USA - the next decade

whatstheplan

Okay, so I know previous performance isn't necessarily an indictor of future performance, however consider this:

Product:  Vanguard FTSE Developed World ex-UK Equity Index Fund
Investment:  £10k
Period:  2011 - 2021
Current Value:  £32,450
US Market Allocation:  67.5%

Product:  Vanguard US Equity Index Fund
Investment:  £10k
Period:  2011 - 2021
Current Value:  £42,800
US Market Allocation:  99.6%

I appreciate this is hindsight, however the (apparently logical) rationale of 'don't have all your investment eggs in one region' would have served investors less well to the relatively significant tune of £10k if they applied this logic choosing between these two products.

So, whilst appreciating we don't have a crystal ball, what are people's thoughts on the projected performance of the USA's economy over the next decade?  Reading a few official projections, continued growth is expected into 2022 and beyond.

Background to my question.  Looking to move £20k from LS100 whilst remaining within Vanguard product suite.  Initially I was looking at FTSE Developed World ex-UK however I then spotted how well US Equity has performed over the last decade, which is tempting ... 

EDIT:  I'll be investing another £20k before end of this calendar year, so I'm tempted to put 100% of my LS100 investment into US Equity and use the next £20k in other markets.

Swipe

Why not hedge your bets and go 50:50?

jamei305

Obviously having all your eggs in the best-performing region for ten years will result in better gains than having them in an all-world tracker.

Likewise having all your eggs in any under-performing region for ten years will result in worse gains than having them in an all-world tracker.

Now, you can either gamble on what will be the best-performing region for the next ten years, or hedge your bets and go with the all-world tracker.

whatstheplan

Thanks guys, see my edit in OP.

Thrugelmir

Not the US economy that's outperformed. It's a select group of global multinational companies. The higher the weighting to these stocks the better the overall performance of your chosen investment. If you compare the more recent 5 year performance figures the gulf isn't as wide. Other markets are beginning to recover lost ground. 

MX5huggy

EDIT:  I'll be investing another £20k before end of this calendar year, so I'm tempted to put 100% of my LS100 investment into US Equity and use the next £20k in other markets.

If you do that you will be underweight in US as it’s about 60% of the global stock. 

You’re original plan would of left you massively overweight in US. With no UK exposure at all.

LS100 (and all LS flavours) have a UK bias. 

You can build your own global tracker within Vanguard for lower fees, than than the global trackers offered but you’ll have do the allocation and rebalancing. 

mrlegend123

Baillie Gifford managed fund (similar to LS80 - aggressive)?

whatstheplan

Valid point re more recent performance, gap lessening, £21k vs £23.5k.  Also valid re if I then invest elsewhere my US weighting decreases.  Some food for thought.

mrlegend123

I said last week that I was not selling existing and was not buying new us holdings using some cash to park in the money markets. Some posters on here slated me.... mad to invest in the US with the highest Cape since the dot com bubble. 

bostonerimus

No mention is made of risk adjusted return. This is also classic "grass is greener" thinking. Stay diversified and compare your return to what you need to meet your goals, that's the metric that matters.

mrlegend123

it is guaranteed that investors around the world are thinking the same about the US markets and the threat of inflation due to money printing.

The smart money has props already left the US markets.....