Important update! We have recently reviewed and updated our Forum Rules and FAQs. Please take the time to familiarise yourself with the latest version.
MSE NEWSFLASH 19/1
MORE THAN 29,800 MONEYSAVERS HAVE NOW ENROLLED IN THE ACADEMONEY THROUGH OUR PARTNERSHIP WITH THE OPEN UNIVERSITYCOLD WEATHER PAYMENTS TRIGGERED - CAN YOU GET £25 TOWARDS YOUR ENERGY BILLS?
MARTIN LEWIS WARNS HSBC, FIRST DIRECT AND M&S CUSTOMERS AFTER MAN NEARLY CHUCKED AWAY UNEXPECTED CHEQUE
For those familiar with Lars Kroijer and his views
101 replies
6.3K views
Quick links
Essential Money | Who & Where are you? | Work & Benefits | Household and travel | Shopping & Freebies | About MSE | The MoneySavers Arms | Covid-19 & Coronavirus Support
Replies
Agreed, and I would expect even a newbie to grasp that a FTSE World Tracker Index Fund is not the same as VLS 100
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
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.
Thanks
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.
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.
Easy with hindsight to make such comments. Was a very different investment era compared to a couple of decades later.
― Daniel Crosby
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.