ETF's, can't decide between S&P500 or All World

PixelPound

Postik said:

@jaypers I've seen a few people do this thinking they are diversifying, but with the S&P500 being 100% USA, and the All World being 60% USA, if you buy 50/50 of both you still end up with 80% USA

You buy an ex-US instead of all world. 

Sidenote surely 80% USA is less than 100% of S&P. 

Sam_666

Global tracker is NOT risk diverse starategy, its investment diverse strategy, looking for better growth.
For risk diverse, you need to look at alternatives, like metals, bonds, gilts, mmf, etc.

If usa market crashes, other world markets will fall like dominos too.

PixelPound

Sam_666 said:

Global tracker is NOT risk diverse starategy, its investment diverse strategy, looking for better growth.
For risk diverse, you need to look at alternatives, like metals, bonds, gilts, mmf, etc.

If usa market crashes, other world markets will fall like dominos too.

I agree. Instead of a global I have 7 region ETF and when the S&P fell, many others did (some as much, some less so). Definitely need to consider time horizon and risk tolerance when deciding. A 100% equity has the biggest upside and if investing for 10+ years will give best returns, however if you're someone who's likely to pull out when your lifesavings have dropped 40%, then derisking by having less risky portions is good whatever your age. 

leosayer

OP you haven't given any reasons why you would ignore the whole rest of the world when investing. 

The US may continue its stellar growth for many years but it may not.  Do you really want to miss out if another country outperforms the US in future?

Postik

leosayer said:

OP you haven't given any reasons why you would ignore the whole rest of the world when investing. 

The US may continue its stellar growth for many years but it may not.  Do you really want to miss out if another country outperforms the US in future?

@leosayer only reason I went with the S&P500 is from various YouTube videos and articles I read over Christmas.  So I went ahead and bought £200 worth.

I'm using Trading212 and have now moved some cash into an ISA there and can begin investing it.  At the last moment I have started reading about using an All World fund instead.

I do believe that the current tech and AI bubbles could burst, or at least cool.  However when you look at some of the other companies making up the S&P500, I am not sure they will ever be de-throned, at least not in my lifetime.

Sussex_by_the_sea

“It is an obvious solution. it should be global” - IMO this is the most useful comment so far on this thread.

TheBanker

Postik said:

leosayer said:

OP you haven't given any reasons why you would ignore the whole rest of the world when investing. 

The US may continue its stellar growth for many years but it may not.  Do you really want to miss out if another country outperforms the US in future?

@leosayer only reason I went with the S&P500 is from various YouTube videos and articles I read over Christmas.  So I went ahead and bought £200 worth.

I'm using Trading212 and have now moved some cash into an ISA there and can begin investing it.  At the last moment I have started reading about using an All World fund instead.

I do believe that the current tech and AI bubbles could burst, or at least cool.  However when you look at some of the other companies making up the S&P500, I am not sure they will ever be de-throned, at least not in my lifetime.

Did your research tell you that around a third of your S&P500 tracker will be invested in just seven companies - Apple, Microsoft, Alphabet (Google), Amazon, Nvidia, Meta Platforms, and Tesla? Even with an All World tracker, 20% of your investment is concentrated in these seven.

If the tech bubble does burst, the non-tech stocks have got to put in a hell of a performance to compensate! 

masonic

Postik said:

leosayer said:

OP you haven't given any reasons why you would ignore the whole rest of the world when investing. 

The US may continue its stellar growth for many years but it may not.  Do you really want to miss out if another country outperforms the US in future?

@leosayer only reason I went with the S&P500 is from various YouTube videos and articles I read over Christmas.  So I went ahead and bought £200 worth.

I'm using Trading212 and have now moved some cash into an ISA there and can begin investing it.  At the last moment I have started reading about using an All World fund instead.

I do believe that the current tech and AI bubbles could burst, or at least cool.  However when you look at some of the other companies making up the S&P500, I am not sure they will ever be de-throned, at least not in my lifetime.

What needs to be understood is that stockmarket returns do not necessarily correlate with the fortunes of the underlying companies. If they are overvalued then even if the businesses continue to be successful, if that is already the market's expectation then there is no reason for the share price to rise further. When already priced for perfection, any minor setback could send the price down. People sometimes get confused when a company posts record earnings, yet its share price falls because it did not meet what were quite unreasonable expectations in hindsight.

If you are bullish about the US market compared to the rest of the world, have you considered at least seeking to get a more balanced spread of investments across industries?

InvesterJones

TheBanker said:

Postik said:

leosayer said:

OP you haven't given any reasons why you would ignore the whole rest of the world when investing. 

The US may continue its stellar growth for many years but it may not.  Do you really want to miss out if another country outperforms the US in future?

@leosayer only reason I went with the S&P500 is from various YouTube videos and articles I read over Christmas.  So I went ahead and bought £200 worth.

I'm using Trading212 and have now moved some cash into an ISA there and can begin investing it.  At the last moment I have started reading about using an All World fund instead.

I do believe that the current tech and AI bubbles could burst, or at least cool.  However when you look at some of the other companies making up the S&P500, I am not sure they will ever be de-throned, at least not in my lifetime.

Did your research tell you that around a third of your S&P500 tracker will be invested in just seven companies - Apple, Microsoft, Alphabet (Google), Amazon, Nvidia, Meta Platforms, and Tesla? Even with an All World tracker, 20% of your investment is concentrated in these seven.

If I remember, the FTSE100 is pretty concentrated too. As are some other markets.

TheBanker

InvesterJones said:

TheBanker said:

Postik said:

leosayer said:

OP you haven't given any reasons why you would ignore the whole rest of the world when investing. 

The US may continue its stellar growth for many years but it may not.  Do you really want to miss out if another country outperforms the US in future?

@leosayer only reason I went with the S&P500 is from various YouTube videos and articles I read over Christmas.  So I went ahead and bought £200 worth.

I'm using Trading212 and have now moved some cash into an ISA there and can begin investing it.  At the last moment I have started reading about using an All World fund instead.

I do believe that the current tech and AI bubbles could burst, or at least cool.  However when you look at some of the other companies making up the S&P500, I am not sure they will ever be de-throned, at least not in my lifetime.

Did your research tell you that around a third of your S&P500 tracker will be invested in just seven companies - Apple, Microsoft, Alphabet (Google), Amazon, Nvidia, Meta Platforms, and Tesla? Even with an All World tracker, 20% of your investment is concentrated in these seven.

If I remember, the FTSE100 is pretty concentrated too. As are some other markets.

Yeah - but the OP was asking about the S&P 500. The FTSE 100 is nowhere near as tech focused as the S&P 500. Its top 5 holdings, which make up about a third of the index are Astrazenica, HSBC, Shell, Unilever and Rolls-Royce - which seems more diversified than the S&P500 Magnificant Seven, and probably more stable too.

I don't think anyone should invest all their money in the FTSE 100 either though. 

Personally - I have built my own all world tracker using regional funds, so that I can deliberatly under-weight the US.