Fidelity Index World P Acc

Alexland

mears1 said:

Have posters got most of their money invested in just 1 passive fund? 

For a £20k pot, 75% in 1 passive global fund would seem unremarkable. But for a £100k pot, would 75% in 1 global passive fund be crazy, rather than a  2-3 global funds even though they might track the same index?

I have a strong bias to keeping things reasonably simple while also spreading our money across a few reputable and unrelated platforms and fund managers. We have various types of accounts on platforms such as iWeb, Fidelity and AJ Bell but within those accounts, even the six digit ones, we often only have a single passive fund/etf from the likes of Blackrock, Vanguard, HSBC, L&G, etc.

Secret2ndAccount

Here is a graph showing the last 10 years of FTSE All World against MSCI World. Can you guess which is which?


If you had invested £1000 in FTSE World ten years ago, you would now have £2700. With MSCI World, you would only have £2680. In other words, no difference.

michaels

I assume these funds are not currency hedged, would it make sense to add a currency hedge to cover positions in such funds?

kinger101

mears1 said:

Alexland said:

mears1 said:
Do you consider the Fidelity Index World would do the task?

Yes if as you say you want to avoid emerging markets, keep your UK exposure to its normal market cap and are happy with the occasional circa 50% crashes that happen when investing in equities. Our kids have their JISAs and SIPPs in that fund and most of our adult money is invested in similar developed world ETFs.

Have posters got most of their money invested in just 1 passive fund? 

For a £20k pot, 75% in 1 passive global fund would seem unremarkable. But for a £100k pot, would 75% in 1 global passive fund be crazy, rather than a  2-3 global funds even though they might track the same index?

If the entirety of your funds are passive, then there's a good case for only having a single passive fund as there's probably one that fits the bill.  You might see >1 if you wanted say a 70:30 equity/debt split by mixing 80:20 funds and 60:40 funds.  Or wanted a bit of bias toward one market.  I don't see anything unreasonable about having 100% of a £100K fund in Fidelity Index World P to be honest, other than one could lower platform fees by switching to an ETF instead.  Assuming you have appetite and capacity for the risk of 100% equities.

kinger101

michaels said:

I assume these funds are not currency hedged, would it make sense to add a currency hedge to cover positions in such funds?

Hedging adds to the cost, so over the long term, this will lower performance.  So it's questionable at best over the long term.  Over the short term, it is gambling.

JohnWinder

These are the ones I have heard about. I realise I am a total ignoramus on these matters,

You might get some enlightenment here: What to look for in an index. https://www.evidenceinvestor.com/what-to-look-for-in-an-index/

michaels

kinger101 said:

michaels said:

I assume these funds are not currency hedged, would it make sense to add a currency hedge to cover positions in such funds?

Hedging adds to the cost, so over the long term, this will lower performance.  So it's questionable at best over the long term.  Over the short term, it is gambling.

Could you expand.  Isn't having liabilities in pounds and assets mostly in other currencies 'gambling'?

kinger101

michaels said:

kinger101 said:

michaels said:

I assume these funds are not currency hedged, would it make sense to add a currency hedge to cover positions in such funds?

Hedging adds to the cost, so over the long term, this will lower performance.  So it's questionable at best over the long term.  Over the short term, it is gambling.

Could you expand.  Isn't having liabilities in pounds and assets mostly in other currencies 'gambling'?

No.  Taking a risk isn't gambling if it is done within the expectation of making a profit. Investing money per se isn't gambling (regardless of whether it's hedged/unhedged) as one can reasonably expect (on the balance of probabilities) to profit from either.  

The "gambling" element comes from picking a hedged fund versus an unhedged fund.  If you're picking the hedged fund, this costs more than the unhedged fund and as one cannot make a reasonable prediction this will be the best strategy, as on average the additional costs of the hedged fund means the returns will be lower than the unhedged fund.  

It doesn't mean to say you can't "win" by picking the hedged fund, but that's luck like picking a red a the roulette wheel.  You can win at roulette over the long term because of house's margin.  

Thrugelmir

Secret2ndAccount said:

Here is a graph showing the last 10 years of FTSE All World against MSCI World. Can you guess which is which?


If you had invested £1000 in FTSE World ten years ago, you would now have £2700. With MSCI World, you would only have £2680. In other words, no difference.

A smaller and smaller number of shares has generated the bulk of returns. Hendrik Bessembinder has produced plenty of academic research on the topic. 

mears1

Alexland said:

mears1 said:

Have posters got most of their money invested in just 1 passive fund? 

For a £20k pot, 75% in 1 passive global fund would seem unremarkable. But for a £100k pot, would 75% in 1 global passive fund be crazy, rather than a  2-3 global funds even though they might track the same index?

I have a strong bias to keeping things reasonably simple while also spreading our money across a few reputable and unrelated platforms and fund managers. We have various types of accounts on platforms such as iWeb, Fidelity and AJ Bell but within those accounts, even the six digit ones, we often only have a single passive fund/etf from the likes of Blackrock, Vanguard, HSBC, L&G, etc.

Thanks for sharing. Spreading across different platforms is sensible for financial protection up to £85k.  I use iWeb because of the low charges, at the moment, not sure if I could keep track of portfolio with multiple platforms.