Which Vanguard Fund: FTSE All World v FTSE Global All Cap

[Deleted User]

Hey all, 

Up until now I've invested in Vanguard's FTSE All World (VWRL )which is:
4k funds, 6 out of 7 on the risk scale and charges 0.22%.

But I see a lot of you are choosing Global All Cap (VAFTGAG) instead
7k stocks, 5 out of 7 risk, 0.23% charge

Vanguard also has an ESG (ethical?) version of the Global All Cap (V3AB) which seems popular
6k stocks, 6 out of 7 risk, 0.24% charge

What do any of you think about these 3 respective funds?

Thanks!

Linton

[Deleted User] said:

Hey all, 

Up until now I've invested in Vanguard's FTSE All World (VWRL )which is:
4k funds, 6 out of 7 on the risk scale and charges 0.22%.

But I see a lot of you are choosing Global All Cap (VAFTGAG) instead
7k stocks, 5 out of 7 risk, 0.23% charge

Vanguard also has an ESG (ethical?) version of the Global All Cap (V3AB) which seems popular
6k stocks, 6 out of 7 risk, 0.24% charge

What do any of you think about these 3 respective funds?

Thanks!

In practice over the long term there should be little difference.  The ESG fund was only launched 2.5 years ago so there is no good data but generally ESG decreases performance.

The difference in fees is irrelevent - published charges are calculated from the previous year's actuals and vary over time.  In any case a difference of 0.01%/year is rather less important than the exact day in which you decide to sell.

So purely because it is the most diversified of the 3 funds I would go for the non ESG Global All Cap fund.

dharm999

Weird, I posted a comment but it disappeared

i had said that I am tracking both, and now own the ESG one having previously owned the GloballAll Cap one.  Up until recently the ESG was lagging on performance, but has overtaken the other one.  I believe the ESG is more tech heavy, which may explain that.  I’m simply tracking the price of each on a monthly and annual basis, so what I am tracking may not be the official performance, but it works for me

masonic

dharm999 said:

I believe the ESG is more tech heavy, which may explain that.

It's interesting what unintended consequences a chosen investment style can have. Reminding us that ESG is in the eye of the beholder. I would not consider the large tech companies to be bastions of social good.

callum9999

masonic said:

dharm999 said:

I believe the ESG is more tech heavy, which may explain that.

It's interesting what unintended consequences a chosen investment style can have. Reminding us that ESG is in the eye of the beholder. I would not consider the large tech companies to be bastions of social good.

I don't think many people do? ESG generally isn't "investing in companies that are bastions of social good" (how many listed shares actually fulfil that criteria?), it's avoiding investing in specific sectors that you/they deem particularly bad. In this case drugs/gambling, non-renewable energy, weapons and companies with "severe human rights/environmental controversies". 

I don't have this specific fund but do invest in ESG funds. I'm well aware that some of them contain shares in large tech companies so it's not really fair to label it as an "unintended consequence" - I don't personally have any major objections to holding funds with them (significantly more than I do for most other capitalistic companies in any case!). 

masonic

callum9999 said:

masonic said:

dharm999 said:

I believe the ESG is more tech heavy, which may explain that.

It's interesting what unintended consequences a chosen investment style can have. Reminding us that ESG is in the eye of the beholder. I would not consider the large tech companies to be bastions of social good.

I don't think many people do? ESG generally isn't "investing in companies that are bastions of social good" (how many listed shares actually fulfil that criteria?), it's avoiding investing in specific sectors that you/they deem particularly bad. In this case drugs/gambling, non-renewable energy, weapons and companies with "severe human rights/environmental controversies". 

I don't have this specific fund but do invest in ESG funds. I'm well aware that some of them contain shares in large tech companies so it's not really fair to label it as an "unintended consequence" - I don't personally have any major objections to holding funds with them (significantly more than I do for most other capitalistic companies in any case!). 

ESG stands for environmental, social, and governance, so there are environmental, social and corporate governance criteria to consider. The large tech companies are associated with problems of aggressive tax avoidance, negative mental health outcomes of their products on society, and unethical exploitation of their workers. There are also examples in the social media space of legitimisation and incitement of division and hatred. Objections would therefore be on grounds of the S and G, similar to those made for drugs, gambling and weapons. As I said, ESG is in the eye of the beholder, and this beholder considers several of these companies at least on a par with many of those excluded.

callum9999

masonic said:

callum9999 said:

masonic said:

dharm999 said:

I believe the ESG is more tech heavy, which may explain that.

It's interesting what unintended consequences a chosen investment style can have. Reminding us that ESG is in the eye of the beholder. I would not consider the large tech companies to be bastions of social good.

I don't think many people do? ESG generally isn't "investing in companies that are bastions of social good" (how many listed shares actually fulfil that criteria?), it's avoiding investing in specific sectors that you/they deem particularly bad. In this case drugs/gambling, non-renewable energy, weapons and companies with "severe human rights/environmental controversies". 

I don't have this specific fund but do invest in ESG funds. I'm well aware that some of them contain shares in large tech companies so it's not really fair to label it as an "unintended consequence" - I don't personally have any major objections to holding funds with them (significantly more than I do for most other capitalistic companies in any case!). 

ESG stands for environmental, social, and governance, so there are environmental, social and corporate governance criteria to consider. The large tech companies are associated with problems of aggressive tax avoidance, negative mental health outcomes of their products on society, and unethical exploitation of their workers. There are also examples in the social media space of legitimisation and incitement of division and hatred. Objections would therefore be on grounds of the S and G, similar to those made for drugs, gambling and weapons. As I said, ESG is in the eye of the beholder, and this beholder considers several of these companies at least on a par with many of those excluded.

I'm well aware what it stands for, and I repeat, it does not stand for "only invest in companies that are bastions of social good". I repeat, virtually no publicly traded company on the planet could possibly meet that criteria.

Perhaps you were just being hyperbolic, but again, I don't personally have a strong objection to investing in tech companies so there is no "unintended consequences" for them being present in an ESG fund I may be interested in. Your objections are so vague I can't think of many companies that you couldn't apply the same criticism to, can you name some examples of companies you think are worthy of being included? 

Though you seem to have completely dismissed my criticism of your presented view of what ESG actually is, you're still giving off the vibe that you genuinely think it's "only invest in companies that are bastions of social good", when it very clearly is not. I'm not aware of a single fund that claims to be anywhere close to that - perhaps you know of one?  

masonic

callum9999 said:

masonic said:

callum9999 said:

masonic said:

dharm999 said:

I believe the ESG is more tech heavy, which may explain that.

It's interesting what unintended consequences a chosen investment style can have. Reminding us that ESG is in the eye of the beholder. I would not consider the large tech companies to be bastions of social good.

I don't think many people do? ESG generally isn't "investing in companies that are bastions of social good" (how many listed shares actually fulfil that criteria?), it's avoiding investing in specific sectors that you/they deem particularly bad. In this case drugs/gambling, non-renewable energy, weapons and companies with "severe human rights/environmental controversies". 

I don't have this specific fund but do invest in ESG funds. I'm well aware that some of them contain shares in large tech companies so it's not really fair to label it as an "unintended consequence" - I don't personally have any major objections to holding funds with them (significantly more than I do for most other capitalistic companies in any case!). 

ESG stands for environmental, social, and governance, so there are environmental, social and corporate governance criteria to consider. The large tech companies are associated with problems of aggressive tax avoidance, negative mental health outcomes of their products on society, and unethical exploitation of their workers. There are also examples in the social media space of legitimisation and incitement of division and hatred. Objections would therefore be on grounds of the S and G, similar to those made for drugs, gambling and weapons. As I said, ESG is in the eye of the beholder, and this beholder considers several of these companies at least on a par with many of those excluded.

I'm well aware what it stands for, and I repeat, it does not stand for "only invest in companies that are bastions of social good". I repeat, virtually no publicly traded company on the planet could possibly meet that criteria.

Though you seem to have completely dismissed my criticism of your presented view of what ESG actually is, you're still giving off the vibe that you genuinely think it's "only invest in companies that are bastions of social good", when it very clearly is not. I'm not aware of a single fund that claims to be anywhere close to that - perhaps you know of one?  

I'll bring these two points together, as it seems you were unaware when I used the phrase "I would not consider the large tech companies to be bastions of social good", I was using a literary device known as understatement, and in fact intended to convey that I viewed some of them as really quite bad on social metrics. There are hundreds of companies that take their social responsibilities much more seriously, act ethically and sustainably, and would therefore be candidates for inclusion or overweight in a such a fund.

callum9999 said:
Perhaps you were just being hyperbolic, but again, I don't personally have a strong objection to investing in tech companies so there is no "unintended consequences" for them being present in an ESG fund I may be interested in. Your objections are so vague I can't think of many companies that you couldn't apply the same criticism to, can you name some examples of companies you think are worthy of being included?

The other point I made was that ESG is in the eye of the beholder, meaning that it is inherently subjective and there will be disagreements about which companies should and should not be included in such a fund. This has always been the ethical investor's dilemma. Having covered off the point that it was actually only companies with really quite a bad record I was looking askance at being overweighted compared to the index, it is maybe more informative to give a couple of examples of these companies. Amazon has generated much publicity over its aggressive tax avoidance activities, shifting revenue and profits through tax havens. It has also come under fire for the appalling way in which it treats its workers, the emblem of which has become the bottles of urine left at the roadside, although the situation is reportedly much worse for those working within its facilities. Also its record of trafficking and human rights abuses of workers in other countries is noteworthy. Meta also has a very poor record, with its flagship product, Facebook, being regarded as addictive by design, and linked to harmful physical and mental health effects, particularly in the young. It's tolerance of harmful content, such as misinformation and hate speech has created a significant problem, and the company has been found time and time again to have prioritised maximum engagement over safety. Not to mention things like the Cambridge Analytical scandal and its weaponisation in the "clearance operation" in Myanmar. There are plenty of ethical consumers who boycott these two organisations, so I'd venture that they'd rather not be investors. I think there is a case to lump them in with companies excluded due to the criteria you mentioned, namely "drugs/gambling, non-renewable energy, weapons and companies with severe human rights/environmental controversies". Others, including yourself, may disagree with that, but it is to be expected as a result of the subjective nature of these criteria. That's why an ethical investor really needs to look under the bonnet to avoid the unintended consequence of having money redeployed into something else they find objectionable on the same or similar grounds, which was the original point I was trying to make in much fewer words.

masonic

Only one post in this thread contains insults and it isn't one of mine. At this time of festive cheer, I won't be dragged down to that level, so I'll bid this interaction farewell. Hopefully my explanations and reasoning, put forward in good faith, are of some interest to others.

LHW99

That's why an ethical investor really needs to look under the bonnet to avoid the unintended consequence of having money redeployed into something else they find objectionable on the same or similar grounds

Whilst the FCA seems to be looking more deeply at what ESG should actually imply, by providing a range of new labels, I suspect the above will remain the case.

On the original question, it perahps depends also on age and temperament. All three funds are well diversified, but 100% equity I think. VWRL doesn't seem to include funds AFAIK (https://www.hl.co.uk/shares/shares-search-results/v/vanguard-ftse-all-world-ucits-etf-usd-dist), so you need to be happy you can cope with the volatility and have time to recover if there is a 50%, long lasting drop in the world economy (WW3 perhaps?).

On that basis I would probably prefer VAFTGAG, as it is supposedly lower risk, with more different stocks included.

So I do tend to check portfolios for what I don't want to invest in, as you can't yet be sure quite what companies an ESG label will exclude.

masonic

I do also wonder, in a time when investing in smallish quantities of individual stocks has become very feasible (it also seems issues around fractional share ownership are going away), one might layer an ethically driven self-selected portfolio over a broader global index fund. That is, if the original question included the ESG fund for such a reason, not just that it was an example of a popular globally diversified fund.