Vanguard LS100 or FTSE Global All Cap?

WSB

I have £5K of my ISA allowance that I want to invest in a stocks a shares isa for 10+ years. Basically,put the money in and forget.

Am considering Vanguard LS100 or FTSE Global All Cap.

Any suggestions on which of these two to go for?

dunstonh

VLS100 is a global managed fund. Vanguard FTSE Global All Cap is a global all cap tracker. Both are 100% equities.

So, it really boils down to whether you want a managed fund with certain tilts away from market cap or prefer to stick to market cap.

WSB

https://forums.moneysavingexpert.com/discussion/comment/81941564#Comment_81941564

Thanks. Not sure really. Just want the best bet performer with no effort on my my behalf.

Time2Go_25

https://forums.moneysavingexpert.com/discussion/comment/81941589#Comment_81941589

Nobody I'm afraid can answer that

dunstonh

https://forums.moneysavingexpert.com/discussion/comment/81941589#Comment_81941589

It is impossible to tell in advance which will be the best performer. it will depend on the period in question.

In a period when the US underperforms (and/or exchange rates move in their historic cycle), VLS100 would likely do better and vice versa when the US outperforms (and/or exchange rates move the other way).

So, both will have periods when they are better than the other. if you have no preference to tilt in a certain way from market cap, then you may as well go with the market cap option.

Albermarle

They are both 100% equity funds, so they will perform similarly ( positively or negatively ) , when compared to say a 50% equity fund.

So in the great scheme of things their performance is likely to be similar, although not exactly the same.

WSB

https://forums.moneysavingexpert.com/discussion/comment/81941592#Comment_81941592

Thank you, think I'll go for the FTSE Global All Cap. Still not sure what you mean by market cap?

InvesterJones

https://forums.moneysavingexpert.com/discussion/comment/81941625#Comment_81941625

It means the weighting of the contents of the fund. Market cap means you buy everything in proportion to it's market capitalisation. So say that Nvidia makes up 4% of all the companies in the world by market capitalisation (the value of all the shares in Nvidia added together), then a market cap weighted fund (or index) would aim to be 4% made up of Nvidia.

Market cap weighting means you don't need to look after individual changes in trends - as another company becomes more popular the proportion in the fund/index will automatically track it.

Basically you are taking the market consensus on how valuable companies are. Anything other than market cap is applying a bias where you are saying I think the whole market is wrong, and something else will do better/worse. In the case of funds like VLS100 you put that belief in the fund managers to make choices that you hope will beat the global consensus (or for some other reason that you want to go with their choices).

WSB

https://forums.moneysavingexpert.com/discussion/comment/81941650#Comment_81941650

Great explanation. Makes complete sense. Many Thanks!

Bostonerimus1

https://forums.moneysavingexpert.com/discussion/comment/81941589#Comment_81941589

Stop looking for the best performer. You can look backwards, but you don't know what will happen in the future and that's what really matters. Content yourself with the "good enough". So either of your funds will be good enough as part of an equity allocation and I'd choose on which has the lowest fees.

WSB

Thanks all! Went for the Vanguard FTSE Global All Cap in the end.