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For those familiar with Lars Kroijer and his views

edited 30 November -1 at 12:00AM in Savings & Investments
101 replies 6.3K views
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  • edited 17 August 2019 at 11:54AM
    badger09badger09 Forumite
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    edited 17 August 2019 at 11:54AM
    DrSyn wrote: »
    Surely even a beginner will have enough curiosity to look at the breakdown of fund before buying it?

    Agreed, and I would expect even a newbie to grasp that a FTSE World Tracker Index Fund is not the same as VLS 100
    DrSyn wrote: »

    So if they wanted a FTSE World Tracker index fund, they would quickly see that the breakdown of the VLS100 is not the same as the !!!!!!.

    I would argue that most beginners don't know they want a FTSE World Tracker Index Fund when they start investing:cool:.

    Consensus on here for newbie investors seems to be to opt for a Global Multi Asset Fund - which is why Vanguard, Blackrock etc are mentioned.

    So, having accepted that premise, how would a newbie investor know that the former was likely to outperform the latter over a 5 year period?.

    I'm probably not explaining myself very well. I'm still on the journey through the hierarchy of competence:o
  • AudaxerAudaxer Forumite
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    badger09 wrote: »
    I would argue that most beginners don't know they want a FTSE World Tracker Index Fund when they start investing:cool:.

    Consensus on here for newbie investors seems to be to opt for a Global Multi Asset Fund - which is why Vanguard, Blackrock etc are mentioned.

    So, having accepted that premise, how would a newbie investor know that the former was likely to outperform the latter over a 5 year period?.
    If a newbie investor was looking for a one fund solution to get started, a global multi asset fund that also contains a percentage of bonds is more likely to be a better choice than either VLS100 or a FTSE World Tracker. If later in their investment journey as they become more experienced, they think they can cope with the volatility of 100% equities, it may then be a choice for them between a FTSE World Tracker or VLS100 or an active portfolio.
  • MalthusianMalthusian Forumite
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    badger09 wrote: »
    So, having accepted that premise, how would a newbie investor know that the former was likely to outperform the latter over a 5 year period?

    It wasn't. Both VLS100 and the FTSE World are 100% equities. The reason for Vanguard LS underperforming the FTSE World over the last five years is predominantly Vanguard's lower exposure to the USA. There was no guarantee in 2014 that the USA would continue to outperform other markets, and there is no guarantee that this will continue for the future.

    If you would have been uncomfortable with having 57% of your money invested in the United States then a FTSE World tracker wouldn't have been a good choice. Never mind that it would have done better with hindsight.
  • AlexlandAlexland Forumite
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    I agree there is no evidence to suggest that a FTSE World will do better than VLS100 going forward and to reduce the very high US or remove home UK bias then an All-World or All-Cap index tracker may be a better choice for a 100% equities investor. Still for a multi asset fund this matters less as there is the additional bond diversification so VLS60/80 or HSBC GS Balanced/Dynamic are fine.
  • badger09badger09 Forumite
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    @ Audaxer, Malthusian & Alexland

    Thanks
    DrSyn wrote: »
    Surely even a beginner will have enough curiosity to look at the breakdown of fund before buying it?

    So if they wanted a FTSE World Tracker index fund, they would quickly see that the breakdown of the VLS100 is not the same as the !!!!!!.

    But the purpose of my earlier post was to point out to DrSyn that
    the choice of VLS100 rather than a FTSE World Index Tracker did not mean ignorance of the make up of each, which I think is his implication.

    As Alexland says, there is no evidence to suggest that a FTSE World will do better than VLS 100 going forward.

    I'm actually invested in both and will watch relative performance with interest.
  • Important update! We have recently reviewed and updated our Forum Rules and FAQs. Please take the time to familiarise yourself with the latest version.
  • LintonLinton Forumite
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    Malthusian wrote: »
    It wasn't. Both VLS100 and the FTSE World are 100% equities. The reason for Vanguard LS underperforming the FTSE World over the last five years is predominantly Vanguard's lower exposure to the USA. There was no guarantee in 2014 that the USA would continue to outperform other markets, and there is no guarantee that this will continue for the future.

    If you would have been uncomfortable with having 57% of your money invested in the United States then a FTSE World tracker wouldn't have been a good choice. Never mind that it would have done better with hindsight.


    I believe that the underperformance of VSL100 over the past 5 years is caused more by the higher allocation to the UK. The evidence for this belief is that the VLS100's allocations are very close to the FTSE All-World with the addition of extra UK. However the FTSE World and FTSE All-World indexes have given very similar performance in the same time period despite the FTSE World having a 10% higher US allocation.

    Note that although in the past 2-3 years the US has performed better than other markets that was not the case for the previous 2-3 years.


    Given the composition of the FTSE100 I am happy to predict that VLS100 will continue to underperform the FTSE World for the next 5 years.
  • ThrugelmirThrugelmir Forumite
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    someone who had a globally diversified portfolio (as LK recommends) wouldn`t have been burned by the Japanese meltdown


    Easy with hindsight to make such comments. Was a very different investment era compared to a couple of decades later.
    "The human understanding when it has once adopted an opinion ... draws all things else to support and agree with it." - Francis Bacon (1561 – 1626)
  • AlexlandAlexland Forumite
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    Japan would have been significant within a diversified cap weighted equity portfolio at the time.

    clnwmcountry-weights.jpg
  • fjhfjh Forumite
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    I am a learner !! so please can you clarify- when talk of a World tracker - does that mean for example- HSBC FTSE All-World index or Fidelity Index World W Fund? + others? And as such these are 'immediate ' to buy in / sell unlike the Woodford funds?
    Please excuse my ignorance but have struggled on this albeit I 'like' what 'Lars' says due to its simplicity- and yes I have read his and AJ Bell's books -
  • LintonLinton Forumite
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    fjh wrote: »
    I am a learner !! so please can you clarify- when talk of a World tracker - does that mean for example- HSBC FTSE All-World index or Fidelity Index World W Fund? + others? And as such these are 'immediate ' to buy in / sell unlike the Woodford funds?
    Please excuse my ignorance but have struggled on this albeit I 'like' what 'Lars' says due to its simplicity- and yes I have read his and AJ Bell's books -


    Yes they are typical world trackers. There would be no problem selling them whenever you wanted. That applies to almost all funds: Woodford's problems are highly specific to his funds' particular circumstances, I cannot off-hand think of any other mainstream equity fund which has ever had the same difficulties.


    Sometimes funds may stop people buying units. This is not unusual in small sectors which become very popular such as Emerging Markets where there are insufficent sensible investment opportunities for all the money that people want to invest.
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