Should I transfer all my S&P 500 into a global tracker?

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  • MK62
    MK62 Posts: 1,446 Forumite
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    Someone is always making decisions on allocations and proportions thereof........in the case of passive index trackers, the decision is simply passed to the index creator, rather than a fund manager.
  • masonic
    masonic Posts: 23,234 Forumite
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    edited 26 December 2023 at 3:15PM
    MK62 said:
    Someone is always making decisions on allocations and proportions thereof........in the case of passive index trackers, the decision is simply passed to the index creator, rather than a fund manager.
    It's really just the eligibility criteria and timing of constituents being admitted to and demoted from the index. The index tracker generally consists of an equal proportion of the share capital for each member company, so the market itself decides allocations/proportions.
  • MK62
    MK62 Posts: 1,446 Forumite
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    masonic said:
    MK62 said:
    Someone is always making decisions on allocations and proportions thereof........in the case of passive index trackers, the decision is simply passed to the index creator, rather than a fund manager.
    It's really just the eligibility criteria and timing of constituents being admitted to and demoted from the index. The index tracker generally consists of an equal proportion of the share capital for each member company, so the market itself decides allocations/proportions.
    If that were fully the case, then things like MSCI World and FTSE World etc would be the same, but they aren't.....because decisions were taken which ensured they aren't.
    Likewise, the market didn't decide to include 500 companies in the S&P500, why not 400 or 600 or whatever - a decision was taken...........


  • masonic
    masonic Posts: 23,234 Forumite
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    edited 26 December 2023 at 4:37PM
    MK62 said:
    masonic said:
    MK62 said:
    Someone is always making decisions on allocations and proportions thereof........in the case of passive index trackers, the decision is simply passed to the index creator, rather than a fund manager.
    It's really just the eligibility criteria and timing of constituents being admitted to and demoted from the index. The index tracker generally consists of an equal proportion of the share capital for each member company, so the market itself decides allocations/proportions.
    If that were fully the case, then things like MSCI World and FTSE World etc would be the same, but they aren't.....because decisions were taken which ensured they aren't.
    Likewise, the market didn't decide to include 500 companies in the S&P500, why not 400 or 600 or whatever - a decision was taken...........
    Agreed about decisions needing to be taken on the criteria for inclusion and member companies being admitted to and demoted from the index. There's an interesting point on the S&P500, that as well as the number of companies, a decision was taken that they need to be profitable - something not replicated in other indices. But once those decisions on the member companies have been taken, the proportions are determined by the market. If a company's share capital doubles in value relative to the others, then so does its weighting, with no decisions, trading or rebalancing. Rebalancing of existing units of an index tracker need only be done infrequently by selling the shares of member companies leaving the index and buying those of the replacements.
  • Being in S&P500 will have provided you with good returns over the last year and the proceeding decades, but it isn't very diversified and you should spread your risk a bit. So maybe sell half and put it in a global tracker ex US. Having 50% in the US is ok as that's basically global cap weighting. If you are a few years away from needing your investments you shouldn't really worry about when you sell, but right now you'd be selling into a nice run up in the US markets.
  • Prism
    Prism Posts: 3,797 Forumite
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    Being in S&P500 will have provided you with good returns over the last year and the proceeding decades, but it isn't very diversified and you should spread your risk a bit. So maybe sell half and put it in a global tracker ex US. Having 50% in the US is ok as that's basically global cap weighting. If you are a few years away from needing your investments you shouldn't really worry about when you sell, but right now you'd be selling into a nice run up in the US markets.
    Pretty hard to find a global ex US outside of the US itself. Likely need to go for individual regional funds or just go global.
  • noclaf
    noclaf Posts: 892 Forumite
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    Prism said:
    Being in S&P500 will have provided you with good returns over the last year and the proceeding decades, but it isn't very diversified and you should spread your risk a bit. So maybe sell half and put it in a global tracker ex US. Having 50% in the US is ok as that's basically global cap weighting. If you are a few years away from needing your investments you shouldn't really worry about when you sell, but right now you'd be selling into a nice run up in the US markets.
    Pretty hard to find a global ex US outside of the US itself. Likely need to go for individual regional funds or just go global.
    Even more difficult if trying to do the same using ETF's rather than OEIC funds.

    The vast majority of global equity trackers have 60-70% allocated to the US. Once you do down the route of using single sector/region funds or etf's = typically higher trading costs, increased ongoing maintenance/management and you have to make an 'active' decision on the various allocations e.g: US, UK etc  Maybe for those of us with +15 years to retirement we should not worry too much but it's difficult not to wonder how the markets will perform in the future.
  • Prism said:
    Being in S&P500 will have provided you with good returns over the last year and the proceeding decades, but it isn't very diversified and you should spread your risk a bit. So maybe sell half and put it in a global tracker ex US. Having 50% in the US is ok as that's basically global cap weighting. If you are a few years away from needing your investments you shouldn't really worry about when you sell, but right now you'd be selling into a nice run up in the US markets.
    Pretty hard to find a global ex US outside of the US itself. Likely need to go for individual regional funds or just go global.
    Well then the OP should probably just transfer to a global tracker then to get a more diverse allocation
  • Qyburn
    Qyburn Posts: 2,291 Forumite
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    Hey, 

    When I first started with Vanguard, I put all my money into S&P500.  I've got about 50k worth.  I've since learned that UK investors are better off with a Global tracker.  Should I sell all my S&P500 and invest in All World/All Cap or just leave it as is and put all money going forward into the global indexes?  

    Thanks
    Sorry if I've missed it, but what sort of account is the, ie ISA, pension, or "general account"? 
  • It's my SIPP I'm talking about. 

    Thanks for all the responses.  I'm only 40 so a way to go before retirement so I've just submitted my request to transfer the whole lot from S&P 500 to Global All Cap.  If I lose a couple of quid in the transfer so be it, if I gain a few so be it.  Hopefully I won't need to do any big changes like that again.  I'm now just "set it and forget it". 
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