FTSE UK All Share or MSCI Global Small Cap?

older_and_no_wiser

For extra portfolio diversification in my SIPP, I'm thinking of purchasing one of the following funds:

Vanguard FTSE UK All Share

MSCI Global Small Cap

 I currently have around 20% of my portfolio in the UK; mainly in the Marlborough UK Micro Cap fund and the UK element of the HSBC Global Strategy fund. 

I have around 48% in the US but virtually all in large and medium cap. So I'm thinking the small cap fund will give added diversity. A lot of the small cap fund is in US stock (currently 59%) but of course the US is a huge stock power, so I would think most people's portfolios would be the same.

Given the choice of the two funds, does anyone have any opinions? Maybe the extra money (around 10% of my existing pension SIPP) should just go into the HSBC Global Strategy fund as that is a pre built diverse fund?

I realise the UK historically hasn't been a great performer compared to the States, but I think now Brexit is done and the reopening of certain parts of our economy after Covid, this is the time for the UK to shine. Of course that is just my opinion! I'm no Warren Buffett!

I have around 8 years before I will be drawing on my pension.

 I understand your comments wouldn't be investment advice, just information/opinion.

underground99

The HSBC global strategy fund is a managed portfolio put together by professionals, designed to create an investment portfolio that targets a particular % range of volatility (depending on whether you go adventurous, cautious, balanced etc). It should suit your needs, right off the shelf, unless you've deliberately chose a version of the product that doesn't suit your needs because it's too light on equities vs bonds etc.

If you don't think the HSBC Global Strategy team are very good at their jobs (because for example they don't want to increase the expense and risk of the portfolio by adding global small cap), then fair enough. Add the global smallcap yourself, and break their allocation to get something more in line with what you think you need.

I don't see any major winning formulae in buying the 'off the shelf portfolio' from HSBC Global Strategy and then immediately breaking it by adding an extra dose of the UK All-Share-  which is quite a concentrated index, mostly invested in a limited set of industries (over 30% of the FTSE UK All-Share is allocated to shares in just the 9 largest companies by free float equity value).

If you feel that you have accidentally bought a version of HSBC Global Strategy which is too light on equity investments at the same time as not having enough small companies, then OK, add some extra global small cap equities.

Otherwise, just keep putting more money into the HSBC Global Strategy Fund which you've already assessed to broadly meet your needs anyway. If it ain't broke, don't go looking for reasons to fix it. If it *is* broke, rip it up completely and start again with your own customised portfolio if you think you are better at building portfolios than the professionals who sell mixed asset investment products to UK retail investors (e.g. the HSBC Global Strategy portfolios, other products are available etc etc.).

george4064

Not sure what you are asking for since you’re comparing apples with oranges with the two funds you have chosen to compare? 

The differences between the two are obvious, one tracks the FTSE All Share and the other MSCI Global Small Cap. Perhaps a better question to ask yourself is whether it would be suitable to add further UK or Global Small Cap exposure to your portfolio?

Either way, over the long-term the Global Small Cap fund will produce better returns than the U.K. FTSE All Share fund.

ChilliBob

I'd not bother with the All Share, the UK (more specifically small cap) seems to do well via Active funds (yeah I know, opening myself up to abuse on this point!).

So, given the choice I'd go with the small cap... But is be tempted to top up my UK holdings tbh, keep seeing stuff how the UK is still 'cheap' in relative terms etc