L&G International vs HSBC Ftse all world fund, vs any low cost vanguard tracker fund suggestion

mears1

Please could some kind member advise me on a passive global index fund to hold for about 10 years in my stocks and share isa.
It needs to be
 1. low cost with a good return,
  2.low or no maintenance - I do not want to be reinvesting dividends. The Accumulation version.  
  3. A fund that I can just leave, as I do not have the know how to assess whether it is doing well.

 Through forums and newspaper articles,  I've come up with L&G International (on HL best buy list, HSBC Ftse all world fund and Vanguard tracker fund.

My research has been based on HL performance charts and costs, but now I have come across the monevator blog which says that's wrong. It should be based on tracking error and TER. Now I am thoroughly confused

30% of my portfolio is with Santander Atlas Portfolio 71A which is a managed fund but with a lower performance compared to these passive trackers! Much of this fund is investing in USA.  Have never read about anyone investing with Santander!

Open to suggestions of any other low cost, high performance tracker fund eg vanguard etc.

Thrugelmir

With low cost passive investing you'll achieve the return of the tracked index (less fees and fund charges) over the period you are invested. Good returns come from the fund selection. Unfortunately no one can predict 10 years ahead which index will come out best. Be no investment industry to speak of if forecasting were that easy.  

Invest and forget may not provide your desired outcome. Much can change in a decade. Perhaps consider a multi asset fund for your entire portfolio. Then at least your portfolio will remain diversified and require no input from yourself. The fund managers rebalancing the holdings every so often. Invest and forget may not provide your desired outcome. 

DireEmblem

You need to decide what you want to buy, and then where to buy/hold it.

If you are starting from scratch, why not try some of the signup offers from the Robo Investment companies?

IIRC

InvestEngine £75 for investing £100 for a year and 0.25% management fees plus ETF fees.
Nutmeg £100 bonus if you invest £500 and £100 a month for a year, with up to 1.05% management fees plus ETF fees.
Wealthify £40 bonus for investing £400 for six months, 0.6% management fees plus ETF fees.

They all ask you a bunch of questions, investment timeframe, and then pick a selection of ETFs to suit your answers.

If you're happy to have a high level of risk/reward, then you can invest in Vanguard FTSE All-World UCITS ETF (USD) Accumulating on a zero fee platform for 0.22% all in costs(its OCF).  I would look up Morningstar for its track record, probably look at the longer running VWRL(Distributing) version.

If you are looking for a Mutual fund, then yes this HSBC fund is not a bad shout.  Its OCF is 0.13% but then you would also have platform fees probably of about 0.35% on top.  HSBC also have an ETF version.

If your looking for an invest, top up and forget strategy, and happy with reasonable risk, then I would go with VWRP or HMWO in the ETF versions on a low cost platform.  For a slightly less volatile 10 year run, but lower potential return as a result, you also wouldn't go far wrong with any of the LifeStrategy funds.

But anyway, decide your risk, then find the right product, then the right wrapper/company that will allow you to buy it.

I would at a minimum look at the signup offers, bag the bonuses, and then decide if you are happy with them/not to leave to go with another option.  See the signup bonus as a head start.

tebbins

For a cheap accumulation fund you could try holding Vanguard FTSE Global All Cap in the vanguardinvestor.co.uk platform.
The performance of most/all global tracker funds will range from similar to identical, the choice between them comes down to preference, cost difference and tracking error. There is no objectively right or wrong choice.

ColdIron

You talk of 'good returns' and 'high performance' but a tracker will only perform as well as the index it tracks. In general higher returns come with higher risk and volatility

Be aware that the Legal & General International Index Trust excludes the UK and would usually be accompanied by a separate UK fund, which is probably not what you want

If you are looking for low cost bear in mind that whatever you choose, HL have fairly high fees of 0.45%. This is fine on low sums (£45 pa on £10,000) but eyewatering on larger sums (£450 pa on £100,000)

10 years might be on the short side for a 100% equity fund (we know nothing about your attitude to risk) and you ought to consider a multi-asset fund, one that includes bonds to reduce volatility. Popular choices could be one of the HSBC Global Strategy or Vanguard Lifestrategy range. These use index trackers as their underlying investments

Alexland

mears1 said:

Through forums and newspaper articles,  I've come up with L&G International (on HL best buy list, HSBC Ftse all world fund and Vanguard tracker fund.

Step back from selecting funds and start by deciding what assets you want to invest your money into.

It sounds like you want to go passive but do you want to exclude the UK as the L&G International fund does? Maybe you want to include Emerging Markets as the HSBC All World fund does accepting the higher risk and lower governance standards found in such countries? Whatever you do you are likely to end up with a lot of money in the USA as it's the home to many successful international companies.

mears1

Thank you for all for the above comments. The Santander is sort of a managed fund, but I do need to have a strategy. I do want a passive to balance out the highish Santander's management fee!  Santander is in the 5 risk category. My risk attitude is moderate to high. I do not want to withdraw an income from it and want pure growth.  

1. I would like to compare the costs of the above  funds  but  am confused about the following comment from a public forum. Can anyone explain this? If the HSBC's ongoing cost is 0.13%, how can this be more expensive than Vanguard's 0.23%?

 “The HSBC FTSE All world 0.13% cost, despite having a lower published OCF actually works out (over the last 5 years at least) significantly more expensive than the Vanguard FTSE Global All cap index’s  0.23% cost (read transaction costs, tracking error, sampling effects etc).”

Is there a website that can calculate this tracking error, sampling effects, transaction costs  into one total figure to make comparisons simpler? My Isa account is with  iweb which only charges £5 per transaction, so the charges are lower than some other platforms.

2.  What is the opinion that inclusion of UK and China lowers funds performance? L & G International trust does not include UK and China.

NedS

mears1 said:

2.  What is the opinion that inclusion of UK and China lowers funds performance? L & G International trust does not include UK and China.

It's really not worth worrying about. If you pick your 5 favourite trackers and compare their performance over a 5 or 10 year period, you'll find there is hardly a hairs width between them, despite them tracking different indices, some of which include emerging markets, others which don't, some exclude UK etc. So unless you know the UK or china is going to outperform or under-perform, stop worrying about it. It is far more important that you are invested  and far less important which global equity tracker you have selected. And if you still can't decide, go with 2, or 3, as their performance will all be nigh on identical anyway.

[Deleted User]

1. I would like to compare the costs of the above  funds  but  am confused about the following comment from a public forum. Can anyone explain this? If the HSBC's ongoing cost is 0.13%, how can this be more expensive than Vanguard's 0.23%?

 “The HSBC FTSE All world 0.13% cost, despite having a lower published OCF actually works out (over the last 5 years at least) significantly more expensive than the Vanguard FTSE Global All cap index’s  0.23% cost (read transaction costs, tracking error, sampling effects etc).”

Is there a website that can calculate this tracking error, sampling effects, transaction costs  into one total figure to make comparisons simpler? 

I assume you could check this for yourself, just see what the return was over 5 years for each, and that'll tell you whether this is correct or not.

-EDIT- In fact since I have some cash in both of these funds and this comment worried me, I have checked for myself, and over the past 5 years the returns of each fund was as follows (as of today):

• Vanguard FTSE Global All Cap Index Investor Acc GBP - 80.34% 5 year return
• HSBC FTSE All World Index C Acc - 81.61% 5 year return
  

So in fact the comment from the other public forum is WRONG and the HSBC fund as you would expect has given better returns. As with all such things be careful before relying on what the internet tells you!!

PS figures taken from the Hargreaves Lansdown site here (https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/v/vanguard-ftse-global-all-cap-index-accumulation/charts & https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/h/hsbc-ftse-all-world-index-class-c-accumulation/charts) NB I don't use HL for actual investing as they're super expensive but their research tools are good!

eskbanker

Deleted_User said:
In fact since I have some cash in both of these funds and this comment worried me, I have checked for myself, and over the past 5 years the returns of each fund was as follows (as of today):

• Vanguard FTSE Global All Cap Index Investor Acc GBP - 80.34% 5 year return
• HSBC FTSE All World Index C Acc - 81.61% 5 year return
  

So in fact the comment from the other public forum is WRONG and the HSBC fund as you would expect has given better returns. As with all such things be careful before relying on what the internet tells you!!

PS figures taken from the Hargreaves Lansdown site here (https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/v/vanguard-ftse-global-all-cap-index-accumulation/charts & https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/h/hsbc-ftse-all-world-index-class-c-accumulation/charts) NB I don't use HL for actual investing as they're super expensive but their research tools are good!

Those funds track different indices - the Vanguard one tracks the FTSE Global All Cap index, which includes small caps, whereas the HSBC one tracks FTSE All World, which is only large and mid cap.  Both are likely to deliver broadly similar performance, but those small variances between the two funds can be attributed to various factors but not specifically tracking error as it's not a like-for-like comparison....

mears1

Hi Jimster
I feel inspired you have these funds, and from the high level of views, this must be a popular and personal topic for many!

How about when you deduct costs from these 5 year returns?
 If you hold them via iweb isa, does the fund or iweb self invest the dividends?
And do both of these deal in sterling, so avoiding the need to need to factor currency charges?
Are there any other charges that need to be considered apart from i webs transaction cost of £5, and ongoing charge to consider?

Thanks