Green alternative to VLS 100 for SIPP?

r6mile

Does anybody have any views on the L&G Future World ESG Multi-Asset fund range? I am about to join the Civil Service AVC scheme which is with L&G, so have been looking at their fund range, and particularly the higher risk version of this fund (82% equities) seems appealing - and cheaper than the Vanguard funds especially since the AMC that the Civil Service with L&G have negotiated is only 0.12%.

https://fundcentres.lgim.com/en/uk/private-investors/fund-centre/Unit-Trust/Future-World-ESG-Multi-Index-7-Fund/#Portfolio

(I am now considering whether I should transfer my current personal pension with Nutmeg into this, instead of Vanguard).

JohnWinder

VLS100 is a global managed fund.   Many believe it only exists for completeness.

VLS100 is the only all equity fund from Vanguard with bias towards UK stocks, a home bias. Most fund providers of decent size offer 100% equity funds, and as there’s a case to be made for home bias, why wouldn’t Vanguard offer one? If they have products suitable to many people with a 40/60 or 60/40 or 80/20 mix all with home biases, why wouldn’t they offer 100/0 with the same degree of home bias, which they do? To think it exists ‘for completeness’ because 100 is as high as you can go so better go there for completeness sounds fanciful. Or what sort of completeness are we talking about here?

Typically, if you want passive and want 100% equity you would go with a global tracker instead’

Well, yes of course, but no one in this thread has said they ‘want passive’. They chose VLS100 for long horizon investing and it could be left to its own devices; perfectly reasonable choice with those as the bases. There are/were other good choices also.

Should you have a home bias in your equities?

Widely diverse cap weighted global equity investing is popular partly because it has a very strong theoretical basis in the efficient market hypothesis and has proven it stands up well when compared with stock picking funds. But to deviate from it for good reason isn’t a sin; after all, some here like a core/satellite approach!

A fund might leave out stocks below a certain value because they’re too small a part of the whole market to bother with, and buying them moves their price unreasonably; or it might see a benefit in a home bias because it reduces the exposure to the way foreign countries tax profits going off-shore, or wants to reduce currency fluctuation risks for investors who will be spending their money at home mostly.

Put all such considerations together and you get….
French of Nobel fame says: ‘Home country bias is per se not a bad thing….Canada is 3 or 4% of the world equity portfolio. A home country bias from that perspective would say Canadians have more than 3 or 4% of their portfolio invested in Canadian stock. If that's how we're going to define home country bias and we say, okay, 7% in Canadian stock is a home country bias. That sounds great to me, no problem whatsoever.’ https://rationalreminder.ca/podcast/100 .
Here’s another analysis with a lot of data: ‘The author believes that this study makes a convincing case to seek a high exposure to global (or international) equities, while keeping a tilt towards domestic equities. Some readers might perceive otherwise, but should by now have more factual material to refine their thinking and possible temptations of home country bias.’ https://www.bogleheads.org/blog/2020/03/02/50-years-of-investing-in-the-world-part-3/. This analysis tested home bias of no more than 43% UK, 55% global for UK investors and concludes it hasn’t been a bad mix over a recent 50 years.
Vanguard have their own analysis: ‘In each market we examined, our analysis indicated that volatility was reduced most with an allocation to international equities of between 40% and 50%.’         https://corporate.vanguard.com/content/dam/corp/research/pdf/Global-equity-investing-The-benefits-of-diversification-and-sizing-your-allocation-US-ISGGEB_042021_Online.pdf
Home bias is not a hanging crime, and VLS100 is there for completeness of offering a diverse global equity fund based on cap weighted indexes, with a home bias.

Pipthecat

VLS100 is the only all equity fund from Vanguard with bias towards UK stocks, a home bias. 

For those that don't want the home bias Vanguard offer FTSE All-World UCITS ETF and FTSE Global All Cap Index Fund.

Got me wondering though are some markets more ethical than others by make up of their companies or regulatory regimes?

dunstonh

 To think it exists ‘for completeness’ because 100 is as high as you can go so better go there for completeness sounds fanciful. Or what sort of completeness are we talking about here?

First you say that thinking it exists for completeness is fanciful...

Home bias is not a hanging crime, and VLS100 is there for completeness of offering a diverse global equity fund based on cap weighted indexes, with a home bias.

And then you see it is there for completeness.

justcheckin

Dunston, I took it the way you intended 🙂

I probably would only have had cash savings at pitiful rates and have received no growth or benefit from tax relief without all on here galvanising me in 2017, so have no complaints about my position at all.

I was suggested to come back for tweaks however once I hit 100k and am only now doing so at 420k. Oops.

justcheckin

I responded having only read page 1.

Thanks everyone, very useful.