global funds

dannybbb

ive posted here before and have been reading a lot , gaining confidence in investing after a late start at 50.

I have most of my money in HSBC global balanced fund and was happy with that but didnt realise how concentrated (seemingly as most global trackers are) in tech in the US. Fine if youve already seen the upside but starting late with a potential for a big crash and potential long period of stagnation or low growth has me wondering if there are other funds that might be a better fit, is there anything truly global?

Ive read about world equal weight as an alternative and less tech focussed fund for my sipp

im ok with ups and downs but in my position it feels like its quite risky to be invested in a fund that is dominated by tech. I have 20k in hsbc in my sipp and a larger amount in short term money markets that im looking to invest. Up until recently i was going to drip feed it into hsbc but now longer so sure thats the best ide

invesco MSCI world equal weight is one I found. Any insight would be helpful

thanks

masonic

You could consider a World ex-US ETF of which there are one or two, for example XUSE, or XMWX. This can be used to get more exposure to the rest of the world and consequently less US exposure. But the chance of a big crash affecting the rest of the world less than the US is slim.

Equal weight approaches have their flaws, such as the requirement for frequent trading to keep the portfolio in balance, and increased risk due to more exposure to smaller, more volatile, companies in the index.

dannybbb

@masonic the argument i read is that smaller (cheaper) companies over the long term perform better

Its just one thing ive been looking at - id read a lot about just investing in a global fund - made a lot of sense but more recently have read more about them not being quit so diversified as they appear and that with my age has me wondering if there should be a different route. Imlooking for something to set and forget pretty much and to get more of my cash invested but have become a bit frozen after reading too much about how global funds like the one im invested in

masonic

There is supposed to be a risk premium for smaller companies, although in most regions there has been little evidence for this in recent years.

US mid-caps and small-caps have a very different composition to the S&P500, so going regional and tilting into those can reduce exposure to the Mag7 and tech sector in general.

dannybbb

would be 100% equities though I guess. Do you think the HSBC fund should remain? is there a similar find that is away from the US?

chiang_mai

https://forums.moneysavingexpert.com/discussion/comment/81930289#Comment_81930289

I dont think you'll find a tracker with a US allocation of say 30% or so but you can find managed funds at that level. Artemis Smartgarp Global Equities has a 43% US allocation but it's not a tracker so will cost more. Another alternative is to use the likes of L&G US Index to control your US allocation and then dilute the percentage using other trackers/funds that don't involve the US. I personally would not consider equal weight, because of the maintenance overhead. Some aspects of Mag 7 are very desirable, the problem is controlling the percentage to which you're invested in them, something a tracker wont allow you to do directly.

kempiejon

I have taken an interest in Vanguard's global high dividend yield etf VHYG, charge 0.29%. It is 40% USA, 30% financials, 10%ish each industrials and healthcare, naff all tech/software. Have a check, I think total return over 5 years is ahead of their global cap weighted index VWRP 0.19%. Still, what the next 5 years will bring, dunno.

masonic

https://forums.moneysavingexpert.com/discussion/comment/81930289#Comment_81930289

If adding a global ex-US fund, then the HSBC GS fund could stay, but you might want to add a bond fund like Vanguard Global Bond Index to avoid increasing equities overall (at that point you could just swap the HSBC fund for a global equities tracker and have each fund doing one thing).

For a multi-asset fund that has reduced US exposure, you could check out L&G Multi Index. Within its equities component, this is only about 25-30% US vs the market's 60%+. Multi-index 5 looks closest to your current balanced fund, and is currently just over 50% equities.

dannybbb

for the more experienced investors - am i just overthinking this - plough on and take advantahw of the lower prices?

InvesterJones

https://forums.moneysavingexpert.com/discussion/comment/81930754#Comment_81930754

Market weights (and therefore concentrations) reflex the consensus view of all investments. If you buy a market weighted tracker then you don't need to think about the details too much - concentration will automatically change to reflect the consensus of what people think is worth the money in the future. Taking a different position (for e.g. equal weight) is adding a bias against the consensus, in favour of smaller companies and less well rated regions. If you're a contrarian, that might be appealing. No problem with thinking about it - the main thing is what will help you sleep best at night.

drphila

Before considering regional/sector tilts, I think you need to address the more fundamental aspect of what level of equities you require based on your risk attitude. You mention more HSBC which would keep your equity level the same but then mention the Invesco fund which is 100% equities.

If you want to keep it at a similar level to HSBC, the L&G multi- index fund mentioned by @Masonic is my own multi -asset fund of choice, based on among other factors its US underweight. There are several other US-underweight MA funds, including other L&G funds and Vanguard Life Strategy.

On the other hand, if you’re looking to increase equity level through a 100% equity fund and at the same time tilt away from US Tech, the latter is something I am trying to do at the moment as part of Bedding and ISA of some of my HSBC FTSE All World, with a particular focus on reducing the Mag 7.

Candidates I am considering so far are VYHG (as @kemplejohn has mentioned ), IWFV, VLS100 (still quite weighty in Mag 7) and Vanguard Global Equity (5yr performance bit low).