Vanguard FTSE Developed Asia Pacific ex Japan UCITS ETF (VAPX)

mither_2

I recently switched to my cash ISA to a stocks and shares ISA with Vanguard. The total value is £130k. 

I put c1/3 into their LS 80% equity fund and their ESG Developed World All Cap Equity Fund.

With the rest I purchased units in a number of funds in £10,000 blocks. I tried to avoid overlap as much as possible but clearly with having the LS fund and the ESG fund there is some. The money has only been in there for 6 weeks and already there has been a substantial deviation in values.   

Within these £10k purchases some of the funds I have invested in have performed well (FTSE 250 UCITs and S&P 500 have done particularly well) but my FTSE Developed Asia Pacific Asia has done terribly. There are only a limited number of non-UK/European/US funds to pick from and I was interested to see how this one performed as it covered a different region though exposure mostly to South Korea and Australia, which is fine and had some seemingly strong businesses such as Samsung and various Australia Banks . However, it has been the worst performing by far. 

The economy us supposedly strong in this areas having been less affected by covid? Will the latest lockdowns in Aus and NZ have been a factor in this? Does anyone have a summary of why this region has performed so much worse and expectations for the next 3 - 6 months.  

I could move my money out of this fund and put it into another better performing fund but that would the opposite approach to what investors are told to do, i.e. hold for the long term.

However, where the UK, Europe and US are opened up and their economies are growing (even if only a temporary phenomenon) are these better places to put the money? 

Thanks!    

eskbanker

mither_2 said:

The money has only been in there for 6 weeks and already there has been a substantial deviation in values.

Of course there has - six weeks is a ridiculously short timescale over which to judge the relative performance of investments, but a basket of different funds will inevitably perform differently!  Naturally, one of them has to be at the bottom....

mither_2 said:

Does anyone have a summary of why this region has performed so much worse and expectations for the next 3 - 6 months.

Likewise, three to six months is little better as a measure.

When investing, it's best to decide on a strategy and to stick to it, rather than micromanaging and looking to hop about from one to another based on short-term performance, so you should take a view about what you're trying to achieve over the long term, and then how best to do so.

mither_2

Thanks 

Agreed on both of the  above. My main curiosity is why the Asia Pacific UCIT has performed so badly. This is the one that I expected to perform best in the current climate where the economies in that regions are relatively strog and there has been a much lower impact from covid. 

When purchasing the different funds I was careful to try and spread them widely and avoid duplications but it is still quite a scattergun unscientific approach. As a newbie I thought it would be a useful way to learn more about the different funds. 

I understand that its necessary to leave the money in different funds for a long period to really assess their benefit but I would assume that individuals still move them around from time to time?  

eskbanker

mither_2 said:

When purchasing the different funds I was careful to try and spread them widely and avoid duplications but it is still quite a scattergun unscientific approach.

But there's already huge overlap across your portfolio if you've bought LifeStrategy and then selectively bought more of what it already covers, which is effectively saying that you don't trust professional fund managers or that you know more than them (or that your core fund holding was poorly selected), unless you have genuine conviction reasons for choosing to upweight some markets or sectors, rather than tinkering for the sake of it.

mither_2 said:

As a newbie I thought it would be a useful way to learn more about the different funds.

Not sure of the wisdom of that approach - what do you feel you're actually learning by owning them?  Merely seeing how they perform doesn't seem like learning to me....

mither_2 said:

I understand that its necessary to leave the money in different funds for a long period to really assess their benefit but I would assume that individuals still move them around from time to time?

Portfolio allocations are rarely cast in stone but a scattergun approach, in which you feel the need to respond to short-term performance variances from your expectations, is unlikely to be a productive method, so it's far better to decide on your strategy and stick to it, rather than seeing it as some sort of experiment.

MX5huggy

Samsung is more than 10% of the fund, next is AIA at less than 5%. 

If you believe in passive investing then buy a All World fund and be done with it if you believe in active then find a fund manager that you are happy to back. Just buying random bits of countries you think might do well is random. 

If COVID is noted as effecting a country or region less than another then that will already be priced in. 

tebbins

1. 6 weeks is a tiny time frame over which to judge a fund as "under" or "better" performing.
1a. No one knows why the market behaves the way it does.
1b. On average most stock indices wobble up and down by 20% a year, so the roughly 10% fall you are talking about (based on eyeballing VAPX lately) is about as "bad" or unusual
as rain on a Tuesday.
1c. The economy and stock market have almost nothing to do with each other, unless you are talking about the *long* term, as in 30 years or more, then you can see a relationship. You can't judge a fund's performance or its relationship with the economies it invests in on the basis of a period of time shorter than the average house purchase. The correlation between GDP and the stock market globally or at nation-level is close to 0. The weather predicts stock returns better than GDP.

1d. Anyone who claims to know why VAPX has underperformed the past 6 weeks (as opposed to those of us who may debate and discuss the possible reasons), or offer projections or expected returns for the next 3-6 months (as opposed to non-assertive debate) is either genuinely psychic, mad, stupid or a liar. However Vanguard do offer a twice yearly economic outlook (https://www.vanguard.co.uk/professional/vanguard-economic-and-market-outlook) which includes return expectations for UK and global equity and bonds for a £-based investor over the next decade.

2. Recent past performance is a *terrible" indicator of future returns. Again, the weather is a better stock returns forecast than recent performance.
3. By buying 2 funds that are basically both mostly Global equity trackers, and then buying other region specific funds, you've ended up with a portfolio that is... Basically a global equity tracker. Spreading 1/3 of your portfolio between two funds and the rest in £10k bundles round a load of other funds adds nothing if your portfolio looks the same as it would under the bonnet if you just bought a single global equity tracker. The only benefit may be reducing the risk of loss if Vanguard collapses and you had your money across multiple funds, as different funds are owned by different legal entities. But i don't think it would work this way in reality as in turn they are all a single institution. An ok reason might be "the US is overvalued and I believe security concerns in the South China Sea are overplayed, therefore I want to add more asia Pacific equity to my global portfolio". A wiser approach is "i know nothing so I'll just stick with a basic global equity tracker".

3-6 months is not nearly a long enough time frame to think about investing for. If this is your situation I suggest returning to cash. If not, remember that investing is for the long-term.

mither_2

Thanks all. Some very good points made. As I say I am a complete newbie but have found it useful to read up on the different funds even if placing my money in them offers no advantage to me than if I had just put it all into a life strategy fund.  

Thrugelmir

mither_2 said:

Thanks 

Agreed on both of the  above. My main curiosity is why the Asia Pacific UCIT has performed so badly. This is the one that I expected to perform best in the current climate where the economies in that regions are relatively strog and there has been a much lower impact from covid. 

Vietnam is suffering now. Thailand too. Australia has admitted defeat with regards to it's Covid strategy.  3rd largest port in the world in China was shut recently due to a Covid outbreak.  No where is immune to Covid. Economies are suffering. 

mither_2

Thrugelmir said:

mither_2 said:

Thanks 

Agreed on both of the  above. My main curiosity is why the Asia Pacific UCIT has performed so badly. This is the one that I expected to perform best in the current climate where the economies in that regions are relatively strog and there has been a much lower impact from covid. 

Vietnam is suffering now. Thailand too. Australia has admitted defeat with regards to it's Covid strategy.  3rd largest port in the world in China was shut recently due to a Covid outbreak.  No where is immune to Covid. Economies are suffering. 

Very true. Maybe UK with its unintended/intended herd immunity will fair better than those countries that achieved lower case numbers.