Picking a world tracking ETF

GeoffTF

https://forums.moneysavingexpert.com/discussion/comment/82062844#Comment_82062844

Does that make sense unless you believe that the US will underperform the global market? This is not a dotcom bubble. US IT companies are rapidly growing, highly profitable and often virtual monopolies.

I have some UK bias {about 17% of my equities are UK). About 53% of my equities are US. That is about 35% of my portfolio. IT is about 37% of the US market. I am not worried about having about 13% of my portfolio invested in them. The global equity market has grown by 24% in the last year alone (with reinvested dividends). It is shoulder shrugging time if US IT halves in value overnight.

aroominyork

Oy, I said no such thing. In fact I pushed back against it. Who misses the old quoting system ? (Me!)

masonic

Am I seeing a quote block reproduced in a quoted post in Geoff's last reply? That's at least something! I always put "" around text I am quoting to make it clearer and will probably continue doing so.

PixelPound

what about Invesco MSCI World Equal Weight UCITS ETF if concerned about the tech bubble

aroominyork

https://forums.moneysavingexpert.com/discussion/comment/82063086#Comment_82063086

Equal weight: sell winners, buy losers.

GeoffTF

https://forums.moneysavingexpert.com/discussion/comment/82063112#Comment_82063112

Invest the same in a whelk stool as Apple. Invest the same in Romania as in the US. Someone else has to overweight the large caps. Who is the bigger fool?

masonic

and, at three times the annual cost! 😁 (0.2%)

aroominyork

https://forums.moneysavingexpert.com/discussion/comment/82063116#Comment_82063116

Funny coincidence - I've been thinking about the investment opportunities in crustacean poo.

PixelPound

https://forums.moneysavingexpert.com/discussion/comment/82063112#Comment_82063112

https://forums.moneysavingexpert.com/discussion/comment/82063117#Comment_82063117

Personally if aiming to have for a long time, then a standard cheap global market ETF is the way. However it all depends on your risk tolerances. If you are someone who will panic when there's a tech crash and as the top 10 constituents in your fund is all tech and takes up 24% of the total fund and turn a paper loss of multiple £10K into a real one, then anything that can keep you invested is worth far more than a cheap cost fund that does well but you sell when it's down. It doesn't matter how cheap it is if you sell because you can't cope with the volatility.

Surely "sell winners, buy losers" can also be stated as "buy low sell high" which the mantra told to most investors.

I don't have a single global ETF, instead I have regional ETFs in portions that mirror the FTSE-all-world index. The reason is because my TER is 0.06%, mainly because the S&P500 can be had for 0.03%, and includes Emerging Markets unlike some of the ultra cheap globals.

Know your risk-tolerance and be honest about it is not given the priority it should be. Everyone says, stick it in a global ETF for decades and pound cost average, which in theory is usually the correct advice, but this doesn't count for the times when there's a full blown recession and the market is down 40% for over a year and a lot of talk it will not recover and your gut instinct is crying out to sell and stem the bleeding.

It's why there are graphs like the below from JP Morgan that show how the average investor far underperforms most asset classes - because they sell when down and don't buy back in (if at all) once it's gone back up a fair way.

masonic

"I don't have a single global ETF, instead I have regional ETFs in portions that mirror the FTSE-all-world index. The reason is because my TER is 0.06%, mainly because the S&P500 can be had for 0.03%, and includes Emerging Markets unlike some of the ultra cheap globals."

I do broadly the same for the core of my equity portfolio (albeit I have diverted some S&P500 into ROW and I've gone regional partly because it makes doing that easy). But I wouldn't suggest others copy me, as reduced US has not exactly done me any favours up to this point.

A big challenge is, however you slice your equities, the path down can be indiscriminate and painful, and as you say, if that leads to a loss of discipline, then all bets are off, which is why 100% equities needs a sense check first and foremost.

Investors also manage to underperform their investments by frequently chopping and changing, so that also needs to be resisted, and simplicity can help there. Presenting a wide range of options people can switch between in an effort to time the market may be counterproductive, although it is inevitable such things will be discussed.