Move my Vanguard LS100 to FTSE Global All Cap Index?

Alexland

aroominyork said:

Even if you want to keep the overweight UK of VLS100 there are cheaper ways to do it. VLS's 0.22% is only justified for rebalancing bonds and equities on the 20/40/60/80 products. So instead of VLS100 you could buy HSBC FTSE All World Index for 0.13% and top it up with a FTSE All Share tracker for 0.06% and occasionally rebalance the UK component.

Problem is that if they are on Vanguard Investor then they won't have access to the HSBC fund so to go cheaper they would end up with VEVE, VFEM and the FTSE All Share tracker fund. If they really want VLS100 with the automatic fixed allocation rebalancing then it's probably best to just buy it and accept the higher cost.

Thrugelmir

Alexland said:

aroominyork said:

Even if you want to keep the overweight UK of VLS100 there are cheaper ways to do it. VLS's 0.22% is only justified for rebalancing bonds and equities on the 20/40/60/80 products. So instead of VLS100 you could buy HSBC FTSE All World Index for 0.13% and top it up with a FTSE All Share tracker for 0.06% and occasionally rebalance the UK component.

Problem is that if they are on Vanguard Investor then they won't have access to the HSBC fund so to go cheaper they would end up with VEVE, VFEM and the FTSE All Share tracker fund. If they really want VLS100 with the automatic fixed allocation rebalancing then it's probably best to just buy it and accept the higher cost.

Not fixed allocation though. Vanguard investment team have the flexibility to reset the allocations as they think fit. There'll also be a range of exposure to avoid excessively trading their own  internal funds. 

Alexland

Thrugelmir said:

Not fixed allocation though. Vanguard investment team have the flexibility to reset the allocations as they think fit. There'll also be a range of exposure to avoid excessively trading their own  internal funds. 

True but they are unlikely to fundamentally change the formula without giving some notice to avoid upsetting their customers.

Thrugelmir

Alexland said:

Thrugelmir said:

Not fixed allocation though. Vanguard investment team have the flexibility to reset the allocations as they think fit. There'll also be a range of exposure to avoid excessively trading their own  internal funds. 

True but they are unlikely to fundamentally change the formula without giving some notice to avoid upsetting their customers.

Why would they upset their customers?  Either you want a managed investment service or you don't.  Never going to be top performers but will protect their investors from the worst of falls. 

GeoffTF

Thrugelmir said:

Alexland said:

aroominyork said:

Even if you want to keep the overweight UK of VLS100 there are cheaper ways to do it. VLS's 0.22% is only justified for rebalancing bonds and equities on the 20/40/60/80 products. So instead of VLS100 you could buy HSBC FTSE All World Index for 0.13% and top it up with a FTSE All Share tracker for 0.06% and occasionally rebalance the UK component.

Problem is that if they are on Vanguard Investor then they won't have access to the HSBC fund so to go cheaper they would end up with VEVE, VFEM and the FTSE All Share tracker fund. If they really want VLS100 with the automatic fixed allocation rebalancing then it's probably best to just buy it and accept the higher cost.

Not fixed allocation though. Vanguard investment team have the flexibility to reset the allocations as they think fit. There'll also be a range of exposure to avoid excessively trading their own  internal funds. 

There are just over 100 more stocks in VEVE than in Vanguard Developed Wold ex UK (they both track the FTSE indexes). On that basis, a FTSE 100 tracker would be a better fit for UK exposure than a FTSE All Share tracker. (There are no FTSE Russell Global Small cap trackers available to retail investors in the UK, so we cannot easily add the global FTSE 250 sized companies.)

In a recent interview, two Vanguard chiefs said the the UK bias in LifeStrategy was for marketing reasons. Neither of them favoured a UK bias.

Thrugelmir

GeoffTF said:

Thrugelmir said:

Alexland said:

aroominyork said:

Even if you want to keep the overweight UK of VLS100 there are cheaper ways to do it. VLS's 0.22% is only justified for rebalancing bonds and equities on the 20/40/60/80 products. So instead of VLS100 you could buy HSBC FTSE All World Index for 0.13% and top it up with a FTSE All Share tracker for 0.06% and occasionally rebalance the UK component.

Problem is that if they are on Vanguard Investor then they won't have access to the HSBC fund so to go cheaper they would end up with VEVE, VFEM and the FTSE All Share tracker fund. If they really want VLS100 with the automatic fixed allocation rebalancing then it's probably best to just buy it and accept the higher cost.

Not fixed allocation though. Vanguard investment team have the flexibility to reset the allocations as they think fit. There'll also be a range of exposure to avoid excessively trading their own  internal funds. 

In a recent interview, two Vanguard chiefs said the the UK bias in LifeStrategy was for marketing reasons. Neither of them favoured a UK bias.

Care to link to the interview? Be an interesting read.

Appears to contradict their own Chief Economist who in his 2022 market and economic outlook said -

"In sterling terms, we think UK shares over the next ten years are likely to return between 4.6% and 6.6% on an annualised basis. For unhedged, non-UK shares the projected range is between 2.8% and 4.8%.". 

VLS was likewise created a decade ago in a very different investing era. 

GeoffTF

Thrugelmir said:

GeoffTF said:

Thrugelmir said:

Alexland said:

aroominyork said:

Even if you want to keep the overweight UK of VLS100 there are cheaper ways to do it. VLS's 0.22% is only justified for rebalancing bonds and equities on the 20/40/60/80 products. So instead of VLS100 you could buy HSBC FTSE All World Index for 0.13% and top it up with a FTSE All Share tracker for 0.06% and occasionally rebalance the UK component.

Problem is that if they are on Vanguard Investor then they won't have access to the HSBC fund so to go cheaper they would end up with VEVE, VFEM and the FTSE All Share tracker fund. If they really want VLS100 with the automatic fixed allocation rebalancing then it's probably best to just buy it and accept the higher cost.

Not fixed allocation though. Vanguard investment team have the flexibility to reset the allocations as they think fit. There'll also be a range of exposure to avoid excessively trading their own  internal funds. 

In a recent interview, two Vanguard chiefs said the the UK bias in LifeStrategy was for marketing reasons. Neither of them favoured a UK bias.

Care to link to the interview? Be an interesting read.

Appears to contradict their own Chief Economist who in his 2022 market and economic outlook said -

"In sterling terms, we think UK shares over the next ten years are likely to return between 4.6% and 6.6% on an annualised basis. For unhedged, non-UK shares the projected range is between 2.8% and 4.8%.". 

VLS was likewise created a decade ago in a very different investing era. 

They were not contradicting their Chief Economist, they were in effect saying that they do not consider their Chief Economist's views to be relevant to choosing their asset allocation. I expect that the Chief Economist's report is published for marketing reasons. Here is the interview:

https://www.youtube.com/watch?v=sppXXFwVWTk

HCIMbtw

I have chunk invested in LS100

I switched over new contributions to FTSE global all cap about 8 months back. I didn't switch my LS100 funds to FTSE though, just changed it for new contributions. 

I don't mind the overweighting UK, but its so similar to my pension that I just wanted a bit more US exposure. 

Will eventually switch out the balance to iWeb and HSBC global index once I hit the 35k mark. 

tebbins

GeoffTF said:

Thrugelmir said:

Alexland said:

aroominyork said:

Even if you want to keep the overweight UK of VLS100 there are cheaper ways to do it. VLS's 0.22% is only justified for rebalancing bonds and equities on the 20/40/60/80 products. So instead of VLS100 you could buy HSBC FTSE All World Index for 0.13% and top it up with a FTSE All Share tracker for 0.06% and occasionally rebalance the UK component.

Problem is that if they are on Vanguard Investor then they won't have access to the HSBC fund so to go cheaper they would end up with VEVE, VFEM and the FTSE All Share tracker fund. If they really want VLS100 with the automatic fixed allocation rebalancing then it's probably best to just buy it and accept the higher cost.

Not fixed allocation though. Vanguard investment team have the flexibility to reset the allocations as they think fit. There'll also be a range of exposure to avoid excessively trading their own  internal funds. 

There are just over 100 more stocks in VEVE than in Vanguard Developed Wold ex UK (they both track the FTSE indexes). On that basis, a FTSE 100 tracker would be a better fit for UK exposure than a FTSE All Share tracker. (There are no FTSE Russell Global Small cap trackers available to retail investors in the UK, so we cannot easily add the global FTSE 250 sized companies.)

...
I'm not sure I follow your reasoning, the FTSE All-Share includes, with around 1/6 of its market cap, the FTSE 250, the non-investment trust companies in which generate around half their earnings within the UK, as opposed to around 1/4 for FTSE 100, granted the difference isn't much though. Also what does the 100 extra names in the VEVE list have do with that? Those are global developed large and mid-cap indices, the UKs "mid cap" index falls into the global definition of small cap, I think that's why you've noticed what you've noticed. At the bottom of the FTSE 10 we have the likes of ITV, Royal Mail and Sainsbury's - hardly capable of being considered large by global standards.

Also Vanguard offer a global small cap index fund, I'm pretty sure other fund houses do too.

GeoffTF

tebbins said:

GeoffTF said:

Thrugelmir said:

Alexland said:

aroominyork said:

Even if you want to keep the overweight UK of VLS100 there are cheaper ways to do it. VLS's 0.22% is only justified for rebalancing bonds and equities on the 20/40/60/80 products. So instead of VLS100 you could buy HSBC FTSE All World Index for 0.13% and top it up with a FTSE All Share tracker for 0.06% and occasionally rebalance the UK component.

Problem is that if they are on Vanguard Investor then they won't have access to the HSBC fund so to go cheaper they would end up with VEVE, VFEM and the FTSE All Share tracker fund. If they really want VLS100 with the automatic fixed allocation rebalancing then it's probably best to just buy it and accept the higher cost.

Not fixed allocation though. Vanguard investment team have the flexibility to reset the allocations as they think fit. There'll also be a range of exposure to avoid excessively trading their own  internal funds. 

There are just over 100 more stocks in VEVE than in Vanguard Developed Wold ex UK (they both track the FTSE indexes). On that basis, a FTSE 100 tracker would be a better fit for UK exposure than a FTSE All Share tracker. (There are no FTSE Russell Global Small cap trackers available to retail investors in the UK, so we cannot easily add the global FTSE 250 sized companies.)

...
I'm not sure I follow your reasoning, the FTSE All-Share includes, with around 1/6 of its market cap, the FTSE 250, the non-investment trust companies in which generate around half their earnings within the UK, as opposed to around 1/4 for FTSE 100, granted the difference isn't much though. Also what does the 100 extra names in the VEVE list have do with that? Those are global developed large and mid-cap indices, the UKs "mid cap" index falls into the global definition of small cap, I think that's why you've noticed what you've noticed. At the bottom of the FTSE 10 we have the likes of ITV, Royal Mail and Sainsbury's - hardly capable of being considered large by global standards.

Also Vanguard offer a global small cap index fund, I'm pretty sure other fund houses do too.

I have not said what I mean by better fit. What I was trying to say was that VEVE and Vanguard Developed World ex UK track the FTSE Russell large and medium cap indices, which contain FTSE 100 sized companies. If we want to be consistent in tracking FTSE Russell large and medium cap sized companies, we should choose the FTSE 100. That would make sense if we wanted to convert Vanguard Developed World ex UK into VEVE by adding the missing UK stocks, for example. Of course we can choose to add the FTSE Russell small cap stocks to just the UK, if we favour the FTSE 250, but that is an active investment decision. As I said, as UK retail investors, we cannot add these stocks to every international market, because we do not have access to a suitable tracker. That would not be a great solution anyway, because we would be paying transaction costs when stocks move between the medium and large cap indexes. An "all-cap" tracker is better, but more expensive that a "large and medium cap" tracker currently. Tax considerations stop me from changing horses anyway.

I am not particularly keen on the FTSE 250, because it contains the perennially under-performing Investment Trusts, which hold stocks that I already have with added costs. It is not really in the spirit of passive investment to include them. On the other hand, the Vanguard FTSE All-Share tracker does have lower transaction costs than the Vanguard FTSE 100 tracker. It is six of one and half a dozen of the other which is the better choice. If I was using ETFs, I would just use VUKE. I wrestled with this issue, and admit to making an active investment decision, and choosing the FTSE 100, because I preferred the prospects of the larger internationally focused companies. That may prove to be wrong, of course.