Best Etfs for Diversification

MK62

There's also L&G Global Equity ETF (LGGG).......with a TER of 0.1%.

It follows a different index to most "similar" ETFs - the Solactive Core Developed Markets Large & Mid Cap Index - so performance might vary slightly from those following alternate indices, but is broadly comparable......but like most of these "similar" ETFs, is dominated by US equities.

Deano37

I have opened a isa with T212 this year and put into it but I actually think u am going to invest in the one fund to keep things simple, obviously I can't do that at the moment but I think the vanguard global all cap fund is what I am going to start investing into as has double the company's in the fund itself so more exposure and more diversification. 

Is it the vanguard ftse global all cap index fund accumulation ? That is si.ilar to the vwrl but with double the funds and global diversification?

Think I will change my children's LifeStratergy 100 isas to this fund also.

Thanks again
Dean

Exodi

Deano37 said:

Hi everybody, I am starting to invest in etfs in my stocks and shares isa on t212, I am wanting a global portfolio with good diversity. The vanguard ftse all world etf has quite high fees so I am wanting to make one with a few seperate etfs in that has much lower fees.

I am thinking something like this

60% vanguard s&p 500
4% vanguard ftse 100
4% vanguard ftse 250
16% vanguard ftse emerging markets
16% vanguard ftse developed europe ex uk

I have used vanguard in the past and am comfortable using them that's why I chose them etfs.
What do you think of the portfolio and percentage allocation?

Also I am doing all accumulating rather than dividends. Any advice is appreciated. 

Thanks Dean

Fortunately for you, I've actually done this comparison on one of the random tabs of my portfolio sheet so it's not too much drama providing this.

(that said, I agree with the other comments that the constant rebalancing and adjusting (as the index constantly changes) doesn't seem worth it for the amounts you are talking about investing).

Nonetheless, I found the the best replication with Vanguard ETF's to be:

62.5% S&P 500 (VUSA)
16.4% FTSE Europe (VEUR)
10.1% Emerging Markets (VFEM)
6.4% Japan (VJPN)
4.6% Developed Asia (VAPX)
---
100%

It replicates roughly 97% of the AW01 index (weighted upwards). The gap is mostly Canada which makes up about 2.5% of the FTSE All World global market capitalisation, but does not feature in these funds.

That said, I'm not really sure why you'd invest strictly in Vanguard funds if you're using t212 - there are better funds for each region if you're not platform restricted.

NedS

Deano37 said:

I will have a look at invest engine next year for my isa as have read good things. So you think it is more beneficial having 1 all world etf over having a portfolio and trying to make your own ?

Thanks dean

The danger is that in having many different ETFs you will increase your costs and potentially reduce your overall returns. For relatively small amounts I would pick one globally diversified fund/ETF and stick with it. It will limit your tendency to tinker which never ends well.

If you are investing £100/month, and want to take a punt on something like the FTSE250 because you think it's cheap and the UK is set for a recovery, maybe one month you could use your £100 contribution for that, and if you already have £2,000 invested, that's going to be ~5% of your portfolio and not an unreasonable allocation to the UK in addition to the exposure you already have in your globally diversified fund. But really, why bother. The effect it would have on your overall portfolio is likely negligible.

Best advice, keep it simple. One globally diversified fund/ETF with cheap fees is all you need to get you started and just keep drip feeding in however much you can afford each month. Once you have £100k, maybe then can you think about next steps, but even then one fund is not unreasonable.

Warren Buffet famously said his wife's inheritance has been told to put 90% of her money into a stock index fund and 10% into short-term government bonds. If a 90% allocation to one diversified equity fund is good enough for him, it should be good enough for anyone.

https://www.investopedia.com/articles/personal-finance/121815/buffetts-9010-asset-allocation-sound.asp

Edit to add: HSBC MSCI World ETF (HMWO) is my preferred global ETF, but there are many to choose from and not all platforms have all ETFs, so other options may suit you better. They all perform similarly over the longterm

Deano37

Thanks so much for all your time and advice, I am going to get ine global index. I think I will use vanguard as already got account etc.

ftse global all cap index fund accumulation , is this the most diversified one they have ? And I will just drip feed into this over next few years as you say.

Also think I will swap the kids lifestratergy 100 for this fund.

I take it this fund has developed markets and emerging markets all within the one "global" fund. Going to see where and what is in the fund but think it sounds great, didn't realise this one was double size of the global etf.

Thanks again
Dean

JohnWinder

The experts also speak in favour of simplicity, fewer funds rather than more. Ferri has a cute four stages in the education of an index investor: born in darkness; finds indexing enlightenment; over complicates everything; embraces simplicity.
https://www.fiphysician.com/the-education-of-an-index-investor-an-future-book-by-rick-ferri/
You’ve now had a good one fund suggestion, and you’ve also asked about another good one. But what you need to do now is educate yourself sufficiently that you can make these choices yourself, and learn how to evaluate these funds so that you don’t have to ask the forum about changing funds only to be talked back to your earlier position. Why? It’s one thing to have someone explain the information needed but ‘it does not provide the deep understanding and conviction that comes from investing the time and effort to understand this at much deeper level--the kind of understanding and conviction that provides the rock solid confidence necessary to "stay the course" through a protracted downturn.’ https://www.bogleheads.org/forum/viewtopic.php?p=6937075#p6937075
The other reason to educate yourself is because you have an important role in teaching the rest of our community. Most of us have an abysmal understanding of personal investing, just when we’ve been dragged from the shallow end of DB pensions to the deep end of DC pensions which the sharks of the financial world inhabit, and with the exception of the odd professional on this forum do little to educate the community. It’s partly your task, and England expects……