Wisdom sought on Vanguard funds

masonic

Thrugelmir said:

bostonerimus said:

Avoiding the UK bias of VLS is a good reason not to buy it,

The UK markets have an international bias. The mantra rolls on and on. 

I wouldn't disagree, but it's generally not the fact that the market is located in the UK that makes it undesirable, rather its composition, and perhaps the fact that it doesn't really give much exposure to companies reflective of the UK economy. The UK is a region where a simple UK cap weighted index really hasn't been a good investment choice for a few decades. UK bias via active funds or FTSE250 exposure makes more sense than the All-share exposure of VLS.

OP, I think the route via ultra-cheap broker for small amounts (no custody or trading fees), followed by transfer to flat fee broker/investment platform when you reach a critical mass, makes more sense than going direct to Vanguard, if you can get what you need from ETFs.

Thrugelmir

masonic said:

Thrugelmir said:

bostonerimus said:

Avoiding the UK bias of VLS is a good reason not to buy it,

The UK markets have an international bias. The mantra rolls on and on. 

I wouldn't disagree, but it's generally not the fact that the market is located in the UK that makes it undesirable, rather its composition, and perhaps the fact that it doesn't really give much exposure to companies reflective of the UK economy. The UK is a region where a simple UK cap weighted index really hasn't been a good investment choice for a few decades. UK bias via active funds or FTSE250 exposure makes more sense than the All-share exposure of VLS.

OP, I think the route via ultra-cheap broker for small amounts (no custody or trading fees), followed by transfer to flat fee broker/investment platform when you reach a critical mass, makes more sense than going direct to Vanguard, if you can get what you need from ETFs.

Forget indices. Active management is the most appropriate route to gain UK exposure.  

GeoffTF

Albermarle said:

There is little point in paying Vanguard's 0.15% if you are using ETFs.

Unless you prefer the security of your money being held on a platform owned by a huge global financial firm .

If you have a small account, you are going to be covered by the compensation scheme anyway. If you have a large account, you can save money by going with a fixed price broker. Some of those are owned by large financial service providers, e.g. Lloyds/Halifax/iWeb. Nonetheless, I am not making recommendations here. People need to make their own assessments.

dunstonh

If you have a small account, you are going to be covered by the compensation scheme anyway.

Although ETFs do not get FSCS protection.

GeoffTF

dunstonh said:

If you have a small account, you are going to be covered by the compensation scheme anyway.

Although ETFs do not get FSCS protection.

The Vanguard ETFs are registered in the Irish Republic. They are protected by the Irish compensation scheme, which is not as generous as the FSCS. Nonetheless, Vanguard funds should be very unlikely to fail. If you are worried, you can split your investment between Vanguard and BlackRock. I just use Vanguard funds.

The FCA rules require your investments to be ring fenced. That can fail due to fraud or gross mismanagement. The FSCS provides protection against that. If the platform becomes insolvent, the administrator's fees can be taken from the customers' investments. The FSCS fully covered everyone when it last happened. 

Albermarle

As Dunstonh says , no ETF's are  covered by UK compensation scheme as they are considered to be a share type investment by FSCS . Are you sure they are covered by the Irish scheme?

If you have a small account, you are going to be covered by the compensation scheme anyway.
Correct but could take months to untangle a collapsed broker ( see SVS securities ) , or longer .

tebbins

Thrugelmir said:

masonic said:

Thrugelmir said:

bostonerimus said:

Avoiding the UK bias of VLS is a good reason not to buy it,

The UK markets have an international bias. The mantra rolls on and on. 

I wouldn't disagree, but it's generally not the fact that the market is located in the UK that makes it undesirable, rather its composition, and perhaps the fact that it doesn't really give much exposure to companies reflective of the UK economy. The UK is a region where a simple UK cap weighted index really hasn't been a good investment choice for a few decades. UK bias via active funds or FTSE250 exposure makes more sense than the All-share exposure of VLS.

OP, I think the route via ultra-cheap broker for small amounts (no custody or trading fees), followed by transfer to flat fee broker/investment platform when you reach a critical mass, makes more sense than going direct to Vanguard, if you can get what you need from ETFs.

Forget indices. Active management is the most appropriate route to gain UK exposure.  

...
I'm just repeating some stuff I've already said before here - classic active/passive, home bias and "is UK large cap crap?" debate - covered ground. See my comments in: https://forums.moneysavingexpert.com/discussion/6305063/why-is-the-uk-ftse-so-low/p2

1. UK equity indices such as the FTSE 100 and all-share have not been underperforming for decades but only since the mid 2010s - trustnet chart, compare with FTSE world/MSCI world (https://www2.trustnet.com/Tools/Charting.aspx?typeCode=NM990100,NUKX, yes this is in £)

2. SPIVA reports indicate UK active managers are less bad than other active managers in other areas but that doesn't make indexing a poor or inappropriate way to gain UK equity exposure.

3. UK large cap equity international revenue % aren't that different from other European large cap indices, though certainly higher than the more domestic S&P500. The UK is a trading economy, imports and exports each total around £600bn or ~30% of GDP, naturally larger corporations tend to be the part of the economy more engaged in that. I see this as having a global portfolio via the relative safety of the UK capital markets.

4. The FTSE 100/all share have still historically been correlated with and grown at approximately the same rate as UK GDP. 

5. The FTSE 100 is not just a random collection of crap/cyclical/commodity stocks that could just as easily be listed anywhere. The UK is the global financial capital with stronger governance standards, listing requirements, capitalisation requirements, reporting standards, lower corruption rates, is less permissive of buybacks, lower fraud rates, stronger regulations, disclosure rules and shareholder rights than many other markets.

GeoffTF

Albermarle said:

As Dunstonh says , no ETF's are  covered by UK compensation scheme as they are considered to be a share type investment by FSCS . Are you sure they are covered by the Irish scheme?

If you have a small account, you are going to be covered by the compensation scheme anyway.
Correct but could take months to untangle a collapsed broker ( see SVS securities ) , or longer .

The FSCS does protect UK domiciled equity funds against fraud or insolvency, but does not protect them from loss of value of the underlying investments. Ireland based ETFs are protected up to €20,000 on the same basis.

It can indeed take months to recover investments from a collapsed broker. Small investors putting away a few £hundred each month, should not have to worry to much about that. If they do, they probably should not be investing in equities anyway. The main obstacle will be that they cannot pay into two stocks and shares ISAs in a tax year (which is a bit unfair if one of them has collapsed). They should not pay tax on a few months savings in an unsheltered account, however. Nonetheless, having a broker fail will always be a serious nuisance. 

Albermarle

The FSCS does protect UK domiciled equity funds against fraud or insolvency

For funds  ,as in OEICS for example this is true.

But not for ETF's . IN the link below, scroll down to the section on Investments .

How safe are your savings and investments? - Money To The Masses

jimjames

tebbins said:

Thrugelmir said:

masonic said:

Thrugelmir said:

bostonerimus said:

Avoiding the UK bias of VLS is a good reason not to buy it,

The UK markets have an international bias. The mantra rolls on and on. 

I wouldn't disagree, but it's generally not the fact that the market is located in the UK that makes it undesirable, rather its composition, and perhaps the fact that it doesn't really give much exposure to companies reflective of the UK economy. The UK is a region where a simple UK cap weighted index really hasn't been a good investment choice for a few decades. UK bias via active funds or FTSE250 exposure makes more sense than the All-share exposure of VLS.

OP, I think the route via ultra-cheap broker for small amounts (no custody or trading fees), followed by transfer to flat fee broker/investment platform when you reach a critical mass, makes more sense than going direct to Vanguard, if you can get what you need from ETFs.

Forget indices. Active management is the most appropriate route to gain UK exposure.  

1. UK equity indices such as the FTSE 100 and all-share have not been underperforming for decades but only since the mid 2010s - trustnet chart, compare with FTSE world/MSCI world (https://www2.trustnet.com/Tools/Charting.aspx?typeCode=NM990100,NUKX, yes this is in £)

I'm not sure that assertion is backed up by the numbers. I'd say the FTSE100 has underperformed for at least 20 years compared to world indexes at least ex dividends

FTSE100 has increased approx 5% since 2000.
MSCI has gone increased 300% in the same time

https://backtest.curvo.eu/market-index/msci-world
https://www.macrotrends.net/2324/sp-500-historical-chart-data