Overweight UK global fund that is cheaper than VLS100

adindas

aroominyork said:

I kind of get that Vanguard charge 0.22% for VLS 20, 40, 60 and 80 because they give you the convenience of not having to manually rebalance your equities and bonds, but for a pure equity index fund 0.22% is expensive. I have about £80k in VLS100 at the moment so finding a cheaper way to own passive funds (and preferably only holding two funds) would be worthwhile.

What you forget to mention here is that you are looking into global geographically diversified Index fund

0.22% is expensive if compared it with non-globally diversified Index Funds but It is not expensive if you are referring to global geographically diversified Index fund. If someone could find it cheaper than 0.20%, please let us know.

Global Geographically diversified Index fund you bought is priced in single currencies. Global geographically diversified Index fund costing them exchange rate every time they rebalance their portfolios.Buying thir funds you get the convenience of buying it in single currency.

Buying ETF in general is cheaper than buying the mutual fund. So, in my opinion you could get it cheaper when you buy every single ETF in portfolios you are intending to compile and rebalance it by yourself. But it might cost you even more as it might involve multiple currencies, multiple platforms and not to mention your time managing it.

But the main problem here is that in your previous post you mention you just want to rebalance 2ETFs. Many people, I believe will think, it does not make sense when come to forming a global geographically diversified Index fund.

eskbanker

adindas said:

aroominyork said:

I kind of get that Vanguard charge 0.22% for VLS 20, 40, 60 and 80 because they give you the convenience of not having to manually rebalance your equities and bonds, but for a pure equity index fund 0.22% is expensive. I have about £80k in VLS100 at the moment so finding a cheaper way to own passive funds (and preferably only holding two funds) would be worthwhile.

What you forget to mention here is that you are looking into global geographically diversified Index fund

0.22% is expensive if compared it with non-globally diversified Index Funds but It is not expensive if you are referring to global geographically diversified Index fund. If someone could find it cheaper than 0.20%, please let us know.

HSBC FTSE All World at 0.13% OCF

https://www.trustnet.com/factsheets/o/kldq/hsbc-ftse-all-world-index

Linton

Thanks for the comments on my posting, it has helped clarify my views.....

If you have say 2 trackers following exactly the same index in exactly the same way then the lower charge one will probably perform slightly better, though not always.  However if you predefine the exact index and the approach to following the index you will have very little choice anyway.  

Once you get into different indexes and different investment methods the effects are far greater than the different charges.  Blindly going for the cheapest global index fund whatever that fund happens to invest in may well not provide the best solution. 

Looking at FTSE World, All World and MSCI World trackers, the most expensive MSCI World Index tracker (Acc) I found at 0.25% (iShares) out-performed the cheapest FTSE All world tracker at 0.13% (HSBC) over the past 5 years by about 0.5%/year.  The reason is pretty obvious once you look at the make-up of the indexes: FTSE All World is  57% US and MSCI World is 67% US,  TheUS having performed very well over the past 5 years, though of course whether it will do so over the next 5 years is unknown.

So what to do? In my view one should go for the index that best matches one's objectives.  The OP has indicated that they are cioncerned about high US allocations.  This would indicate the best option would be the FTSE All-World index despite there being a marginally cheaper MSCI World fund available from Fidelity 

aroominyork

Linton said:

Thanks for the comments on my posting, it has helped clarify my views.....

You're welcome. My wife usually tells me what I think so it's nice to do the favour to someone else.

Linton said:

In my view one should go for the index that best matches one's objectives.  The OP has indicated that they are cioncerned about high US allocations.  This would indicate the best option would be the FTSE All-World index despite there being a marginally cheaper MSCI World fund available from Fidelity 

I think that's right. It's not worth chasing a 0.10% saving if it means looking at your portfolio and thinking "it's not quite what I want, but it's a fraction cheaper".

Thrugelmir

aroominyork said:

NedS said:

JohnWinder said:

Linton said:

2) Why do you want a cheaper index fund?  What is important is that the fund follows the index.  If it does that its charges are irrelevent.

I think it's because charges reduce your overall return. So, if you have two products providing the same service, you'd choose the less expensive, a bit like buying anything else I suppose. That would be what makes the charges relevant, I'd say. Now of course 5 basis points is perhaps here nor there over a shortish period with the sorts of money we're probably talking about here, but even 5 basis points can be evaluated for its impact on returns.

I think the point @Linton was making is that if two funds both track an index, the index rises by 10% and the two funds also both rise by 10%, it's irrelevant that one fund has a charge of 0.1% and the other a change of 0.6% as both funds have done what they intended to do and provided you with a return the same as the index.

 A little ironic, then, that it's Vanguard I want to get away from. 

The late Jack Bogle left Vanguard 20 plus years ago. When there was a difference of opinion as to the direction Vanguard were taking.  Ever since Vanguard have milked JB's initial successful strategy. While their marketing spend has remained minimal. 

older_and_no_wiser

Linton said:

If my maths is right 60% Fidelity Index and 40 % VLS100 is about 11.5% UK.  This could be achieved by approx 92.6% Fidelity Index World and 7.4% your favourite FTSE100 tracker.

Or you could go with a cheeky actively managed UK fund. Yes it would cost more in fees, but some people may have the opinion that actively managed UK funds are a better bet in the long run as the UK market at the top end (FTSE 100) isn't a great performer. 

aroominyork

swleventhal said:

Linton said:

If my maths is right 60% Fidelity Index and 40 % VLS100 is about 11.5% UK.  This could be achieved by approx 92.6% Fidelity Index World and 7.4% your favourite FTSE100 tracker.

Or you could go with a cheeky actively managed UK fund. Yes it would cost more in fees, but some people may have the opinion that actively managed UK funds are a better bet in the long run as the UK market at the top end (FTSE 100) isn't a great performer. 

That's a well trodden path/much discussed thread. About 70% of my UK equities are in active funds (mostly smaller companies, plus a bit of Fundsmith) but I want a small amount to just track the index.

aroominyork

Vanguard have just started a major TV advertising campaign. While doesn't go into specifics such as the benefits of passive over active investing, it would be interesting to hear from IFAs about whether you think Vanguard's long term aim is that clients question their IFAs about how their money is invested.

adindas

eskbanker said:

adindas said:

aroominyork said:

I kind of get that Vanguard charge 0.22% for VLS 20, 40, 60 and 80 because they give you the convenience of not having to manually rebalance your equities and bonds, but for a pure equity index fund 0.22% is expensive. I have about £80k in VLS100 at the moment so finding a cheaper way to own passive funds (and preferably only holding two funds) would be worthwhile.

What you forget to mention here is that you are looking into global geographically diversified Index fund

0.22% is expensive if compared it with non-globally diversified Index Funds but It is not expensive if you are referring to global geographically diversified Index fund. If someone could find it cheaper than 0.20%, please let us know.

HSBC FTSE All World at 0.13% OCF

https://www.trustnet.com/factsheets/o/kldq/hsbc-ftse-all-world-index

Thanks good to know this.

Vanguard has simililar ETF FTSE All-World UCITS ETF (VWRL) with higher OCF of 0.22%.

But I think for some people, unless they are paying a large chunk of money in one go, they might be ending up paying more. I did my research and find that this ETF from HSBC is only available in the UK under the platforms/brokers which will charge people a trading fee each time they are adding their position.

HL figure for instance

https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/h/hsbc-ftse-all-world-index-class-c-accumulation/costs

Does anyone have any info on how to get this global ETF lower for investing say 2x£5,000 a year taking into account all of the fees/charges ?

eskbanker

adindas said:

eskbanker said:

adindas said:

aroominyork said:

I kind of get that Vanguard charge 0.22% for VLS 20, 40, 60 and 80 because they give you the convenience of not having to manually rebalance your equities and bonds, but for a pure equity index fund 0.22% is expensive. I have about £80k in VLS100 at the moment so finding a cheaper way to own passive funds (and preferably only holding two funds) would be worthwhile.

What you forget to mention here is that you are looking into global geographically diversified Index fund

0.22% is expensive if compared it with non-globally diversified Index Funds but It is not expensive if you are referring to global geographically diversified Index fund. If someone could find it cheaper than 0.20%, please let us know.

HSBC FTSE All World at 0.13% OCF

https://www.trustnet.com/factsheets/o/kldq/hsbc-ftse-all-world-index

Thanks good to know this.

Vanguard has simililar ETF FTSE All-World UCITS ETF (VWRL) with higher OCF of 0.22%.

But I think for some people, unless they are paying a large chunk of money in one go, they might be ending up paying more. I did my research and find that this ETF from HSBC is only available in the UK under the platforms/brokers which will charge people a trading fee each time they are adding their position.

HL figure for instance

https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/h/hsbc-ftse-all-world-index-class-c-accumulation/costs

Does anyone have any info on how to get this global ETF lower for investing say 2x£5,000 a year taking into account all of the fees/charges ?

That HSBC fund isn't an ETF, it's an OEIC, so doesn't incur dealing costs when bought through HL (and others which have that pricing model).  It's also available from platforms such as IWeb where there are dealing costs but no custody charges, so may be cheaper overall....