Global ETF vs Global Index Fund/OEIC

masonic

GeoffTF said:

Albermarle said:

 it seems like that Index Funds/OEICs are better than ETFs. My reasoning for this is that they are covered by FSCS, typically have lower fees 

Only UK domiciled ETFs are covered by the FSCS. ETFs are often cheaper. With Vanguard. it is cheaper to buy a developed world tracker and an emerging market tracker separately. The emerging market weight is about 10%.

Is that really true? It's hard to know as there aren't any as far as I'm aware, but there are plenty of UK domiciled Investment Trusts, and they aren't covered.

GeoffTF

masonic said:

GeoffTF said:

Albermarle said:

 it seems like that Index Funds/OEICs are better than ETFs. My reasoning for this is that they are covered by FSCS, typically have lower fees 

Only UK domiciled ETFs are covered by the FSCS. ETFs are often cheaper. With Vanguard. it is cheaper to buy a developed world tracker and an emerging market tracker separately. The emerging market weight is about 10%.

Is that really true? It's hard to know as there aren't any as far as I'm aware, but there are plenty of UK domiciled Investment Trusts, and they aren't covered.

Sorry, I meant OEICs rather than ETFs. There are no UK domiciled ETFs, and ETFs are not protected by the FSCS wherever they are domiciled. About half of of Vanguard's OEICs are domiciled in the UK, with the other half domiciled in Ireland. As has been said, the lack of FSCS protection is very unlikely to matter for funds. It is also very unlikely to matter for most of the large investment platforms.

LHW99

I'm still confused about the difference between the two, what is an index fund usually called as I have heard loads of different names thrown around? (eg, mutual funds, ICVC, collective investment schemem OECs)

On the whole "collective investment scheme" can cover IT's OIEC's or ETF's, as can "index fund".

"Index fund" signifies the investment aims to track an index - there are plenty of them, MSCI World, FTSE All-share, Emerging Markets, Small Cap......... Starting off, you would probably stick to some form of Global (ie covers the world) tracker. There are also plenty of funds that don't track an index although they may aim to beat one.

IT's or ETF's are priced in "real time" so if the relevant market is open, you know what unit price you would pay.

OIEC's tend to price once per day, and most platforms seem to gather up orders at a specific time (eg noon), send the request to the fund manager and you get the units at the manager's next pricing point.

Ch1ll1Phlakes

blowzy said:

Sorry if the title isn't very clear as I'm new to investing. 

I am looking to invest a sum of money into the global stock market. I have started to watch "Damien Talks Money" on YouTube, and he said that if he was getting into investing again he would start out by putting money into the Vanguard FTSE All-World ETF (vwrp/vwrl). I was wondering why he choose to do this rather than invest in a global index fund (or OEIC, I'm completely unsure of terminology) such as Vanguard FTSE Global All Cap Index Fund (VAFTGAG). The latter does have a 0.1% higher fee. From what I have read,  on the website monevator which was recommended to me in the my last post, it seems like that Index Funds/OEICs are better than ETFs. My reasoning for this is that they are covered by FSCS, typically have lower fees and also they have no bid-offer spread. Maybe I do not understand entirely the benefits of a global ETF, as why would anybody invest in one when a index fund looks like a more sensible choice?

I'm still confused about the difference between the two, what is an index fund usually called as I have heard loads of different names thrown around? (eg, mutual funds, ICVC, collective investment schemem OECs)

Furthermore, what is the best route to take with ETF? I saw that Invesco pretty much do the same thing but charge a lower fee. Also what is the best route with the index fund/OEIC?

I pretty much have a blank state at the moment and I am going to be holding for a long time; so what would you do if in my shoes?

I'm in a similar position and am testing the waters of a few different funds until I feel comfortable with what the do and how they compare.  I also watched "Damien Talks Money" on YouTube and his explanations of some of the basics are what encourage me to start investing. I believe the video you are referring to is the following (If I Started Investing in 2025, This is What I'd Do - YouTube) however I found it useless to look through some of his other videos (such as The Only Index Fund I'm Buying Now where he discusses other options to the VWRP ETF) and the likes of Kroijer at Lars Kroijer (as often recommended by users of this forum).

I'm mainly in ETFs but also have a holding in the HSBC All-World through HL (can't remember the exact term for it but it's not an ETF). I'm open to both products but really am just looking at a long-term passive strategy. You probably already have read the following article from Monevator however I think it would be worth a reread for you (ETFs vs index funds: What are the key differences? - Monevator).

As mentioned by previous posts of your thread, Monevator also includes lists of the cheapest index funds (such as Low-cost index funds UK - Monevator). Other articles I would suggest based on what you have mentioned include Best global tracker funds – how to choose - Monevator which includes both the VWRP and the Vanguard All-Cap fund you mentioned, and Maximising FSCS protection for your investment portfolio - Monevator which explains the FSCS protection you are concerned about.

A little side note, having watched "Damien Talks Money", why don't you watch his free investing course "Investing Funds for Beginners" I've found it useful as it explains the basics and terms step by step. Then hopefully you will be able to make your own decisions regarding that you want to invest in.

Hope this helps and wish you all the best as you start your investing journey.

EDIT: Having read your previous thread your time frame for investing is only 4-5 years (If this is still the same investment you are referring to) and equity-only investing may carry more risk than you would like. I've linked your previous thread here so other participants of this thread will see what I am referring to (Best Junior Stocks and Shares ISA 2025? — MoneySavingExpert Forum)

blowzy

toothdoctor said:

HL charges 11.95 to buy ETFs so can be costly to trade ETFs on that platform. 

Interesting. I did not know that, is this the case with a junior isa? 

blowzy

 Funds are free but ETFs will cost you £11.95 per trade, quite expensive if you trade frequently. You can buy for £0 with monthly savings if you don't mind when you trade. So with HL it does very much depend upon how you trade

You will need to run the numbers with your numbers. Or choose a cheaper platform

Hi, I don't really understand how can I buy with £0?
Also HL is a junior isa? do the fees still apply for ETFs?

masonic

blowzy said:

toothdoctor said:

HL charges 11.95 to buy ETFs so can be costly to trade ETFs on that platform. 

Interesting. I did not know that, is this the case with a junior isa? 

No it isn't Junior ISAs are a big loss leader with no trading or holding fees, see https://www.hl.co.uk/investment-services/junior-isa/savings-interest-rates-and-charges

ColdIron

blowzy said:

 Funds are free but ETFs will cost you £11.95 per trade, quite expensive if you trade frequently. You can buy for £0 with monthly savings if you don't mind when you trade. So with HL it does very much depend upon how you trade

You will need to run the numbers with your numbers. Or choose a cheaper platform

Hi, I don't really understand how can I buy with £0?

Simple, there is no transaction charge if you buy with monthly savings, usually on the 10th of the month via direct debit

Also HL is a junior isa? do the fees still apply for ETFs?

No trx charges or annual fees

blowzy

Thanks all for your help. I think I will choose to invest in the SPDR MSCI World UCITS ETF mainly due to it being a cheaper fee than the an mutual fund/OEIC

thunderroad88

Many people like ETFs as they are easy to obtain or liquidate in a hurry…press sell and they’re gone, good if there’s a market event and you need funds quickly for another buying opportunity or simply to get out of the market fast. However, as a buy and hold investor, I didn’t like the ability to make instant decisions when I tried a few ETFs…found myself watching their prices too often and tempting me to act more like a trader than investor. So I stick with OEIC funds just because the more elongated buy and sell process makes me more calm and considered about what I invest in, and I find it much easier to just not look at what’s going on and making knee jerk emotional decisions. I know that probably seems a bit odd but it works for me