Investing in Global Trackers and other similar investments

bostonerimus

If you own a bond fund you will own hundreds and even thousands of bonds so even if a bond defaults it is basically meaningless. Of course if you had invested in a Russian State bond fund you might now be in trouble so stick to diversified bond funds with good ratings.

I use just 3 Vanguard funds and have more than £200k in each of them.

GeoffTF

bostonerimus said:

DoneWorking said:

GeoffTF said:

DoneWorking said:

GeoffTF said:

DoneWorking said:
Keeping in mind I want to go ESG can anyone give me any ideas on selecting suitable funds

Would I go for just one fund

You would need to tell us what you mean by ESG, i.e. give us a list of the types of companies that you do not want to invest in. The shorter the list, the better, as far as risk and likely return are concerned.

Yes, you should go with just one fund.

Don't want to go with fossil fuels or weapons

Here is the one that was suggested earlier:

https://www.vanguardinvestor.co.uk/investments/vanguard-esg-global-all-cap-ucits-etf-usd-distributing/overview

That is 100% equities, which is appropriate if you also have savings accounts. An IFA is not going to bother with savings accounts. That would be too much work. He would use a packaged find with equities and bonds. That will not give as good a return for the same risk level. Vanguard does packaged ESG funds, e.g.:

https://www.vanguardinvestor.co.uk/investments/vanguard-sustainablelife-40-50-equity-fund-a-gbp-accumulation/overview?intcmpgn=blendedglobal_sustainablelife4050equityfund_fund_link

That fund excludes fossil fuels, but only excludes "controversial weapons".

So if I invest say £250k
50% in a savings/bond ladder

Then 50% in  the vanguard sustainable life 40 50 would that meet my requirements

I'm assuming put the whole sum in to the Vanguard straight away

Do they constantly adjust it on an ongoing basis

What is the anticipated return after costs

I will of course do my own research on this fund

Including how to make the best of any tax implications

What would happen if Vanguard went bust

Vanguard is owned by its funds which are owned my the customers who invest in Vanguard funds. So it's like a cooperative. So I'm not sure how it could go bust. Anyway Vanguard fund shares are totally separate from Vanguard's own finances and the only way you will lose money is if the underlaying investments go down in value.

There is $7.5 trillion invested in Vanguard funds:

https://www.investopedia.com/articles/investing/110515/who-are-owners-vanguard-group.asp

The whole world economy would be in deep trouble if someone managed to sneak off with $7.5 trillion in their back pocket. That cannot happen. The 40 50 fund (and the others in the series) invest in just about every reasonable investment in the world, except for those that do not satisfy its ESG criteria. Adding more funds will not spread the risk any further.

Thrugelmir

DoneWorking said:

GeoffTF said:

DoneWorking said:

GeoffTF said:

DoneWorking said:
Keeping in mind I want to go ESG can anyone give me any ideas on selecting suitable funds

Would I go for just one fund

You would need to tell us what you mean by ESG, i.e. give us a list of the types of companies that you do not want to invest in. The shorter the list, the better, as far as risk and likely return are concerned.

Yes, you should go with just one fund.

Don't want to go with fossil fuels or weapons

Here is the one that was suggested earlier:

https://www.vanguardinvestor.co.uk/investments/vanguard-esg-global-all-cap-ucits-etf-usd-distributing/overview

That is 100% equities, which is appropriate if you also have savings accounts. An IFA is not going to bother with savings accounts. That would be too much work. He would use a packaged find with equities and bonds. That will not give as good a return for the same risk level. Vanguard does packaged ESG funds, e.g.:

https://www.vanguardinvestor.co.uk/investments/vanguard-sustainablelife-40-50-equity-fund-a-gbp-accumulation/overview?intcmpgn=blendedglobal_sustainablelife4050equityfund_fund_link

That fund excludes fossil fuels, but only excludes "controversial weapons".

What is the anticipated return after costs

ESG may well be lower than investing in "dirty" companies.  As ESG covers a whole range of issues not simply those considered to be green. No one ever calls for a boycott of Apple Iphones either. Wouldn't be anywhere near as profitable if it didn't manufacture in China. 

bostonerimus

DoneWorking said: What is the anticipated return after costs

Open ended questions like that are impossible to answer. There is plenty of historical data for you to look at and you need to chose a few funds and research them yourself. This is why multi-asset funds like Vanguard Life Strategy range are good for the beginner because the give you a diversified portfolio in a single fund. Take a look at the returns and component parts for VLS100, VLS80, VLS69 VLS40 and VLS20.

GeoffTF

Thrugelmir said:

DoneWorking said:

GeoffTF said:

DoneWorking said:

GeoffTF said:

DoneWorking said:
Keeping in mind I want to go ESG can anyone give me any ideas on selecting suitable funds

Would I go for just one fund

You would need to tell us what you mean by ESG, i.e. give us a list of the types of companies that you do not want to invest in. The shorter the list, the better, as far as risk and likely return are concerned.

Yes, you should go with just one fund.

Don't want to go with fossil fuels or weapons

Here is the one that was suggested earlier:

https://www.vanguardinvestor.co.uk/investments/vanguard-esg-global-all-cap-ucits-etf-usd-distributing/overview

That is 100% equities, which is appropriate if you also have savings accounts. An IFA is not going to bother with savings accounts. That would be too much work. He would use a packaged find with equities and bonds. That will not give as good a return for the same risk level. Vanguard does packaged ESG funds, e.g.:

https://www.vanguardinvestor.co.uk/investments/vanguard-sustainablelife-40-50-equity-fund-a-gbp-accumulation/overview?intcmpgn=blendedglobal_sustainablelife4050equityfund_fund_link

That fund excludes fossil fuels, but only excludes "controversial weapons".

What is the anticipated return after costs

ESG may well be lower than investing in "dirty" companies.  As ESG covers a whole range of issues not simply those considered to be green. No one ever calls for a boycott of Apple Iphones either. Wouldn't be anywhere near as profitable if it didn't manufacture in China. 

Here are the policies of my two suggested Vanguard funds:

SustainableLife 40-50% Equity Fund

Sustainability Policy: The Manager excludes investments that fall within an exclusions policy (which excludes companies involved in and/or deriving revenue (above certain thresholds) from tobacco, thermal coal, oil sands, nuclear / controversial weapons), and then considers each company’s alignment to the Fund’s net zero emissions targets and conducts an assessment of good governance standards.

https://www.vanguardinvestor.co.uk/investments/vanguard-sustainablelife-40-50-equity-fund-a-gbp-accumulation/overview

ESG Global All Cap UCITS ETF (V3AM)

The Index excludes shares of companies that the sponsor of the Index determines to be engaged or involved in, and / or derive revenue (above a threshold specified by the Index provider) from, the following activities: Vice products, Non-renewable energy, Weapons, and Controversies.

https://www.vanguardinvestor.co.uk/investments/vanguard-esg-global-all-cap-ucits-etf-usd-distributing/overview

SustaniableLife has fewer exclusions.

DoneWorking

GeoffTF said:

Thrugelmir said:

DoneWorking said:

GeoffTF said:

DoneWorking said:

GeoffTF said:

DoneWorking said:
Keeping in mind I want to go ESG can anyone give me any ideas on selecting suitable funds

Would I go for just one fund

You would need to tell us what you mean by ESG, i.e. give us a list of the types of companies that you do not want to invest in. The shorter the list, the better, as far as risk and likely return are concerned.

Yes, you should go with just one fund.

Don't want to go with fossil fuels or weapons

Here is the one that was suggested earlier:

https://www.vanguardinvestor.co.uk/investments/vanguard-esg-global-all-cap-ucits-etf-usd-distributing/overview

That is 100% equities, which is appropriate if you also have savings accounts. An IFA is not going to bother with savings accounts. That would be too much work. He would use a packaged find with equities and bonds. That will not give as good a return for the same risk level. Vanguard does packaged ESG funds, e.g.:

https://www.vanguardinvestor.co.uk/investments/vanguard-sustainablelife-40-50-equity-fund-a-gbp-accumulation/overview?intcmpgn=blendedglobal_sustainablelife4050equityfund_fund_link

That fund excludes fossil fuels, but only excludes "controversial weapons".

What is the anticipated return after costs

ESG may well be lower than investing in "dirty" companies.  As ESG covers a whole range of issues not simply those considered to be green. No one ever calls for a boycott of Apple Iphones either. Wouldn't be anywhere near as profitable if it didn't manufacture in China. 

Here are the policies of my two suggested Vanguard funds:

SustainableLife 40-50% Equity Fund

Sustainability Policy: The Manager excludes investments that fall within an exclusions policy (which excludes companies involved in and/or deriving revenue (above certain thresholds) from tobacco, thermal coal, oil sands, nuclear / controversial weapons), and then considers each company’s alignment to the Fund’s net zero emissions targets and conducts an assessment of good governance standards.

https://www.vanguardinvestor.co.uk/investments/vanguard-sustainablelife-40-50-equity-fund-a-gbp-accumulation/overview

ESG Global All Cap UCITS ETF (V3AM)

The Index excludes shares of companies that the sponsor of the Index determines to be engaged or involved in, and / or derive revenue (above a threshold specified by the Index provider) from, the following activities: Vice products, Non-renewable energy, Weapons, and Controversies.

https://www.vanguardinvestor.co.uk/investments/vanguard-esg-global-all-cap-ucits-etf-usd-distributing/overview

SustaniableLife has fewer exclusions.

In your opinion which of the above two funds is

a) most ethical

b) likely to provide best return

c) less volatile

GeoffTF

DoneWorking said:

GeoffTF said:

Thrugelmir said:

DoneWorking said:

GeoffTF said:

DoneWorking said:

GeoffTF said:

DoneWorking said:
Keeping in mind I want to go ESG can anyone give me any ideas on selecting suitable funds

Would I go for just one fund

You would need to tell us what you mean by ESG, i.e. give us a list of the types of companies that you do not want to invest in. The shorter the list, the better, as far as risk and likely return are concerned.

Yes, you should go with just one fund.

Don't want to go with fossil fuels or weapons

Here is the one that was suggested earlier:

https://www.vanguardinvestor.co.uk/investments/vanguard-esg-global-all-cap-ucits-etf-usd-distributing/overview

That is 100% equities, which is appropriate if you also have savings accounts. An IFA is not going to bother with savings accounts. That would be too much work. He would use a packaged find with equities and bonds. That will not give as good a return for the same risk level. Vanguard does packaged ESG funds, e.g.:

https://www.vanguardinvestor.co.uk/investments/vanguard-sustainablelife-40-50-equity-fund-a-gbp-accumulation/overview?intcmpgn=blendedglobal_sustainablelife4050equityfund_fund_link

That fund excludes fossil fuels, but only excludes "controversial weapons".

What is the anticipated return after costs

ESG may well be lower than investing in "dirty" companies.  As ESG covers a whole range of issues not simply those considered to be green. No one ever calls for a boycott of Apple Iphones either. Wouldn't be anywhere near as profitable if it didn't manufacture in China. 

Here are the policies of my two suggested Vanguard funds:

SustainableLife 40-50% Equity Fund

Sustainability Policy: The Manager excludes investments that fall within an exclusions policy (which excludes companies involved in and/or deriving revenue (above certain thresholds) from tobacco, thermal coal, oil sands, nuclear / controversial weapons), and then considers each company’s alignment to the Fund’s net zero emissions targets and conducts an assessment of good governance standards.

https://www.vanguardinvestor.co.uk/investments/vanguard-sustainablelife-40-50-equity-fund-a-gbp-accumulation/overview

ESG Global All Cap UCITS ETF (V3AM)

The Index excludes shares of companies that the sponsor of the Index determines to be engaged or involved in, and / or derive revenue (above a threshold specified by the Index provider) from, the following activities: Vice products, Non-renewable energy, Weapons, and Controversies.

https://www.vanguardinvestor.co.uk/investments/vanguard-esg-global-all-cap-ucits-etf-usd-distributing/overview

SustaniableLife has fewer exclusions.

In your opinion which of the above two funds is

a) most ethical

b) likely to provide best return

c) less volatile

Most ethical is a matter of judgement. V3AM excludes more companies. We would expect SustainableLife to give a better return with less volatility, assuming that you added an equivalent bond allocation to V3AM. You could, however, use savings accounts rather than bonds with V3AM, which would potentially increase your return a little. It would also be less vulnerable to interest rate rises, but might not cushion a stock market crash so well. 

andyhawes

I’d recommend looking at AJ Bell Youinvest - it’s a really nice platform with low fees and lots of trackers / funds to choose from.

I’ve found since Covid hit that tech funds have done really well as you would expect, and for example the Fidelity Global Technology fund is up about 60% since I bought into it, which is growth I’ve never experienced before with any funds or individual shares, but timing was lucky, however tech isn’t going away anytime soon.

Of course you should diversify your portfolio if you haven’t already done so, for example keep some in cash, put some in bonds, some in precious metals, and some into property, to prevent you losing it all if any one of those areas drop heavily.

I’m not a financial advisor, nor a representative of AJ Bell by the way, just telling you what I’ve done that has worked well.  Hope it helps.

GeoffTF

andyhawes said:

I’d recommend looking at AJ Bell Youinvest - it’s a really nice platform with low fees and lots of trackers / funds to choose from.

AJ Bell would be very expensive for holding SustainableLife. iWeb would be much cheaper. If the OP wants to funnel a hundred thousand into V3AM, the safest way to do it would be to use Vanguard's own platform. He could then pay in £20K at a time via a debit card, and buy £20K at a time using the bulk buying service. He could buy V3AM with AJ Bell, but big ETF trades are potentially hazardous for beginners. It would be safer to have Vanguard do it for him.

GeoffTF

bostonerimus said:

DoneWorking said: What is the anticipated return after costs

Open ended questions like that are impossible to answer. There is plenty of historical data for you to look at and you need to chose a few funds and research them yourself. This is why multi-asset funds like Vanguard Life Strategy range are good for the beginner because the give you a diversified portfolio in a single fund. Take a look at the returns and component parts for VLS100, VLS80, VLS69 VLS40 and VLS20.

The Vanguard economists' estimates are of interest here.

"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%."

"We see UK bonds offering returns of between 0.8% and 1.8% on average over the next ten years, while international (non-UK) bonds will offer returns of between 0.7% and 1.7%, which is slightly up on our expectations from last year."

https://www.vanguardinvestor.co.uk/articles/latest-thoughts/markets-economy/misstep-by-policymakers-key-risk-to-markets-2022

Lets say 3.8% for equities and 1.2% for bonds. 50 : 50 would give a return of about 2.5%. With the IFA costs that OP has been quoted, that would be less than 1%. He would be better of in a savings account. SustainableLife would probably return a little below inflation. In reality, nobody knows the future. The actual returns could be much more, or much less. Nonetheless, with the economic outlook, and the high prices of both equities and bonds, the next ten years does not look rosy.