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Moving from one global tracker to another

Is it considered a change in my portfolio if I sold my holding in one fund and bought into another one which appears to have pretty much very similar objectives, but one has been better than the other over last 10 years.

Example - I have quite a bit invested in Vanguard FTSE Global all cap and a bit in the HSBC Global tracker.

I noted that the L&G International Index Trust seemed historically to perform better over 10 years, 5 years and all other intervals.  Also, has lower charges and appears to be available on Interactive Investor.

If I sold my holding in Vanguard and bought into L&G, even though I've only had the Vanguard holding since April, is that a bad thing to do because I should stick to the decisions I made, or is it generally ok because the fund I am selling and buying seem to be meeting the same objective?

If I come back next month or in a few months am I likely to see a different result and my current Vanguard fund might be at the top?

The reason I am looking into this is after watching a video guide about how to screen funds on morningstar which led me to zero in on a different fund than the one I originally selected.
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Comments

  • The L&G fund is ex-UK, so that is one difference between it and the HSBC. The other is that the HSBC has a smaller proportion of US stocks and a larger proportion of emerging markets than the L&G fund.

    Future performance may very well be different.


  • gm0
    gm0 Posts: 1,071 Forumite
    Sixth Anniversary 1,000 Posts Name Dropper
    Impossible to say.  But it is quite likely "yes".

    Only if they track the same index (same list of stocks) at the same cost will they be identical. And there are flavours of indices for say - global developed equities - which have some countries treated as EM or inside developed with different indices.  So fund A can differ from fund B by the fact that it has n% of a particular asian country market in it.  And the other does not.  Backward looking results will not tell you if that index difference will be a positive or negative factor in the next few years.

    The backward looking performance comparison fact sheet to factsheet  is tricky anyway with differing reporting dates.  I don't much care for them.  Only daily unit prices are really your friend in this regard.

    The other thing to look at with portfolio examination on trustnet or via factsheets is the geographic content.  For UK investor targeted funds - some providers increase the UK content above global market weight. 

    VG do this with some of their stuff and are criticised here more than lauded for it by passive purists. 

    Of course the currency you are taking income in matters and FX changes can help or hurt - a lot.  And home market bias can (somewhat) reduce some of that pain.  But UK market and sterling have been depressed vs others for a while. So "home market bias" has been a drag on returns for a lot of people.   And the ongoing misery of sterling has made US investments seem better.  A dollar crash.  Or a sustained sterling recovery would reverse these trends.
  • Bostonerimus1
    Bostonerimus1 Posts: 1,166 Forumite
    1,000 Posts First Anniversary Name Dropper
    edited 10 October 2023 pm31 10:19PM
    You seem to have sensible funds for someone with a long time horizon so don't worry too much about small differences in performance cause by asset allocations. If you can save something on fees and expenses then that's important as it's a guaranteed long term benefit. But above those things is how much you contribute to your pension each month. So concentrate on your budget and putting as much as you can into the pension so that it has time to compound. Dropping something like your TV services and putting the money into your pension will be more important than which global equity fund you choose.
    And so we beat on, boats against the current, borne back ceaselessly into the past.
  • I had the same conversation with a friend a few weeks ago who, like the OP, had notice the relative difference in performance between these two funds - he also holds the Vanguard tracker. He was driven by the superior performance of the L&G fund and was prepared to buy on that basis even though it wasn't a natural global index tracker due to the lack of UK exposure.

    There's nothing wrong with re-examining the fund market and seeing if better products have appeared that better meet your objective regarding exposures, fees, index tracked etc. but in my opinion, favouring one country or region over another is something that's best left to people other than retail investors.

    The naming of the L&G fund is not helpful here. It should say 'ex-UK'.
  • Linton
    Linton Posts: 17,935 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Hung up my suit!
    The L&G fund is ex-UK, so that is one difference between it and the HSBC. The other is that the HSBC has a smaller proportion of US stocks and a larger proportion of emerging markets than the L&G fund.

    Future performance may very well be different.


    Yes, almost certainly there will be a non life-changing difference between the trackers in the short/medium term.

    However there Is no way of predicting which will perform better.  The longer the term the less significant the differences  should be.


  • Mostly to ram home the points already made there being differences in the markets your choices cover, I would question your assertion that 

    … the L&G International Index Trust seemed historically to perform better over 10 years, 5 years and all other intervals.’

    Small point, there seems no 10 year data for Vanguard. Bigger point, both LG and Vanguard state their objective is to track an index. The most, perhaps only, valid performance measure is which tracked more closely, since that was their aim. I don’t think it was LG. That your objective, and mine, is to make as much money as possible at our risk level, is not something we can hold against LG of Vanguard if that wasn’t their objective. By feeling disappointed in the returns of one fund compared to another is to misalign your objectives with your fund’s objective; the easy route to dissatisfaction, return ‘chasing’, cognitive bias hazards etc. 

    If you’re to use a tracker, it’s imperative that you choose an index you think is good for you; then it’s ‘how well is it tracking?’. Whether it makes you any money is in the lap of the gods, as equities promise nothing.

  • coastline
    coastline Posts: 1,662 Forumite
    Part of the Furniture 1,000 Posts Photogenic Name Dropper
    edited 11 October 2023 pm31 6:25PM
    Not much in it but you could buy a few and why not ? If you select more than one then maybe the average over 5/10 years might give you a slightly better performance. That's what I'd be doing with active funds . Select one and you might just underperform ?

    Chart Tool | Trustnet

    Trouble is it might just end up like this.

    Chart Tool | Trustnet

  • James Shack covered something very similar in his most recent video.

    https://www.youtube.com/watch?v=uNZKKYVKaN0
    Signature on holiday for two weeks
  • James Shack covered something very similar in his most recent video.

    https://www.youtube.com/watch?v=uNZKKYVKaN0
    Yes fees are important, if you can get the same index tracking for a lower cost that's the fund to buy, but also consider service and reputation. Being in the US I can get those low Vanguard fees of 0.03% which is great!
    And so we beat on, boats against the current, borne back ceaselessly into the past.
  • James Shack covered something very similar in his most recent video.

    https://www.youtube.com/watch?v=uNZKKYVKaN0
    That doesnt look like James but Damen(sp) or do I need to visit Specsavers :)
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