Selling out of Fundsmith all in one go and going into Vanguard FTSE Global All Cap Index ?

dllive

Hi all,

Im invested in the Fundsmith Equity fund on the Hargreaves platform.

Its done fairly well over the past 10 years. 

Within my Hargreaves account I also hold the following funds:

Vanguard FTSE Developed World ex-UK Equity Index

Vanguard FTSE Global All Cap Index

Vanguard LifeStrategy 100% Equity

Vanguard US Equity Index

Looking at the discrete and cumulative performance of these funds, all the Vanguard funds have performed better over the past 5 years and have a far lower fees that Fundsmith. (about 0.7% cheaper).

Is my thinking correct? In which case I may just move all my money from Fundsmith to one of the Vanguard funds (probably Vanguard FTSE Global All Cap Index). How best to do this: sell my whole amount in Fundsmith and buy into the Vanguard all in one go? Or do it in dribs and drabs over the space of a few weeks. Or does it not make much difference? (my investment horizon is 15 years)

Thanks

Exodi

The first thing you should think about is why, now and in the future if you plan to hold mainly Vanguard funds, you'd do so on a platform that charges an annual charge of 0.45% compared to holding them directly with vanguard for an annual charge of 0.15%.

Regarding your idea, I don't see an issue in investing in one global index fund, and the global all cap isn't a bad one to pick. I'd probably do a switch on HL (instead of separate buy/sell instructions) to minimize time out the market but otherwise I'd do in one go.

Of course, if you liked the HL platform and wanted to stay, you could also consider other all world funds which may be 'cheaper' (some good reading here: https://monevator.com/best-global-tracker-funds/ ). Depending on portfolio size, you could benefit from holding your investments as ETF's (as HL caps out charges for ETF's).

dllive

Thanks @Exodi . Transferring these to my Vanguard was going to be step 2 in my plan. This is another benefit of moving to a Vanguard fund.

Good call on doing a switch, I havnt done that before. Cheers!

Alexland

dllive said:

Im invested in the Fundsmith Equity fund on the Hargreaves platform.

Ouch that's going to be expensive with high fees at both levels.

dllive said:

Its done fairly well over the past 10 years. 

The market's gone up and the quality growth style has been in favour for some of those years.

dllive said:

Within my Hargreaves account I also hold the following funds:

Vanguard FTSE Developed World ex-UK Equity Index

Vanguard FTSE Global All Cap Index

Vanguard LifeStrategy 100% Equity

Vanguard US Equity Index

Lots of duplication there - might be easier to just pick the fund you want.

dllive said:

Looking at the discrete and cumulative performance of these funds, all the Vanguard funds have performed better over the past 5 years and have a far lower fees that Fundsmith. (about 0.7% cheaper).

Is my thinking correct? In which case I may just move all my money from Fundsmith to one of the Vanguard funds (probably Vanguard FTSE Global All Cap Index). How best to do this: sell my whole amount in Fundsmith and buy into the Vanguard all in one go? Or do it in dribs and drabs over the space of a few weeks. Or does it not make much difference? (my investment horizon is 15 years)

Maybe switch on HL to consolidate then transfer somewhere cheaper. If it's a large account valuation then consider a fixed/capped fee platform but it it's not much money then go for one that's free or has low percentage charges. Some of the free ones require you to hold a tracker ETF rather than an OEIC fund so if you do that then consider the bid/offer spread on the ETF at the time of purchase.

dllive

Great, thanks @Alexland

ColdIron

dllive said:

Looking at the discrete and cumulative performance of these funds, all the Vanguard funds have performed better over the past 5 years and have a far lower fees that Fundsmith. (about 0.7% cheaper).

While Vanguard's fees are quite a bit lower it's worth remembering that performance data is net of fees

dunstonh

ColdIron said:

dllive said:

Looking at the discrete and cumulative performance of these funds, all the Vanguard funds have performed better over the past 5 years and have a far lower fees that Fundsmith. (about 0.7% cheaper).

While Vanguard's fees are quite a bit lower it's worth remembering that performance data is net of fees

And whilst Vanguard is strong on its fixed interest securities range of trackers, they are not as strong on its equity trackers (relative to other fund houses).

dllive

dunstonh said:

ColdIron said:

dllive said:

Looking at the discrete and cumulative performance of these funds, all the Vanguard funds have performed better over the past 5 years and have a far lower fees that Fundsmith. (about 0.7% cheaper).

While Vanguard's fees are quite a bit lower it's worth remembering that performance data is net of fees

And whilst Vanguard is strong on its fixed interest securities range of trackers, they are not as strong on its equity trackers (relative to other fund houses).

Apologies @dun@dunstonh , can you clarify what you mean? (Ive read your sentence 5 times and still not sure what it means! )

dunstonh

dllive said:

dunstonh said:

ColdIron said:

dllive said:

Looking at the discrete and cumulative performance of these funds, all the Vanguard funds have performed better over the past 5 years and have a far lower fees that Fundsmith. (about 0.7% cheaper).

While Vanguard's fees are quite a bit lower it's worth remembering that performance data is net of fees

And whilst Vanguard is strong on its fixed interest securities range of trackers, they are not as strong on its equity trackers (relative to other fund houses).

Apologies @dun@dunstonh , can you clarify what you mean? (Ive read your sentence 5 times and still not sure what it means! )

Vanguard is not the only game in town.  Other fund houses offer trackers, and a number of them do it at a lower cost than Vanguard.    No single fund house is the best in all areas. 

Vanguard has the best range of trackers covering fixed-interest securities (gilts and bonds) and a number of niche areas as well.   However, when it comes to main market equities (e.g. global equity, US equity, UK equity etc), then others do it at lower cost.   

At the moment, you have picked Vanguard for all your equities exposure when perhaps you would look at some other fund houses as well.

dllive

Thanks so much @dunstonh !