame. 

What about holdings number? The more diversified, the more holdings, but it’s a crude measure if look under the hood. Some global index funds have four holdings - four of their own funds eg US, EM, EU and Asia; but the underlying holding could be thousands. But that aside, whether a global fund has 2000 or 3000 stocks, it’s more important to consider if it has EM, small cap, home bias etc.

Index fund management is a new-ish game. But every company has to be in it now because that’s where the money is heading. So there are some established players who have experience, and others who MIGHT not do so well until they get that experience. Vanguard and I think Fidelity are oldies. It might show up in tracking error, or how often they mess around with the index they use (Blackrock recently annoyed investors by adding ESG considerations to an otherwise very nice global fund), or they might find they can’t make enough money from the fund and so close it down (for example, it omits emerging markets, then for 10 years emerging markets do very well, so investors want emerging markets but this fund has none, so money flows out of it), or they might use derivatives dangerously (instead of buying the actual stocks in the market they buy those futures), or they might lend their stocks hazardously (most funds lend their stocks short term to earn money which helps them reduce their tracking error - so a tracking error which has the fund doing better than the index is a worry).

Lastly, although not part of your considerations, you need to stick with your choice(s) long term for best results. So choose with the long term in mind, one you won't regret when inevitable market movements occur.