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

sebtomato

grumiofoundation said:

To me I don't see a dramatic difference between 25% and 20% or even 62% and 44% such that one could claim that the issues you were worried about are no longer an issue. For example the concentration in the top holdings, or the UK 'bias' (versus I presume a 'standard' global tracker). 

The only diversification I see you have added is the global small cap fund, not the fiddling with geographical allocations. 

Surely, 62% down to 44% is a difference...

Anyway, doesn't matter. At the end of the day, it's up to personal choices to either a have a world tracker (which is going to be heavily weighted towards the USA), have VLS (quite heavily weighted towards the UK, at 25%), or something different.

At the end of the day, my own objective was to balance a bit more in regions outside of the US and the UK, in caps (so included small caps), in many shares (almost 9,000) and also cut down the fees from 0.22% to about 0.11%, which starts to make a difference with large investments.

I am pretty sure I will either do better than VLS in term of performance, about the same or possibly worse.

tebbins

tigerspill said:

tebbins said:

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.

OK.  Maybe I wasn't totally clear.  I have no plans to change what I already have as I am happy with this.  However, my question related to additional money I have come into through inheritance.  This is money I have never had in my plans (deliberately).  So I want to push more into equities and I believe I have sufficient in cash and equity/bond blended funds.  I believe that I am happy to take a higher risk with this money in terms of volatility.

IMHO the most "vanilla" or "pure" global tracker available is Vanguard FTSE global all cap, though not as cheap as HSBC FTSE all world. However you invest, there is always an opportunity cost and ultimately investing is always an active decision so this whole active/passive debate is really just semantics designed to sell active management. If you believe you have "enough" "safe" assets, then there is no reason not to invest the rest in a way you think has the highest long term returns potential, probably equities. Personally I seem to be very bullish on the UK vs average, around 2/3-3/4 of my portfolio excluding cash is in UK equity. Most would agree that a globally diversified portfolio is sensible unless you know what you're doing and can pick individual funds or stocks for good reasons.

k_man

sebtomato said:

grumiofoundation said:

To me I don't see a dramatic difference between 25% and 20% or even 62% and 44% such that one could claim that the issues you were worried about are no longer an issue. For example the concentration in the top holdings, or the UK 'bias' (versus I presume a 'standard' global tracker). 

The only diversification I see you have added is the global small cap fund, not the fiddling with geographical allocations. 

Surely, 62% down to 44% is a difference...

Anyway, doesn't matter. At the end of the day, it's up to personal choices to either a have a world tracker (which is going to be heavily weighted towards the USA), have VLS (quite heavily weighted towards the UK, at 25%), or something different.

At the end of the day, my own objective was to balance a bit more in regions outside of the US and the UK, in caps (so included small caps), in many shares (almost 9,000) and also cut down the fees from 0.22% to about 0.11%, which starts to make a difference with large investments.

I am pretty sure I will either do better than VLS in term of performance, about the same or possibly worse.

I don't think anyone can argue with that 😉

Thrugelmir

sebtomato said:

tebbins said:

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.

This looks like you've basically replicated VLS or something closely resembling it.
The weight of the mega caps is simply a result of them being mega caps, if you choose an index fund or an index-based fund-of-funds, you track whatever the market decides each company is worth. Index concentration is somewhat more pronounced in the UK though without the concentration into highly valued tech stocks that do half of the S&P's buybacks, but much more pronounced in most other countries or even regions.
It is worth mentioning that some of that apparent concentration is because these are groups of companies, organised into large operating divisions with often hundreds of operating subsidiaries, Berkshire Hathaway is a great example. Were these de-consolidated, the weights would look quite different but arguably the economic reality of their operations and returns may not be.

Berkshire Hathaway might be an exception as opposed to a rule, when compared to Microsoft, Apple, Tesla...

BH is basically a fund in itself, so well diversified. 

Reinforces the importance of performing proper research and due diligence. Depending upon the share price of Apple. It constitutes around half the value of Berkshire Hathaway. As a consequence indexes such as MSCI World , risk adjust the allocation to BH. VLS do likewise by reducing their % of exposure to the SP500. Holding a broader US index as well. 

The matter gets further compounded by the sizable stakes that BH owns. BH has around a 10% holding of the issued share capital in Coca Cola as well. Indexes will factor this in when risk weighting BH. 

mears1

I have heard that VWRL, the income version, pays the dividends in $. Do you have to pay your platform foreign exchange fees to change this to £? What about if held with Vanguard?  Presumably, this is not an issue with the VWRP, accumulation version?

mears1

tebbins said:

tigerspill said:

tebbins said:

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.

OK.  Maybe I wasn't totally clear.  I have no plans to change what I already have as I am happy with this.  However, my question related to additional money I have come into through inheritance.  This is money I have never had in my plans (deliberately).  So I want to push more into equities and I believe I have sufficient in cash and equity/bond blended funds.  I believe that I am happy to take a higher risk with this money in terms of volatility.

IMHO the most "vanilla" or "pure" global tracker available is Vanguard FTSE global all cap, though not as cheap as HSBC FTSE all world. However you invest, there is always an opportunity cost and ultimately investing is always an active decision so this whole active/passive debate is really just semantics designed to sell active management. If you believe you have "enough" "safe" assets, then there is no reason not to invest the rest in a way you think has the highest long term returns potential, probably equities. Personally I seem to be very bullish on the UK vs average, around 2/3-3/4 of my portfolio excluding cash is in UK equity. Most would agree that a globally diversified portfolio is sensible unless you know what you're doing and can pick individual funds or stocks for good reasons.

Would be wonderful if Vanguard did an OEIC All world fund, at a low cost! As, I understand beginners should stay away from ETF's.

GeoffTF

mears1 said:

I have heard that VWRL, the income version, pays the dividends in $. Do you have to pay your platform foreign exchange fees to change this to £? What about if held with Vanguard?  Presumably, this is not an issue with the VWRP, accumulation version?

Vanguard does not charge FX commission. AJ Bell charges 0.5%, as does Freetrade. VWRP has a less liquidity and a wider market spread than VWRL. Vanguard does not have VWRP on its own platform.

mears1

GeoffTF said:

mears1 said:

I have heard that VWRL, the income version, pays the dividends in $. Do you have to pay your platform foreign exchange fees to change this to £? What about if held with Vanguard?  Presumably, this is not an issue with the VWRP, accumulation version?

Vanguard does not charge FX commission. AJ Bell charges 0.5%, as does Freetrade. VWRP has a less liquidity and a wider market spread than VWRL. Vanguard does not have VWRP on its own platform.

GeoffTF said:

mears1 said:

I have heard that VWRL, the income version, pays the dividends in $. Do you have to pay your platform foreign exchange fees to change this to £? What about if held with Vanguard?  Presumably, this is not an issue with the VWRP, accumulation version?

Vanguard does not charge FX commission. AJ Bell charges 0.5%, as does Freetrade. VWRP has a less liquidity and a wider market spread than VWRL. Vanguard does not have VWRP on its own platform.

That's helpful. Thanks

GeoffTF

mears1 said:

tebbins said:

tigerspill said:

tebbins said:

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.

OK.  Maybe I wasn't totally clear.  I have no plans to change what I already have as I am happy with this.  However, my question related to additional money I have come into through inheritance.  This is money I have never had in my plans (deliberately).  So I want to push more into equities and I believe I have sufficient in cash and equity/bond blended funds.  I believe that I am happy to take a higher risk with this money in terms of volatility.

IMHO the most "vanilla" or "pure" global tracker available is Vanguard FTSE global all cap, though not as cheap as HSBC FTSE all world. However you invest, there is always an opportunity cost and ultimately investing is always an active decision so this whole active/passive debate is really just semantics designed to sell active management. If you believe you have "enough" "safe" assets, then there is no reason not to invest the rest in a way you think has the highest long term returns potential, probably equities. Personally I seem to be very bullish on the UK vs average, around 2/3-3/4 of my portfolio excluding cash is in UK equity. Most would agree that a globally diversified portfolio is sensible unless you know what you're doing and can pick individual funds or stocks for good reasons.

Would be wonderful if Vanguard did an OEIC All world fund, at a low cost! As, I understand beginners should stay away from ETF's.

Vanguard Global All Cap has an OCF of 0.23%, whereas VWRL has an OCF of 0.22%. VEVE (Developed world only) has an OCF of 0.12%. VWRL has had a smaller tracking error than VEVE, but that may not continue.

There is no compelling reason why beginners should stay away from the ETFs that Vanguard hosts on its own platform. Vanguard does not issue any such warnings:

https://www.vanguardinvestor.co.uk/articles/latest-thoughts/investing-success/how-to-build-a-portfolio-part-five

grumiofoundation

mears1 said:

tebbins said:

tigerspill said:

tebbins said:

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.

OK.  Maybe I wasn't totally clear.  I have no plans to change what I already have as I am happy with this.  However, my question related to additional money I have come into through inheritance.  This is money I have never had in my plans (deliberately).  So I want to push more into equities and I believe I have sufficient in cash and equity/bond blended funds.  I believe that I am happy to take a higher risk with this money in terms of volatility.

IMHO the most "vanilla" or "pure" global tracker available is Vanguard FTSE global all cap, though not as cheap as HSBC FTSE all world. However you invest, there is always an opportunity cost and ultimately investing is always an active decision so this whole active/passive debate is really just semantics designed to sell active management. If you believe you have "enough" "safe" assets, then there is no reason not to invest the rest in a way you think has the highest long term returns potential, probably equities. Personally I seem to be very bullish on the UK vs average, around 2/3-3/4 of my portfolio excluding cash is in UK equity. Most would agree that a globally diversified portfolio is sensible unless you know what you're doing and can pick individual funds or stocks for good reasons.

Would be wonderful if Vanguard did an OEIC All world fund, at a low cost! As, I understand beginners should stay away from ETF's.

As also linked by GeoffTF above they offer FTSE Global All Cap Index Fund for 0.23%..... 
 https://www.vanguardinvestor.co.uk/investments/vanguard-ftse-global-all-cap-index-fund-gbp-acc/overview