Selling OEIC Funds to buy ETFs - How long out of investing and thoughts on ETFs?

InvesterJones

BigBlueSky said:

InvesterJones said:

First question depends on the platform - if they require cleared funds for investment or if they're ok to use positive account balance. If the latter then you'd only be out of the market the number of seconds it took for you to buy the ETF as soon as your account is credited for the sale price of the OEICs. If cleared funds required then usually about 3-5 working days.

in terms of the ETFs, while they're roughly similar, they vary in emerging market coverage, distribution vs accumulation, and index (with associated mild ESG tilt or not).

Thanks for your reply.

The current platform is Interactive Investor.

I'm not an expert but was assuming all of those ETFs would be similar enough to just pick one of them rather than multiple.  I'd be aiming for accumulation funds that don't incur FX fees.

I agree with just picking one, and the differences are pretty minor, but certainly don't pick a distributing ETF like WEBG if you want accumulation. They're all GBP listed so no FX fees, so main choice remaining is whether you want developed world, or all world (includes emerging market) - only makes a tiny difference though so you may not mind. There are some additional ETFs that do more or less exactly the same as what you've already picked, just with minor differences in fee. (VWHG, SWLD etc.for developed world.)

BigBlueSky

EthicsGradient said:

As far as time out of market goes, on Interactive Investor the settlement time is normally 4 working days for OEICs, and 2 working days for ETFs. So this typically means, say, give the order to sell the OEIC on Monday, at least an hour before the valuation point for the OEIC (typically midday, so 11am, but some, particularly North American ones, can be later), the order is finalised the first thing Tuesday, with Friday the settlement day, and then on Wednesday you can use the proceeds to buy an ETF which will also settle on the Friday.

It's possible that they'll allow you to buy the ETF as soon as the sell order is finalised first thing on Tuesday, but I think I tried that once and the system didn't let me.

Thank you - That is great to know.

BigBlueSky

Albermarle said:

Well it looks like quite a big change in investment strategy.

You are going from a portfolio that is about 60% equity index funds, with a diverse number of other funds, some of which are not equity related at all, to a 100% equity index tracker portfolio.
So if nothing else you have notched up the risk/volatility.

Now it could be a good move and your portfolio probably needed tidying up, but the main question is do you really want to go 100% equity that could fall 40% in a couple of weeks. Could you live with that ?

Thank you - I appreciate your reply.

I had been thinking myself that the current equity funds I hold were lower risk than some of my other funds.

I was going to go mainly for the equity index trackers as replacements, but add in a few other ETF's to increase diversity.  I'm still researching at the moment to find others that will help with this.

What I don't want to do is get other ETF's that end up overlapping too much - which is what I did with my current funds.  I want to try and keep things as simple as possible with just a few ETF's - Maybe 5 or less, rather than the 13 funds I currently hold.  I assume most of these areas that I am invested in can be covered by ETFs?

BigBlueSky

InvesterJones said:

I agree with just picking one, and the differences are pretty minor, but certainly don't pick a distributing ETF like WEBG if you want accumulation. They're all GBP listed so no FX fees, so main choice remaining is whether you want developed world, or all world (includes emerging market) - only makes a tiny difference though so you may not mind. There are some additional ETFs that do more or less exactly the same as what you've already picked, just with minor differences in fee. (VWHG, SWLD etc.for developed world.)

Thank you.

That was another thing I came across.  I saw some listed as USD but with codes beginning IE or GB.  I assume the currency is because there is a large weight towards US companies.  To avoid FX fees I just need to be looking for ones listed on the London Stock Exchange ?

I would want both developed world and emerging markets, but I suppose I could have a developed world ETF and a separate one for emerging markets.  Fees definitely will play into it a lot for me too.  Assuming my planned platform (Freetrade) offer the ETF's I am looking at.

InvesterJones

BigBlueSky said:

InvesterJones said:

I agree with just picking one, and the differences are pretty minor, but certainly don't pick a distributing ETF like WEBG if you want accumulation. They're all GBP listed so no FX fees, so main choice remaining is whether you want developed world, or all world (includes emerging market) - only makes a tiny difference though so you may not mind. There are some additional ETFs that do more or less exactly the same as what you've already picked, just with minor differences in fee. (VHVG, SWLD etc.for developed world.)

Thank you.

That was another thing I came across.  I saw some listed as USD but with codes beginning IE or GB.  I assume the currency is because there is a large weight towards US companies.  To avoid FX fees I just need to be looking for ones listed on the London Stock Exchange ?

I would want both developed world and emerging markets, but I suppose I could have a developed world ETF and a separate one for emerging markets.  Fees definitely will play into it a lot for me too.  Assuming my planned platform (Freetrade) offer the ETF's I am looking at.

You could have separate, but then you've lost the advantage of a set and forget single fund So from the funds mentioned so far, FWRG and VWRP are accumulation, all world, funds. I can't see any significant difference between them - both track the same index using the same strategy, I don't know any difference in holdings is due to different sampling fidelity or they've just reported it at different times, but I wouldn't mind one or the other.

To avoid FX fees, look for ones whose price is quoted in pounds (GBP) or pence (GBX). Everything mentioned so far in this thread has been.

Bostonerimus1

I don't think the difference between an ETF or a similarly invested OEIC fund should be that relevant to most investors. Certainly choose the one with the lowest fees, but the main goal should be to come up with an appropriate asset allocation that you can manage easily. So I'd start with a reassessment of your goals and then a radical pruning of your portfolio. Get rid of all the dead wood and duplication.

BigBlueSky

InvesterJones said:

You could have separate, but then you've lost the advantage of a set and forget single fund So from the funds mentioned so far, FWRG and VWRP are accumulation, all world, funds. I can't see any significant difference between them - both track the same index using the same strategy, I don't know any difference in holdings is due to different sampling fidelity or they've just reported it at different times, but I wouldn't mind one or the other.

To avoid FX fees, look for ones whose price is quoted in pounds (GBP) or pence (GBX). Everything mentioned so far in this thread has been.

Thanks for the reply.

The bulk of my investment will be going into something such as the VWRP (0.22% TER), but then I thought if I do both the VHVG (90%) - 0.12% TER and VFEG (10%) - 0.22% TER wouldn't I have something almost identical to the VWRP but with an overall lower cost.

I would probably hold about 75% of my overall SIPP portfolio in this and then possibly get something a bit different to cover the other 25%.  - Still researching and trying to decide.

BigBlueSky

Bostonerimus1 said:

I don't think the difference between an ETF or a similarly invested OEIC fund should be that relevant to most investors. Certainly choose the one with the lowest fees, but the main goal should be to come up with an appropriate asset allocation that you can manage easily. So I'd start with a reassessment of your goals and then a radical pruning of your portfolio. Get rid of all the dead wood and duplication.

Thanks.

Yes, that is going to be the biggest challenge, as there is no right or wrong answer and it is personal preference, but I'm not completely certain what I want that to look like.  Probably around 75% in something like all world including emerging markets.  The remainder into - increase the UK exposure maybe (not sure).

Yes, I need to get rid of the dead wood in my existing portfolio, but it is difficult for me to work out which is the dead wood.  I'm always thinking that those that have not performed well may do in the future.

Bostonerimus1

BigBlueSky said:

Bostonerimus1 said:

I don't think the difference between an ETF or a similarly invested OEIC fund should be that relevant to most investors. Certainly choose the one with the lowest fees, but the main goal should be to come up with an appropriate asset allocation that you can manage easily. So I'd start with a reassessment of your goals and then a radical pruning of your portfolio. Get rid of all the dead wood and duplication.

Thanks.

Yes, that is going to be the biggest challenge, as there is no right or wrong answer and it is personal preference, but I'm not completely certain what I want that to look like.  Probably around 75% in something like all world including emerging markets.  The remainder into - increase the UK exposure maybe (not sure).

Yes, I need to get rid of the dead wood in my existing portfolio, but it is difficult for me to work out which is the dead wood.  I'm always thinking that those that have not performed well may do in the future.

It's easy to be paralyzed by choice which is why I've just used a cap weighted global equity index and bond index portfolio with 3 or 4 funds for the past 30 odd years. I don't overweight things like EM, there's a lot of utility in simplicity. When coming up with a portfolio ask yourself what you'll do when the value of a fund goes up or down by 10%, 20% etc. If you emphasize EM, small cap etc. there is a greater likelihood of seeing big variations and you need to be prepared to handle them.

InvesterJones

BigBlueSky said:

InvesterJones said:

You could have separate, but then you've lost the advantage of a set and forget single fund So from the funds mentioned so far, FWRG and VWRP are accumulation, all world, funds. I can't see any significant difference between them - both track the same index using the same strategy, I don't know any difference in holdings is due to different sampling fidelity or they've just reported it at different times, but I wouldn't mind one or the other.

To avoid FX fees, look for ones whose price is quoted in pounds (GBP) or pence (GBX). Everything mentioned so far in this thread has been.

Thanks for the reply.

The bulk of my investment will be going into something such as the VWRP (0.22% TER), but then I thought if I do both the VHVG (90%) - 0.12% TER and VFEG (10%) - 0.22% TER wouldn't I have something almost identical to the VWRP but with an overall lower cost.

I would probably hold about 75% of my overall SIPP portfolio in this and then possibly get something a bit different to cover the other 25%.  - Still researching and trying to decide.

Only you can answer if the added complexity makes the fee saving worthwhile. Would you still think it worthwhile if the single fund was 0.15% TER rather than 0.22%? (ie FWRG) Will you be able to leave it alone if the two funds start diverging in performance?

Looking back, I wish I had gone for simplicity - I'm in the process of consolidating as well.