Which Index funds to invest in?

EthicsGradient

If you want to decrease the amount you hold in the US while keeping other regions balanced, there are one or two Global ex-US ETFs - iShares MSCI World ex-USA (symbol XUSE) (this is, for instance, available on ii), or maybe Vanguard FTSE All World Ex US (symbol 0LMO) (not available on ii, though). The former is just developed markets; the latter may include developing ("FTSE All World" normally does).

MarkFromCornwall

michael1234 said:
It seems difficult (for a laymen like me) to keep a geo balanced portfolio. The "all-world" fund mentioned above seems to be 65% USA based and that seems quite typical.

Isn't that how it should be?  According to Wikipedia the total capitalisation of companies in the US is $62 trillion, followed by China at $12 trillion, then Japan, India and Hong Kong with £5-6 trillion each, and the rest with smaller amounts.  A portfolio that gave equal weight to all countries would surely be weird.

(corrected to replace billion with trillion - thank you Linton)

Bostonerimus1

You are essentially asking how to create an investment portfolio. Right now you are concentrated in US equities and you should be more diversified especially with all the uncertainly in the world. One easy solution is to buy a multi-asset fund like the VLSxx series from Vanguard which is a fund that contains several index fund inside it. This link will give you the basics.

https://www.bogleheads.org/wiki/Investing_from_the_UK

Enzo_L

EthicsGradient said:

If you want to decrease the amount you hold in the US while keeping other regions balanced, there are one or two Global ex-US ETFs - iShares MSCI World ex-USA (symbol XUSE) (this is, for instance, available on ii), or maybe Vanguard FTSE All World Ex US (symbol 0LMO) (not available on ii, though). The former is just developed markets; the latter may include developing ("FTSE All World" normally does).

There's also DB-XTRACKERS MSCI World ex USA UCITS ETF (Ticker XMWX) which covers the top 23 developed countries ex-USA. 

aroominyork

Bostonerimus1 said:

One easy solution is to buy a multi-asset fund like the VLSxx series from Vanguard which is a fund that contains several index fund inside it. 

As a sidebar, the VLS series can justify their 0.22% fee for the 20/40/60/80 versions that include bonds, but if you are looking at VLS100 - equity only - you can get a very similar regional allocation for about half the cost by investing 80% in a global index fund and 20% in a UK index fund (100, 350 or All Share - take your pick).

Linton

MarkFromCornwall said:

michael1234 said:
It seems difficult (for a laymen like me) to keep a geo balanced portfolio. The "all-world" fund mentioned above seems to be 65% USA based and that seems quite typical.

Isn't that how it should be?  According to Wikipedia the total capitalisation of companies in the US is $62 billion, followed by China at $12 billion, then Japan, India and Hong Kong with £5-6 billion each, and the rest with smaller amounts.  A portfolio that gave equal weight to all countries would surely be weird.

Why is it "what it should be"?  Surely "what it should be" is what best meet your objectives.  If your objectives include avoiding overwhelming dependence on a single factor then keeping US below 60%-70% is what you need to do.

That doesnt imply having every country equal weight.

Your figures indicate a problem with global trackers. With the US at $62 trillion (surely not billion) China+Hong Kong at $17 trillion should be about 27% of the US allocation.  The MSCI ACWI (all world) index actually allocates about 4.5%.  Furthermore most index investors would use the MSCI World Index which allocates about 0.8%.  

My Growth portfolio currently has US at 36% and China+Hong Kong at 13%.

Bostonerimus1

aroominyork said:

Bostonerimus1 said:

One easy solution is to buy a multi-asset fund like the VLSxx series from Vanguard which is a fund that contains several index fund inside it. 

As a sidebar, the VLS series can justify their 0.22% fee for the 20/40/60/80 versions that include bonds, but if you are looking at VLS100 - equity only - you can get a very similar regional allocation for about half the cost by investing 80% in a global index fund and 20% in a UK index fund (100, 350 or All Share - take your pick).

Yes it's important to consider fees. However, it's also important not to become paralyzed by choice. There are an almost infinite number of ways to construct a portfolio, many of which will be functionally identical - so K.I.S.S. and the simplicity of mult-asset funds makes them a good solution for many people.

aroominyork

Bostonerimus1 said:

aroominyork said:

Bostonerimus1 said:

One easy solution is to buy a multi-asset fund like the VLSxx series from Vanguard which is a fund that contains several index fund inside it. 

As a sidebar, the VLS series can justify their 0.22% fee for the 20/40/60/80 versions that include bonds, but if you are looking at VLS100 - equity only - you can get a very similar regional allocation for about half the cost by investing 80% in a global index fund and 20% in a UK index fund (100, 350 or All Share - take your pick).

Yes it's important to consider fees. However, it's also important not to become paralyzed by choice. There are an almost infinite number of ways to construct a portfolio, many of which will be functionally identical - so K.I.S.S. and the simplicity of mult-asset funds makes them a good solution for many people.

Sure, but VLS100 isn't a multi-asset fund, it's all equities. Two funds is reasonably simple - KIRSS.

michael1234

MarkFromCornwall said:

michael1234 said:
It seems difficult (for a laymen like me) to keep a geo balanced portfolio. The "all-world" fund mentioned above seems to be 65% USA based and that seems quite typical.

Isn't that how it should be?  According to Wikipedia the total capitalisation of companies in the US is $62 billion, followed by China at $12 billion, then Japan, India and Hong Kong with £5-6 billion each, and the rest with smaller amounts.  A portfolio that gave equal weight to all countries would surely be weird.

Yes, not equal but "balanced". I do wonder though if some of this is a little too self-fulfilling. i.e. The US is the biggest market so more money goes there so it becomes even bigger etc.

aroominyork

If you want a neat allocation which underweights the US: 
40% North America
30% UK & Europe
30% Emerging markets, Japan & Asia Pacific

In a global index fund the proportions are approx. 65/15/20, so the 40/30/30 can also give you a little home country bias.