LISA ETF options

Herbalus

I’m looking to switch LISA investments from funds to ETFs because the amount now means HL £45 capped platform charges for ETFs is cheaper than 0.45% platform fee for funds. (I’m aware that AJ Bell is slightly cheaper at £42 plus cheaper dealing fees but not enough for me to switch). The plan is to deposit once per year and wait until the bonus arrives before buying in, so 1x purchase per year. I’m trying to select my ETF.

 

I’ve made some assumptions I’d be grateful for comments on:

·         Acc is preferable to distributing, to avoid reinvestment costs due to dealing fees.

·         All World indexes are more diversified than World indexes (but tend to be more expensive).

 

I’ve considered:

1.       VHVG, 0.12% OCF, FTSE Developed World index, which seems ok but perhaps issues with being a smaller ETF have having a larger spread.

2.       SWDA, 0.20% OCT, MSCI World index, seems a good bet and is large and liquid, but relatively expensive as VWRP (just below) has EM exposure for 0.02% more.

3.       LCWL, 0.12% OCF, MSCI World index, a favourite of at least one person here  but doesn’t have EM exposure and I don’t have a SIPP I can use to boost EM exposure in (nor have enough spare cash to start one, my workplace pension is excellent also).

4.       VWRP, 0.22% OCF, FTSE All World, the most expensive of the options but has EM exposure.

 

I have discounted VEVE and HMWO for being distributing, and LGGG for being too small.

 

Is there anything I’m missing? I started off looking at VWRP but then went down a rabbit hole of cheaper ETFs only to find they were developed world only or distributing etc, so feel like I’m back where I started.

 

It’s potentially worthwhile splitting say LCWL or VHVG with an EM only option like HMEF 0.15%. Say £22k at 0.22% is £48.40 but £20k at 0.12% plus £2k at 0.15% is £27 so makes up for the 2x dealing fee but then I potentially face rebalancing.

 

Can somebody tell me bluntly that I’m over-analysing it (and probably being hypocritical chasing pennies to the nth degree when not switching away from HL!).

csgohan4

it really is down to personal preference, HMWO is another option. I wouldn't get hung up on EM exposure tbh. I have satellites that deal with that, but you don't have to

Alistair31

I use VWRP 

ColdIron

I would concentrate on the right investment for you, charges are a secondary concern. The saving on £10,000 of 0.12% over 0.22% is a tenner. If you split with a core plus EM then you will need to be prepared to rebalance, the cost of a sale and purchase will probably blow any small savings you make on the OCF so you would be picking up an admin task for no gain. Even if we ignore the cost, knowing I had the right investment would be worth a tenner to me

Thrugelmir

Generating an income and reinvesting elsewhere is a useful tool in building a diversified portfolio. Holding a small sum in cash until there's a lump sum to invest isn't going to detract from your investment performance significantly.