Vanguard FTSE All World UCITS ETF & Vanguard FTSE Developed World ex-UK Equity Index

tigerspill

To date, I have been investing in VLS funds.  I them wanted to balance the UK bias and edge my equities %age up a but so invested in the VG Dev. Wld. ex. UK fund.
I am now at the point where I want to again increase my equity %age in a diversified way and have been looking at the VWRL from Vanguard which is an all world index tracker ETF.
While I appreciate it is not totally fair to compare these two investments as they aren't the same, it seems that historically that the ex. UK fund has consistently out performed VWRL.  And I am now asking myself, why I would go with VWRL - even though it seems to meet my need a bit better in terns of all round equity diversification.

A is VWRL and B is the Dev. World fund.

GeoffTF

That is the past, not the future. VWRL is the more diversified fund. Why are you using VLS if you believe that you will do better with your own active management? The UK bias has done rather well lately. Vanguard's economic models suggest an even bigger UK bias:

https://www.vanguard.co.uk/content/dam/intl/europe/documents/en/gbp-vanguard-economic-and-market-outlook-2022.pdf

If you switched to a VLS fund with more equities, your portfolio would rebalance itself. If you add another equity fund, you will be paying for rebalancing, but your portfolio will progressively move out of balance.

noclaf

If it's a single fund you need then my choice would be VWRL (rather than VLS). It's a big well established fund and from one of the key players (Vanguard) so ticks a lot of boxes. Nothing wrong with VLS, just personal preference.

I have invested in VWRL previously but preference in my S&SISA is FTSE Global All CAP for the 'acc' option on Vanguard's platform.

Just for transparency, I do use the Dev world Ex UK fund in my primary pension( as one of 3 funds) but that's mainly due to fund availability limitations in my employer pension. 

sebtomato

At 61% invested in North America, VWRL is too biased, while vls funds are too biased towards the UK.

VWRL is also charging 0.22%.

I have made my own VLS type fund for about 0.11%.

tigerspill

sebtomato said:

At 61% invested in North America, VWRL is too biased, while vls funds are too biased towards the UK.

VWRL is also charging 0.22%.

I have made my own VLS type fund for about 0.11%.

Thanks.  If you dont mind me asking, which funds did you use?

tebbins

Vwrl is not biased at all, it simply seeks to track a global large and mid caps equity index.

OP - since the mid 2010s, the US has done much better than the rest of the world, since the GFC, through Brexit and Covid the UK has done a bit worse than the rest of the world. This, and the effect of VWRLs inclusion of emerging markets explain the difference.


By your logic, you would always be swapping whatever you were holding for whatever had done better lately.

grumiofoundation

sebtomato said:

At 61% invested in North America, VWRL is too biased, while vls funds are too biased towards the UK.

VWRL is also charging 0.22%.

I have made my own VLS type fund for about 0.11%.

VLS100 has ~50% - will 50 vs 60 really make a huge difference in the long run? 

What have you replaced the uk bias with in ‘your’ vls 

bostonerimus

Biased, better, worse? who knows? and if someone says "yes", don't jump on their bandwagon. This is all arguing about trivia that cannot be known and I suspect will be long forgotten after 30 years of investing.

sebtomato

tebbins said:

Vwrl is not biased at all, it simply seeks to track a global large and mid caps equity index.

Agreed, my usage of the word "biased" was not correct.

It's tracking the large and mid caps and therefore has a large weight towards North America. Might the reality of the global markets for a tracker, but then is questionable in term of regional diversification.

sebtomato

tigerspill said:

sebtomato said:

At 61% invested in North America, VWRL is too biased, while vls funds are too biased towards the UK.

VWRL is also charging 0.22%.

I have made my own VLS type fund for about 0.11%.

Thanks.  If you dont mind me asking, which funds did you use?

I have replaced VLS100 by a number of ETFs or funds (when no ETFs available). This means some lower fees (0.11% combined fee, instead of 0.22%) but also a risk profile a bit more spread around regions, than having too much in the US or UK, which I prefer for diversification.

I am particularly nervous about a few very large caps marking up a large part of the US market, such as Apple, Microsoft, Google and Tesla. 

Regions	%	Code	Description
Europe (ex. UK)	11%	VERX	FTSE Developed Europe ex UK
Small cap	8%	Fund	Global Small Cap Index Fund
UK	20%	Fund	FTSE UK All Share Index
Japan	6%	VJPN	FTSE Japan
Asia	3%	VAPX	FTSE Developed Asia Pacific ex-Japan (Australia, South Korea)
USA	44%	VUSA	S&P500
Emerging	8%	VFEM	FTSE Emerging Markets (China)

=100% and investments in 8,938 companies, with very little overlap.

Of course, the drawback is having to rebalance manually once in a while, compared to a VLS fund that does it automatically, and using ETFs, which doesn't allow for exact amounts to be invested.

grumiofoundation

sebtomato said:

tigerspill said:

sebtomato said:

At 61% invested in North America, VWRL is too biased, while vls funds are too biased towards the UK.

VWRL is also charging 0.22%.

I have made my own VLS type fund for about 0.11%.

Thanks.  If you dont mind me asking, which funds did you use?

I have replaced VLS100 by a number of ETFs or funds (when no ETFs available). This means some lower fees (0.11% combined fee, instead of 0.22%) but also a risk profile a bit more spread around regions, than having too much in the US or UK, which I prefer for diversification.

I am particularly nervous about a few very large caps marking up a large part of the US market, such as Apple, Microsoft, Google and Tesla. 

Regions	%	Code	Description
Europe (ex. UK)	11%	VERX	FTSE Developed Europe ex UK
Small cap	8%	Fund	Global Small Cap Index Fund
UK	20%	Fund	FTSE UK All Share Index
Japan	6%	VJPN	FTSE Japan
Asia	3%	VAPX	FTSE Developed Asia Pacific ex-Japan (Australia, South Korea)
USA	44%	VUSA	S&P500
Emerging	8%	VFEM	FTSE Emerging Markets (China)

=100% and investments in 8,938 companies, with very little overlap.

Of course, the drawback is having to rebalance manually once in a while, compared to a VLS fund that does it automatically, and using ETFs, which doesn't allow for exact amounts to be invested.

So to clarify you stated  "vls funds are too biased towards the UK." and then proceeded to replicate the UK 'bias'? 

I don't really understand how your ETFs are actually significantly more diversified (if at all) than VLS100 or a simple global tracker. You have 3% (0.44 x 0.0691) in apple, 2.6% (0.44 x 0.06) in microsoft etc - basically the same as a global tracker (3.4% and 3%) https://www.vanguardinvestor.co.uk/investments/vanguard-ftse-global-all-cap-index-fund-gbp-acc/portfolio-data


Unless I have missed something why do you need to rebalance? The regional percentages of a global tracker will change based on market movements, as will your collection of ETFs? Unless you are sticking with these set percentages regardless of market movements?