Broad index tracking portfolio of world equities

kimwp

Having read and decided to follow the advice in Lars Kroijer's "Investing Demystified", I am now trying to find the low cost broad index tracking portfolio of world equities that he advises. Having been relatively confident when finishing the book and determined to take control of my destiny (or at least invest in a LISA), I am now faced with lots of choices and terminology which is a bit overwhelming so it would be great to have some advice.

A specific question is what do the Fund classes mean? Looking at the two funds below, the Key Investor Information sheets are almost a copy paste - they both track large and middle cap, aiming to emulate the FTSE World Index, class risk 6 etc. The Class R however has a 0.59% ongoing charge, whereas the Class C has a 0.19% ongoing charge - can anyone explain this difference?

Legal & General Global Equity Index FundClassR Accumulation -ISIN:GB00B032BN28

Legal & General Global Equity Index FundClassC Accumulation -ISIN:GB00BPN60094 Also - income vs accumulation (and is this the same thing as growth?)

Prism

The simple answer is ignore the more expensive classes of a fund and go for the cheapest option - that would be the C class in this case. 
One thing to note about this fund is that it follows FTSE World, which doesn't contain any emerging markets, rather than FTSE All-World which does. HSBC FTSE All-World has a charge of 0.13% if that interests you.

MX5huggy

Accumulation, dividends are reinvested automatically in the fund. Income dividends are paid out as cash and held in the platform you use where you can invest them back in or invest in something else or take them out and spend them. You want Accumulation unless you have a reason not to!

moneysavinghero

They look like a copy and paste because they are. The fund will be exactly the same, holding exactly the same stocks. Funds sometimes have different classes that are aimed at different markets. So you may get a class aimed as direct purchasers and another class aimed at people who buy from an adviser. The class aimed at the adviser market would have a slightly higher ongoing fee as the adviser gets a fee.

Income version pays you a dividend. The accumulation version just accumulates the dividend within the fund (ie the dividend gets paid to the fund which would increase the value of the fund). Unless you need the cash go for the accumulation version - the money can be reinvested by the fund and earn more than it would sat in your bank account.

aroominyork

As Prism says, you need to check whether you are buying a fund which includes emerging markets. It is not always clear from the name - for example the L&G fund you mentioned (and also Fidelity Index World, which I hold) are developed markets only.

You asked about whether acc/inc is the same as growth. Are you getting confused between 'growth' and 'value' styles of investing? If so, buying an index fund removes that choice - you will have a nicely balanced mix of companies.

Have a think about whether you want predominantly large companies or also some exposure to smaller ones. Take a look at these two funds, scrolling down to Stock Style and clicking on Weight:

HSBC FTSE All World Index https://www.morningstar.co.uk/uk/funds/snapshot/snapshot.aspx?id=F00000TXY8&tab=3

Vanguard FTSE Global All Cap Index https://www.morningstar.co.uk/uk/funds/snapshot/snapshot.aspx?id=F00000XXVV&tab=3

dunstonh

The Class R however has a 0.59% ongoing charge, whereas the Class C has a 0.19% ongoing charge - can anyone explain this difference?

The retail share class is only for people who invested prior to 2013.   The clean share class is for post 2013 investments.

The retail share class comes from the days when the charges for distribution were bundled into one charge.   The clean share class is the modern way where charges are unbundled and distribution is charged seperately.

So you may get a class aimed as direct purchasers and another class aimed at people who buy from an adviser. The class aimed at the adviser market would have a slightly higher ongoing fee as the adviser gets a fee.

Not since 2013.   The retail share class also included the platform commission, which was banned not long after.    

Whether it is advised or non-advised, the same clean share class is used.    Only if you buy direct from fund house (which is rare nowadays) would a bundled share price be used.

kimwp

Thank you everyone, a wealth of advice! I really appreciate you taking the time to respond and it's helped me massively.

Type_45

I've recently been looking into this too.
I was with Vanguard LifeStrategy 100% (Acc). 
I have now split between HSBC All World, Vanguard FTSE Global, and a few grand in iShares Gold ETC.

I think the trackers I've mentioned are much of a muchness.  But VLS wasn't quite a good over the last 5 years as the other two, with HSBC a clear winner.  But any of those 3 are fine.  

You may want bonds too though, which I don't want at this stage.


Also, no one ever seems to mention BlackRock in these conversations, but I imagine they are worth looking into, particularly if you are of a globalist/environmentalist/Leftist disposition as their Tsar is well into all that.

aroominyork

Type_45 said:

 But VLS wasn't quite a good over the last 5 years as the other two, with HSBC a clear winner. 

That's because VLS is overweight to the UK which over the last 5+ years has performed worst of the six main regions (UK, Europe, US, Japan, EM, AP). You will find people on this forum talking about recently upping their UK allocation. Who knows what the future holds.

Type_45

aroominyork said:

Type_45 said:

 But VLS wasn't quite a good over the last 5 years as the other two, with HSBC a clear winner. 

That's because VLS is overweight to the UK which over the last 5+ years has performed worst of the six main regions (UK, Europe, US, Japan, EM, AP). You will find people on this forum talking about recently upping their UK allocation. Who knows what the future holds.

What we know of the UK's future, at least until 2029 and almost certainly longer, is that it will have this Conservative government in charge.  A government which has crashed the economy with lockdowns and will continue to do so. This will hollow out British businesses and increase the advantages and profits of multinational organisations such as Amazon etc.

older_and_no_wiser

Type_45 said:

A government which has crashed the economy with lockdowns and will continue to do so. This will hollow out British businesses and increase the advantages and profits of multinational organisations such as Amazon etc.

Really? Hmm. Maybe I was watching a different government briefing last night. Regardless, I think human life should always take priority over profits and money.

I don't think the UK will ever compete with the US in the mega-tech/industry sectors. I see the value in the UK at lower levels - small cap companies that are more agile and growing. However, you won't find these companies in the the main index funds.