Core fund for ISA - Vanguard LS 100?

Alexland

JohnWinder said:
With this information you can decide if it’s worth holding these ‘satellite’ funds which often cost more but don’t ensure better returns.

Satellites often just complexify the situation and increase the opportunity for tinkering and making common investor behavioural errors. The aim should be to keep things as simple as possible to harness long term market returns. I'm a big fan of just picking one very good investment per account and challenging yourself to make as few trades as possible. Having that discipline is most important. Minimise distractions on the path.

F1001

InvesterJones said:

F1001 said:

Thanks all!
I've just been researching the difference between ETFs OEICs and ITs - still quite confusing and not sure which is best for a simple core ISA fund. I think LS100 is an OEIC so, it might be better to switch to an ETF global index tracker? Anything I should be aware of before taking this route? Am looking at L&G Global Equity ETF (charges 0.1% and tracks the Solactive Core Developed Markets Large and Mid Cap Index) or iShares MSCI ACWI ETF USD Acc (charges 0.2% but includes Emerging markets) - any thoughts on these or alternatives?   

There isn't a simple best for ETFs vs OEICs/Unit Trusts vs ITs - it depends on other factors like your platform and how you intend to trade. Work out the latter first, then pick a platform and fund type that suits it best. There are very similar funds for global passive trackers available as OEICs or ETFs, and on some platforms there's no difference in holding fees so it would come down to whether you need intra-day trading (ETFs) or fractional purchasing (OEICs).

Thanks
I dont think I will need intra day because I wasn't planning to do any day trading with my S&S ISA but just manage it for maximising growth over the medium to long term. My plan is to max my ISA this year and any leftover savings into a GIA - so a lump sum right now and then do smaller monthly deposits. My platform is Interactive Investor.  How would this help determine the right fund? And whther ETF and OEIC?

InvesterJones

If you've already chosen that platform then it's the same fees for either ETFs or OEICs, so just a question of whether your smaller deposits will need fractional purchases, if so, go for an OEIC/Unit Trust.

FIREmenow

iShares MSCI ACWI ETF USD Acc

When I last looked at this one, one issue with this ETF is that it is traded in USD, so you will incur FX fees? Not sure if that's still the case.

If you are with ii then unless you have free monthly trades, using the regular investing is free, but on a set day each month. 

Another ETF that is fairly new and still growing is Invesco FTSE WLD UCITS ETF ACC (FWRG) fund charge 0.15%

OEICs also include HSBC FTSE ALL WORLD which is about 0.13%

InvesterJones

FIREmenow said:

iShares MSCI ACWI ETF USD Acc

When I last looked at this one, one issue with this ETF is that it is traded in USD, so you will incur FX fees? Not sure if that's still the case.

If referring to SSAC (IE00B6R52259) then it's traded in GBX so no FX fees.

thunderroad88

You won’t get simpler than iWeb to park your ISA..no platform fee if you get in quick before end of June. And if I were you from what you’ve said, I’d go into either HSBC Ftse All World or Fidelity World P, both low cost OEICs…then leave well alone and enjoy life.

leosayer

boingy said:

It's not necessarily a bad thing to have your investments slightly biased towards the country where you earn and spend your money.

I would argue the opposite.

If you live and work in the UK the you already have enough riding on the success of the GBP, the economy, jobs, house prices etc. 

Diversification mitigates that concentration risk.

F1001

Thanks All! I am still a bit confused with the OEIC vs ETF thing - can't understand when to choose one versus the other and how to compare costs. And if OEIC is VLS100 basically the same as HSBC Ftse All World but % with UK FTSE100? While I am deciding any views on what to invest in that won't cost me if I buy now and sell in the next couple of weeks? Conscious that my money is sitting in ii as cash while I learn this stuff! And I just missed my monthly free trade deadline again Thank you!

dunstonh

I am still a bit confused with the OEIC vs ETF thing - can't understand when to choose one versus the other and how to compare costs.

The vast majority of the population use UT/OEICs.    ETFs require a greater understanding as there is more that can go wrong.     

. And if OEIC is VLS100 basically the same as HSBC Ftse All World but % with UK FTSE100? 

HSBC is a global tracker.
VLS is a manged global growth fund.

If you like the management decisions of Vanguard on VLS100 and don't mind paying more for that then that is fine (and you could effectively insert the same thinking with any managed fund on that basis).
If you like the benchmark that the tracker is following then that is fine.

Don't over think it.  If in doubt, stick to the tracker. 

Alexland

The costs for holding and trading OEICs and ETFs are the same at II so unless you want to trade live you might as well hold an OEIC as they are simpler and you get the FSCS protection covering fund manager fraud etc.

A tracker like Fidelity Index World (for developed world) or HSBC FTSE All World (if you also want to include emerging markets) should be fine and are almost half the cost of VLS100 which includes the UK bias. Given people don't knows if UK listed stocks will outperform the rest of the world (or else it would already be priced in) you might as well go for the cheaper index trackers.

Just beware all of the above could drop 50% or more and even when they get to the bottom you might fear they will keep dropping further so for a gentler ride maybe look at introducing some bonds using lower risk VLS or HSBC Global Strategy fund series if you don't want the UK bias. Bonds are more attractive now than a few years ago.