Our friends at InvestEngine are offering a Welcome Bonus of up to £50 when you invest at least £100 with InvestEngine (Ts&Cs apply) investengine.pxf.io/anQ5QM If you decide to register using this link then we will also receive a small commission. Capital at risk. InvestEngine (UK) Limited is Authorised and Regulated by the Financial Conduct Authority (FRN: 801128)
The best way to find growth stocks, key features to keep in mind is as follows: 1. Ensure gross margins are greater than 50% 2. Ensure P/E ratio is less than 100 3. Buy companies that are PROFITABLE, very important irrespective of sector. 4. Debt to equity ratio is less than 30% 5. Current ratio is above 1 6. and a Float under 100 million One stock that fits the bill is......
The video I was waiting for Ramin. Thanks a bunch. I am very glad to see your subscriber numbers go up every week. There is so much noise and click baity financial education channels on YT (with 100's of thousands subs) that a entry level investor could easily get duped and confused. Thanks for bringing some clarity into this madness. Cheers Ramin!
Thanks Sam and thanks@@chessdad182! I try to keep it level-headed and present the risks alongside the benefits but I pay the price by not being clickbaity. But you've got to remain true to yourself even if it comes with a cost. Thanks, Ramin.
Or people keep trying to push bitcoin and some trader who apparently can make you loads of money, instead of following sensible, well diversified long term strategies
@@Pensioncraft Thanks for not falling for that trap Ramin. I believe you are attracting the right kind of audience and support which will be sustainable in the long run. Now if once in a while you want to do a video with a "surprised" look and claiming "end of the world" is coming..we will let it slide.. :)
@@chessdad182 You are on point Chess Dad. What I don't understand is, how are they are able to retain viewership with the same surprised look thumbnail, the same narrative and the same story over and over. I guess there is lack of education and a lot of confusion and those channels take advantage of it.
This is one of th best and most useful videos you have done. Thank-you ! Yes, I wish Vanguard did not rip off its UK customers, charging them a multiple of fees to US customers.
As a SMALL change to VT, I think a comparable alternative is to invest in both VTI and VXUS(maybe 60/40 to 55/45) and it saves a LITTLE on the expense ratio with similar results. Not a major difference, but on a long timeline, those 5 basis points could save a good chunk of change.
Thanks for another great informative video. Just one point from me is The Vanguard FTSE Global All Cap cannot be replicated combining FTSE Developed and FTSE EM ETFs as it s not going to get the same fund because the ETFs don't represent All Cap. Although for those who invest in VWRL this is great advice to knock the price down👍
Hi @j4jjj that's true the returns won't be identical but they will be very similar. If there is ever a developed all cap fund offered by Vanguard you could match the returns more accurately. There are developed & EM ESG all cap funds so that might be another way to go to replicate a global all cap ESG fund more cheaply. Thanks, Ramin
Thanks for the video, definitely helping with drawing up a shortlist. Just to note, the Fidelity Index World fund only has 0.16% exposure to emerging markets, not the the approx 11% you are eluding to.
10:40 I take it that ETFs are generally considered superior to mutual funds? I assumed they were essentially equivalent and have opted with mutual funds to avoid broker fees. Are there any key differences that I should be aware of?
Hi Dave on some platforms ETFs are cheaper to hold than funds (e.g. Hargreaves Lansdown). If you day-trade (bad idea) then ETFs provide intra-day pricing so you can buy and sell minute-to-minute while markets are open. But generally the fees are similar whether the fund wrapper is an open-ended investment company or an ETF given the same index is being tracked. Thanks, Ramin.
@@Pensioncraft Thank's. The only thing I'm a bit unsure about is it only covers Developed markets, not sure if having emerging markets exposure is important or not.
@@fredatlas4396 Developed world markets make up 89% of total global equities, so up to you as to whether or not you care about EM (just bear in mind that China makes up ~42% of EM -- FTSE Emerging Index. As for me, given that Vanguard doesn't offer an EM ex-China index fund/ETF, I stick to Developed World indices for my equity portfolio component).
Hey, sorry if this is a stupid question. But to get closer to the 'all cap fund' would you not do 89% developed and then 11% small/medium cap index fund rather than 11% emerging markets? This is in reference to 16:55 in the video. Thanks :)
Great video as always Ramin, thank you. I'm a novice UK investor. Started investing in Aug 2020 (after watching many of your videos, which are always excellent by the way). Your channel is by far the best of any UK investing channel on youtube. I think there'll be a lot of miffed Vanguard UK investors after watching this video who, like me, will be very be surprised to hear about the VT fund (expense ratio 0.08%) we don't have access to. I am invested in Vanguard's FTSE Global All cap fund (expense ratio a, comparatively, whopping 0.23%). Hopefully a group of disgruntled twitter users will tweet Vanguard after viewing this video. Come on Vanguard that's a bit cheeky charging UK investors almost 3 times as much for what is essentially the same product.
Hi Tal I've talked about factor funds in the UK in the past and unfortunately there aren't many to choose from. For example, small cap value is the factor combination that does extremely well in backtests and yet I only know of one such fund available to UK investors. The US has many to choose from. It's all very unfair. Thanks, Ramin.
I follow Ben Felix too, and the Rational Reminder is a great podcast. VWRP and USSC is the closest I can get to replicating their approach in the UK. Global small cap is a nightmare to get.
Last week I bought some VEA, the Vanguard Developed Markets ETF (no US). My international exposure has always been very low, and I've done well. But it was time. Yes, Vanguard charges a lot more to their UK customers for the same fund. Maybe they can't get the scale. Or they just think they can get it. But I don't feel real bad, especially after I pay $6 for the smallest container of Marmite!
Thanks Ramin. Very interesting video. Concerning most fund options available in the UK are overweight US given where the S&P500's CAPE is, but they look like a sensible diversification option at more reasonable valuation levels, if these are ever reached in the future.
Are they "overweight" or just market cap weighted? I have the same concern, but if they have a simple and consistent methodology you can't expect them to meddle with it based on a subjective assessment of CAPE.
I currently invested in FTSE Global All Cap Acc (55% of portfolio) and Developed World Ex-UK (33% of portfolio). My main reason for that was to drive down the overall cost, increase my share in the U.S and decrease my share in Emerging Markets. What are your thoughts on investing in two global funds that similar???
I always enjoy these videos. I am Canadian so some investments are not available. Still, the concepts are solid and I have joined even though I might not make the live Sunday broadcast often. I want to support the work that you are doing. Thank you.
This was really well explained, thank you so much! I'm was looking at a single global index to invest in initially as I'm consolidating old pensions into a SIPP. I had almost decided on the Fidelity World Index and I was glad to see it mentioned on your video - so my thinking isn't completely off the mark! I've just discovered your channel so have a lot of catching up to do!
Ramin, as a foreign investor subject to 30% dividend withholding tax for US domiciled ETF, is it more efficient to still invest in US domiciled ETF with lower expense ratio, or UCITS ETF with higher expense ratio but dividend tax exempted?
Hi 1.21 gigawatts it's unlikely i.e. you'd need to compare withholding tax between your domicile and the domicile of the assets multiplied by the typical dividend yield and see if that's more than the fee saving. Thanks, Ramin.
In the split to recreate the FTSE global all cap fund neither of the 2 you suggest to make it up contain UK. However, the all cap fund is 4.1% UK. Is this a mistake and you meant to say FTSE developed world fund?
I noticed this too and it confused me. I know he said the other strategies were overweight U.K. but I didn’t think he would want to exclude it completely
Hi @Gringadoor the UK is only 4% of global equity markets to excluding it makes almost no difference. The entire UK market is about the same size as a single US megacap like Apple. Thanks, Ramin.
@@Pensioncraft I would have thought 4% was enough to care about. Those funds also don't cover small cap where the all caps does. One is accumulation and one isn't. May have been better to just not attempt to recreate the fund this way as it seems to have caused confusion.
You can easily buy a 4% FTSE tracker for only 0.06 so doesnt really matter just personal preference. I would say 4% is totally worth considering though. The point is whether you believe in the UK's upcoming growth. Or if you're a truly passive investor you just want the market share of everything anyway :)
Great video and advice! Is there any reason why you chose the Emerging Markets ETF (VFEM) instead of the Emerging Markets Stock Index Fund - Accumulation when coupling it with the developed world ex UK index fund? Thanks!
I've never quite understood peoples focus on VWRL (£7B of assets) instead of Global All Cap Index (£800M of assets). All Cap gives twice the number of stocks and you can buy fractions of the index.. And its basically the same returns!
How can Vanguard not let you buy a fund if it's exchange-traded ? I think it's your broker that doesn't let you buy it. I'm also annoyed as I'm restricted to ETFs that are traded on Euronext Paris in euro.
Hi Ramin - Another great video! With the Vanguard fund split you suggested to allow for a cheaper global tracker, would this not result in you excluding exposure to UK equity?
I noticed this too and it confused me. I know he said the other strategies were overweight U.K. but I didn’t think he would want to exclude it completely
Many thanks Ramin for the content you're creating! In respect to the 'all world index' volatility, on minute 8:30 you've mentioned that the average volatility is around 17%, would that mean that if you had a lump-sum, you'd be looking to get into an index when it's just over 15% deep down? I am not referring to the drip-feed, which I understand has advantages itself.
Yes but no, because it's hard to time. If it's 15% down you won't know if it's going to be 16% tomorrow and 30% by the end of the week. You can try timing but while you're waiting on the sidelines for a drop, you're missing out on the current gains.
Will the fund (e.g vanguard all cap) ever change weightings though? So this may negate any satillite funds you may have to overweight on a certain country in the first place
Great stuff as always! Would be good to see something more detailed on etf fees, I still never fully understand the ways the fees work. Eg if the fee is 0.5% and the fund moves 0% over a year, how is that fee taken?
The fee is normally included in the price. So if the fund moves 0% and the fee is 0.5% it means the shares within it have actually gone up 0.5% but the price you see will remain 0
Great stuff as always, your timing is perfect - just setup a Lifetime ISA so this should help me decided on a single fund to help reduce those transaction costs! I thought the Vanguard FTSE Global All-cap included small-cap stocks - wouldn't you need to add a global small cap index as well for the DIY fund to be accurate?
Another great video thanks Pensioncraft, this is my third viewing. I would like to have seen more on synthetic ETFs, as a UK investor how can I avoid US dividend withholding tax on the lion's share of my portfolio?
At 14:00, the Vanguard FTSE All-World underperforms most of the rest. Did that chart include dividend, because the vast majority of others are ACC, while VWRL distributes dividends.
@@vosyem Good spot George! So one will be the distributing and the other the accumulation version. The compare apples with apples, the distributing should have been removed from the chart.
Just joined the channel really enjoying catching up on the videos, some great content so thank you. It would be interesting if you could do a video about the best replacement fund for VVAL for uk investors who still want to capture the value premium. Theres a few funds and ETF'S out there. Not much in the way of small cap value apart from an SPDR etf. Thanks
Very interesting video! However, the ETF League Table shown at 19:08 seems faulty. Xtrackers ETFs have 80 billion EUR in assets under management, which makes it larger than WisdomTree (72 billion in global ETF assets).
Hi f bu those AUM numbers are probably for US Assets Under Management as Eric Balchunas is the US ETF guy for Bloomberg. By default US commentators usually only talk about US fund AUM. If you want to ask him yourself the link to that tweet is twitter.com/EricBalchunas/status/1337566634102448128 Thanks, Ramin.
Good morning, I hope you’re well. Please could I get your thoughts on splitting my investment into 3 sections, 55% developed world ETF (VEVE), 35% S&P 500 etf (VUSA) and 10% emerging markets etf (VFEM)? I would like to hold a 100% stock portfolio and also own majority American, with some global exposure. Any thoughts would be appreciated! Thank you.
Watching this makes me thing the charges on the 80% life strategy fund is a little on the expensive side! Reckon I should shift away from that and invest in more DIY funds like the vanguard ones you have highlighted?
The main benefit you get from lifestrategy is automatic rebalancing, and it removes some of the temptation to tinker which in the long run would probably cost you more than fees. I say that as someone who has taken the DIY approach with vanguard - and tinkers regularly...
it's more expensive than other less diversified vanguard funds, but you're paying a bit extra for the diversification being done for you. And 0.22% is still very cheap relative to most other providers.
Thanks for another great video. A potentially stupid question: For the two-fund Global Equity combo to mimic VRWL, why do you recommend the FTSE Developed World ex-U.K. fund, rather than VEVE? The fee for VEVE is slightly lower; and presumably with the former, you'd have to also include a third, UK specific fund if you wanted any UK exposure
Thank you for the video. I have a novice investor question on rebalancing. It seems you need to rebalance every now and then if you have multiple funds. If you buy a SINGLE global index fund, do you still have to rebalance WITHIN that fund, or is that done for you? because wouldn't some sectors, regions etc will outperform others even within a single index fund, causing it to become imbalanced vs the fund you'd originally purchased, so even a single index fund would need rebalancing....I'm guessing?
Hi Jim J I believe that's the case. If you have more assets under management you can charge a lower fee and still generate a good income. As Vanguard UK gets more popular and people cotton on to the importance of fees here in the UK I suspect their fees will fall. They've already done a round of fee cuts in October 2019 and I'm sure there will be more. Fingers crossed! Thanks, Ramin.
That's right @@byedwardleung. I've made a video for Patreon supporters www.patreon.com/posts/49775530 about my portfolio for those who are interested. But generally, it's a bad idea to copy other people, it's best to come up with your own investment style that suits your circumstances and world view. Thanks, Ramin.
@@Pensioncraft thats an interesting allocation. I thought with the (probable) imminent rise in interest rates on the horizon the only way for government bonds can go is down. Great video BTW
My understanding of SIPP is that its most advantageous to do using pre-tax income. If thats where your funds are coming from, you really cannot lose. If not pre-tax income, what is the advantage?
@@seanphurley You invest in SIPPs post tax with your net income. SIPP providers will claim basic rate tax back for you and add it the SIPP. You can then write to Revenue and tell them about your ongoing contributions to get a new tax code which includes any higher and additional rate tax relief (they basically increase your tax free allowance). The benefit is you get to keep some of the tax relief now and some goes into your SIPP. Another potential benefit is you may not have to pay tax when you take money from the SIPP later. A downside is you can't take it before a certain age depending on when you were born. Typically you are better off using AVCs through a workplace pension as you also get national insurance relief on contributions but you have less control over where the money is invested.
True @AjitB07 the problem is that China totally dominates Emerging Market funds just as the US dominates Developed Market funds. I suspect that's why many funds don't exclude it. Thanks, Ramin.
I wouldn't focus too much on the TER when picking an index fund. In my understanding, TERs are just estimations of the fund's operating cost in comparison to its assets. They are also subject to change. It makes more sense to look at the tracking difference (how much does the ETF deviate from the value of the underlying index?).
Hi f bu Total Expense Ratio is important because it is always negative i.e. it is a persistent drag on return. Tracking error can go both ways as a fund might underperform or outperform an index. So for example if comparing a group of passive funds tracking the same index the natural way to discriminate between them is to compare the ongoing expense charged by the fund manager. Thanks, Ramin.
Hi Ramin how about the following set up when trying to emulate a global index in Vanguard with an appropriate UK weighting: U.S. Equity Index Fund - Accumulation 60% at 0.1% =6 FTSE Developed Europe ex-U.K. Equity Index Fund - Accumulation 14% at 0.12% =1.68 Pacific ex-Japan Stock Index Fund - Accumulation 12% at 0.16% =1.92 Vanguard Emerging Markets Stock Index Fund GBP Acc 10% at 0.23% =2.3 FTSE U.K. All Share Index Unit Trust 4% at 0.06% =0.24 This comes in at about 0.12% if my maths is correct?
I found the data visualization quite a refreshing take, for eg the use of the dendrogram to highlight clustering between different global funds. Great content!
How do very similar ETF's charge very different fees (e.g. VT .08% vs ACWI .32%)? The high fee fund enjoys a captive set of investors within 401K plans.
Hi Mark that's interesting. Why are they captive? Is it because they are offered a limited range of funds in their 401k all of which have a very high fee?
@@Pensioncraft Employers in the U.S. are not adequately motivated to demand low cost funds in their 401K plans administered by outsiders. I've participated in two plans where the only investment offerings to select from were mutual funds with fees in the 1% range. One other plan I used did offer just one S&P 500 low cost ETF.
Hi, just wondering what the main differences are between funds like life strategy and Global equity funds like ACWI? Is it just that one is actively managed and comes with a higher cost? Thank you in advance.
IF dollar cost averaging is such a good strategy for spreading the risk for investing. Would you apply this strategy to transferring a 50K non vanguard S&S ISA by drip feeding partial transfers say 5 or 10k a month?
Yes there are lots, although it might be hard to find a Global Ex-US fund. L&G's UK index fund for example is UK equity only, and euro and emerging markets funds will also not have US equity.
Time for a moment's silence... 😢 David Swensen, the head of Yale University’s endowment who helped reshape how institutions manage their money, has died from cancer aged 67
Hi Ramin I understand the need to keep costs down when it comes to index funds that all essentially track the same index. What I am interested in knowing your thoughts on is wether you would think it worth investing in a global active fund or trust with a long track record of out performance for a potential better return, fees up around 0.5/1%. Maybe 50/50 active/passive?
Hi 132 Buckleup1000 as soon as I find an active fund that has outperformed for 20 years or more I would consider it, as long as the fees aren't too high. But I don't know of any in the UK. Personally I find the fact that there are so few is quite revealing. So I wouldn't do that given the evidence, but if you believe that an active fund manager will continue to outperform over your investment horizon then some active management would make sense for you. Thanks, Ramin.
@@Pensioncraft That's a fair point Ramin, I think with actives you have to watch them more and be prepared to change it up, that takes Judgement getting out at the right time. Do you put any credence into talk of a passive bubble, or is that just vested interests trying to talk passive down?
@@NoRegertsHere history is full of examples of these stellar funds falling flat on their face, and it tends to be shortly after when most people have invested in them. See Ben Felix's video on this.
HI Ramin in the preferred UK section - if I understood you correctly you said that the Fidelity Index World Fund - didn't need splitting out ( ie: using separate Dev and EM holdings) - however all the info I can see seems to say that this fund has only a tiny EM component. Did I miss understand please? Thank you
Hi Craig you're right the EM allocation is tiny for "Fidelity Index World Fund" so if you want any significant EM allocation (in line with market capitalisation) you'll have to buy a separate EM fund. Good spot! Thank you, Ramin.
Hi tamsinwood2 LifeStrategy is okay, but if you watch my video on LifeStrategy I mention the UK domestic bias and the fact I don't like it. And "expensive" is relative. I was talking to a client in a Power Hour today who is paying 2% (!!!) for a global equity tracker. But I'm annoyed that US Vanguard investors get a global equity fund for 0.08% fee whereas in the UK it costs 0.23%. Thanks, Ramin.
@@Pensioncraft Hi Ramin, can I ask you if you only hold the FTSE Global All Cap Index Fund in your Vanguard ISA for your equity allocation or do you also hold the global small cap index? Cheers :)
Hi @@johndupont8596 I just have the FTSE Global All Cap, I'm happy to have a slight tilt to mid-caps and small-caps at the moment. If there was a big equity market tumble I might go for a much bigger small-cap allocation so would consider a separate global small-cap allocation if that were to happen. Thanks, Ramin.
Our friends at InvestEngine are offering a Welcome Bonus of up to £50 when you invest at least £100 with InvestEngine (Ts&Cs apply) investengine.pxf.io/anQ5QM If you decide to register using this link then we will also receive a small commission.
Capital at risk. InvestEngine (UK) Limited is Authorised and Regulated by the Financial Conduct Authority (FRN: 801128)
The best way to find growth stocks, key features to keep in mind is as follows: 1. Ensure gross margins are greater than 50% 2. Ensure P/E ratio is less than 100 3. Buy companies that are PROFITABLE, very important irrespective of sector. 4. Debt to equity ratio is less than 30% 5. Current ratio is above 1 6. and a Float under 100 million One stock that fits the bill is......
Intel
Go on.... 😁
The video I was waiting for Ramin. Thanks a bunch.
I am very glad to see your subscriber numbers go up every week. There is so much noise and click baity financial education channels on YT (with 100's of thousands subs) that a entry level investor could easily get duped and confused. Thanks for bringing some clarity into this madness. Cheers Ramin!
Thanks Sam and thanks@@chessdad182! I try to keep it level-headed and present the risks alongside the benefits but I pay the price by not being clickbaity. But you've got to remain true to yourself even if it comes with a cost. Thanks, Ramin.
Or people keep trying to push bitcoin and some trader who apparently can make you loads of money, instead of following sensible, well diversified long term strategies
@@Pensioncraft Thanks for not falling for that trap Ramin. I believe you are attracting the right kind of audience and support which will be sustainable in the long run. Now if once in a while you want to do a video with a "surprised" look and claiming "end of the world" is coming..we will let it slide.. :)
@@chessdad182 You are on point Chess Dad. What I don't understand is, how are they are able to retain viewership with the same surprised look thumbnail, the same narrative and the same story over and over. I guess there is lack of education and a lot of confusion and those channels take advantage of it.
This is one of th best and most useful videos you have done. Thank-you ! Yes, I wish Vanguard did not rip off its UK customers, charging them a multiple of fees to US customers.
Ramin would you consider a video with best index funds specifically tracking Chinese and other Asian markets?
This is one of the best videos you have ever done and I will be re-watching it as I like my global funds
Thanks Phil! Ramin.
As a SMALL change to VT, I think a comparable alternative is to invest in both VTI and VXUS(maybe 60/40 to 55/45) and it saves a LITTLE on the expense ratio with similar results. Not a major difference, but on a long timeline, those 5 basis points could save a good chunk of change.
Finally! A serious and no nonsense channel.
Such a great channel. We should all be gaining such financial literacy starting in middle school or even before. 👍🏻
Yes! Thank you @ DaRyteJuan
Thanks for another great informative video. Just one point from me is The Vanguard FTSE Global All Cap cannot be replicated combining FTSE Developed and FTSE EM ETFs as it s not going to get the same fund because the ETFs don't represent All Cap. Although for those who invest in VWRL this is great advice to knock the price down👍
Hi @j4jjj that's true the returns won't be identical but they will be very similar. If there is ever a developed all cap fund offered by Vanguard you could match the returns more accurately. There are developed & EM ESG all cap funds so that might be another way to go to replicate a global all cap ESG fund more cheaply. Thanks, Ramin
@@Pensioncraft ah that's good to know👍
Thanks for the video, definitely helping with drawing up a shortlist. Just to note, the Fidelity Index World fund only has 0.16% exposure to emerging markets, not the the approx 11% you are eluding to.
Thanks for sharing
Fantastic video and nice timing as I spend this weekend deciding on which fund to invest in within my little boys junior SIPP.
Thanks @Bouncing Back I'm glad it was helpful. Ramin
10:40 I take it that ETFs are generally considered superior to mutual funds?
I assumed they were essentially equivalent and have opted with mutual funds to avoid broker fees. Are there any key differences that I should be aware of?
Hi Dave on some platforms ETFs are cheaper to hold than funds (e.g. Hargreaves Lansdown). If you day-trade (bad idea) then ETFs provide intra-day pricing so you can buy and sell minute-to-minute while markets are open. But generally the fees are similar whether the fund wrapper is an open-ended investment company or an ETF given the same index is being tracked. Thanks, Ramin.
@@Pensioncraft got it. Thanks.
@@PensioncraftMost etfs are Ireland domiciled not UK so less FCA protection ($20K only), is is much of a concern, please? thank you.
I noticed you don't mention the Vanguard ftse Developed World etf with ter of 0.12 %
Hi Fred, good point the ETF wrapped version is a tiny bit cheaper. Thanks, Ramin.
@@Pensioncraft
Thank's. The only thing I'm a bit unsure about is it only covers Developed markets, not sure if having emerging markets exposure is important or not.
@@fredatlas4396 Developed world markets make up 89% of total global equities, so up to you as to whether or not you care about EM (just bear in mind that China makes up ~42% of EM -- FTSE Emerging Index. As for me, given that Vanguard doesn't offer an EM ex-China index fund/ETF, I stick to Developed World indices for my equity portfolio component).
Hey, sorry if this is a stupid question. But to get closer to the 'all cap fund' would you not do 89% developed and then 11% small/medium cap index fund rather than 11% emerging markets? This is in reference to 16:55 in the video. Thanks :)
Great video as always Ramin, thank you. I'm a novice UK investor. Started investing in Aug 2020 (after watching many of your videos, which are always excellent by the way). Your channel is by far the best of any UK investing channel on youtube.
I think there'll be a lot of miffed Vanguard UK investors after watching this video who, like me, will be very be surprised to hear about the VT fund (expense ratio 0.08%) we don't have access to.
I am invested in Vanguard's FTSE Global All cap fund (expense ratio a, comparatively, whopping 0.23%).
Hopefully a group of disgruntled twitter users will tweet Vanguard after viewing this video. Come on Vanguard that's a bit cheeky charging UK investors almost 3 times as much for what is essentially the same product.
I’m shocked for a better word. LS100 has lagged big time.
What's your take on Ben Felix's 5 factor portfolio ? Would love a video about that. Thanks
Hi Tal I've talked about factor funds in the UK in the past and unfortunately there aren't many to choose from. For example, small cap value is the factor combination that does extremely well in backtests and yet I only know of one such fund available to UK investors. The US has many to choose from. It's all very unfair. Thanks, Ramin.
I follow Ben Felix too, and the Rational Reminder is a great podcast.
VWRP and USSC is the closest I can get to replicating their approach in the UK.
Global small cap is a nightmare to get.
Last week I bought some VEA, the Vanguard Developed Markets ETF (no US). My international exposure has always been very low, and I've done well. But it was time. Yes, Vanguard charges a lot more to their UK customers for the same fund. Maybe they can't get the scale. Or they just think they can get it.
But I don't feel real bad, especially after I pay $6 for the smallest container of Marmite!
@Dave Schmarder, l’d switch to a cheaper alternative, for both. Vanguard will find themselves in State Street’s position if they are uncompetitive.
Thanks Ramin. Very interesting video. Concerning most fund options available in the UK are overweight US given where the S&P500's CAPE is, but they look like a sensible diversification option at more reasonable valuation levels, if these are ever reached in the future.
Are they "overweight" or just market cap weighted?
I have the same concern, but if they have a simple and consistent methodology you can't expect them to meddle with it based on a subjective assessment of CAPE.
I currently invested in FTSE Global All Cap Acc (55% of portfolio) and Developed World Ex-UK (33% of portfolio). My main reason for that was to drive down the overall cost, increase my share in the U.S and decrease my share in Emerging Markets. What are your thoughts on investing in two global funds that similar???
I always enjoy these videos. I am Canadian so some investments are not available. Still, the concepts are solid and I have joined even though I might not make the live Sunday broadcast often. I want to support the work that you are doing. Thank you.
Thank you George that’s a delightful comment and it’s made my day. Thank you! Ramin
Not only is VT only 0.08%, but it also contains 9063 stocks of the 9230 in the index. The UK version only contains 6907!!! Ramin, how can this be?
Creamu
@@muffemod I agree with Ramin - Vanguard don't seem to treat UK investors very well IMHO
@@czeital far less choice of funds as well.
I still like the platform though.
Sampling
Very consice presentation... Well-done...
I have recently started my SIPP journey with Vanguard and I will listen closely to your tips...🙏
Thanks and welcome
Really clever idea to buy developed and emerging funds separately to reduce fees. That’s a really simple arbitrage idea. I hadn’t thought of that.
Yep I own VWO and VEA for that reason
The only problem is the lack of small cap exposure (compared to the global all cap)
@@alanmason9931 you can always slap a bit of small cap on top.
This was really well explained, thank you so much! I'm was looking at a single global index to invest in initially as I'm consolidating old pensions into a SIPP. I had almost decided on the Fidelity World Index and I was glad to see it mentioned on your video - so my thinking isn't completely off the mark!
I've just discovered your channel so have a lot of catching up to do!
Glad it was helpful!
Ramin, as a foreign investor subject to 30% dividend withholding tax for US domiciled ETF, is it more efficient to still invest in US domiciled ETF with lower expense ratio, or UCITS ETF with higher expense ratio but dividend tax exempted?
Hi 1.21 gigawatts it's unlikely i.e. you'd need to compare withholding tax between your domicile and the domicile of the assets multiplied by the typical dividend yield and see if that's more than the fee saving. Thanks, Ramin.
I like your soft English voice. Thanks
So nice of you @Mimi Khan
In the split to recreate the FTSE global all cap fund neither of the 2 you suggest to make it up contain UK. However, the all cap fund is 4.1% UK. Is this a mistake and you meant to say FTSE developed world fund?
I noticed this too and it confused me. I know he said the other strategies were overweight U.K. but I didn’t think he would want to exclude it completely
Hi @Gringadoor the UK is only 4% of global equity markets to excluding it makes almost no difference. The entire UK market is about the same size as a single US megacap like Apple. Thanks, Ramin.
@@Pensioncraft I would have thought 4% was enough to care about. Those funds also don't cover small cap where the all caps does. One is accumulation and one isn't. May have been better to just not attempt to recreate the fund this way as it seems to have caused confusion.
You can easily buy a 4% FTSE tracker for only 0.06 so doesnt really matter just personal preference. I would say 4% is totally worth considering though. The point is whether you believe in the UK's upcoming growth. Or if you're a truly passive investor you just want the market share of everything anyway :)
@@JB-ov3qx second this:
~11% EM
~89% DW:
---- 4.1% UK
---- 84.9% DW-ex-UK
Or can just do it on Vanguard w/ 2 ETFs - 89% VEVE + 11% VFEM
Great video and advice!
Is there any reason why you chose the Emerging Markets ETF (VFEM) instead of the Emerging Markets Stock Index Fund - Accumulation when coupling it with the developed world ex UK index fund?
Thanks!
I've never quite understood peoples focus on VWRL (£7B of assets) instead of Global All Cap Index (£800M of assets). All Cap gives twice the number of stocks and you can buy fractions of the index.. And its basically the same returns!
How can Vanguard not let you buy a fund if it's exchange-traded ? I think it's your broker that doesn't let you buy it. I'm also annoyed as I'm restricted to ETFs that are traded on Euronext Paris in euro.
Thanks so much for our videos. So very helpful! I am learning a lot.
You are so welcome!
Illuminating! This video says almost everything one needs to know about having a good, strong, stable investment strategy. Thank you, Ramin.
Hehe
Hi Ramin - Another great video!
With the Vanguard fund split you suggested to allow for a cheaper global tracker, would this not result in you excluding exposure to UK equity?
I noticed this too and it confused me. I know he said the other strategies were overweight U.K. but I didn’t think he would want to exclude it completely
Hi @Adam the UK is under 4% of the global equity universe so excluding it makes hardly any difference. Thanks, Ramin.
Got a vanguard advert on this video
Lol. This was the only video recently where I didn't get a Vanguard ad! "Do, do, do, do, do, dah, dah"
I got Nandos
This is the way
Not only is the Vanguard US all cap ETF (VT) much cheaper than the UK version but it also has a higher dividend yield (1.95% vs 1.35%).
Many thanks Ramin for the content you're creating! In respect to the 'all world index' volatility, on minute 8:30 you've mentioned that the average volatility is around 17%, would that mean that if you had a lump-sum, you'd be looking to get into an index when it's just over 15% deep down? I am not referring to the drip-feed, which I understand has advantages itself.
Yes but no, because it's hard to time. If it's 15% down you won't know if it's going to be 16% tomorrow and 30% by the end of the week. You can try timing but while you're waiting on the sidelines for a drop, you're missing out on the current gains.
Will the fund (e.g vanguard all cap) ever change weightings though? So this may negate any satillite funds you may have to overweight on a certain country in the first place
Great stuff as always! Would be good to see something more detailed on etf fees, I still never fully understand the ways the fees work. Eg if the fee is 0.5% and the fund moves 0% over a year, how is that fee taken?
The fee is normally included in the price. So if the fund moves 0% and the fee is 0.5% it means the shares within it have actually gone up 0.5% but the price you see will remain 0
My global technology fund is 93% up over 18 months.
Great stuff as always, your timing is perfect - just setup a Lifetime ISA so this should help me decided on a single fund to help reduce those transaction costs! I thought the Vanguard FTSE Global All-cap included small-cap stocks - wouldn't you need to add a global small cap index as well for the DIY fund to be accurate?
Brilliant video, very well explained
Hi Free your Finance thanks, glad you liked it! Ramin.
just the info I was looking for. Packed with information and very simple to understand. Thanks.
You're welcome!
Another great video thanks Pensioncraft, this is my third viewing. I would like to have seen more on synthetic ETFs, as a UK investor how can I avoid US dividend withholding tax on the lion's share of my portfolio?
If you like my videos then why not check out my weekly podcast “Many Happy Returns” many-happy-returns.captivate.fm/
Thanks Ramin...but no ESG recommendations? The idea of supporting the Arms trade puts many like me off investing in certain funds.
Antonmursid
Antonmursid
At 14:00, the Vanguard FTSE All-World underperforms most of the rest. Did that chart include dividend, because the vast majority of others are ACC, while VWRL distributes dividends.
@@vosyem Good spot George! So one will be the distributing and the other the accumulation version. The compare apples with apples, the distributing should have been removed from the chart.
Just joined the channel really enjoying catching up on the videos, some great content so thank you. It would be interesting if you could do a video about the best replacement fund for VVAL for uk investors who still want to capture the value premium. Theres a few funds and ETF'S out there. Not much in the way of small cap value apart from an SPDR etf. Thanks
Really sad that Vanguard UK nuked their Factor Funds... loved my VVAL allocation :(
Very interesting video! However, the ETF League Table shown at 19:08 seems faulty. Xtrackers ETFs have 80 billion EUR in assets under management, which makes it larger than WisdomTree (72 billion in global ETF assets).
Hi f bu those AUM numbers are probably for US Assets Under Management as Eric Balchunas is the US ETF guy for Bloomberg. By default US commentators usually only talk about US fund AUM. If you want to ask him yourself the link to that tweet is twitter.com/EricBalchunas/status/1337566634102448128 Thanks, Ramin.
Ramin great video ; just curious why not UK in any of the two Vanguard funds you picked? .. thank you
Hi Rafa the UK global equity weight is less than 4% so excluding the UK makes hardly any difference to your portfolio. Thanks, Ramin.
@@Pensioncraft thank you Ramin
Good morning, I hope you’re well. Please could I get your thoughts on splitting my investment into 3 sections, 55% developed world ETF (VEVE), 35% S&P 500 etf (VUSA) and 10% emerging markets etf (VFEM)? I would like to hold a 100% stock portfolio and also own majority American, with some global exposure. Any thoughts would be appreciated! Thank you.
Watching this makes me thing the charges on the 80% life strategy fund is a little on the expensive side! Reckon I should shift away from that and invest in more DIY funds like the vanguard ones you have highlighted?
The main benefit you get from lifestrategy is automatic rebalancing, and it removes some of the temptation to tinker which in the long run would probably cost you more than fees.
I say that as someone who has taken the DIY approach with vanguard - and tinkers regularly...
it's more expensive than other less diversified vanguard funds, but you're paying a bit extra for the diversification being done for you. And 0.22% is still very cheap relative to most other providers.
I have huge respect for your views and delivery style , well done. Thank you.
I appreciate that! @stu7803
FYI, VT etf doesn’t provide foreign tax credit , so good to buy vti,vxus.
Hi Krunal thanks for sharing that! Ramin.
Thanks for another great video.
A potentially stupid question:
For the two-fund Global Equity combo to mimic VRWL, why do you recommend the FTSE Developed World ex-U.K. fund, rather than VEVE? The fee for VEVE is slightly lower; and presumably with the former, you'd have to also include a third, UK specific fund if you wanted any UK exposure
Thank you🙏 very much very nice video and valuable information
Most welcome
Thank you for the video. I have a novice investor question on rebalancing. It seems you need to rebalance every now and then if you have multiple funds. If you buy a SINGLE global index fund, do you still have to rebalance WITHIN that fund, or is that done for you?
because wouldn't some sectors, regions etc will outperform others even within a single index fund, causing it to become imbalanced vs the fund you'd originally purchased, so even a single index fund would need rebalancing....I'm guessing?
Great post, super helpful. Why do Vanguard charge UK customers more, is it just a volume thing?
Hi Jim J I believe that's the case. If you have more assets under management you can charge a lower fee and still generate a good income. As Vanguard UK gets more popular and people cotton on to the importance of fees here in the UK I suspect their fees will fall. They've already done a round of fee cuts in October 2019 and I'm sure there will be more. Fingers crossed! Thanks, Ramin.
Excellent information, and well done videos, the channel deserves to grow. Thank you
Hi Juan that is really kind of you. Tell your friends! Thanks, Ramin.
Tremendous content
Thanks so much - glad you enjoyed it @the1big1matt
Thank you,best video ever .
I have learnt a lot!
You are welcome!
Excellent, thank you.
You are welcome @Stuart Reed I am glad you enjoyed it.
FTSE Global All Cap is my favourite as well. Do you invest in any other funds?
Hi Edward just two others at the moment in my Vanguard ISA: long-duration gilts and US Treasuries (GBP hedged). Thanks, Ramin.
@@Pensioncraft is that U.K. bonds and US bonds?
That's right @@byedwardleung. I've made a video for Patreon supporters www.patreon.com/posts/49775530 about my portfolio for those who are interested. But generally, it's a bad idea to copy other people, it's best to come up with your own investment style that suits your circumstances and world view. Thanks, Ramin.
@@Pensioncraft thats an interesting allocation. I thought with the (probable) imminent rise in interest rates on the horizon the only way for government bonds can go is down. Great video BTW
With UK inflation running at about 12 percent I'm afraid returns of 6 percent a year just don't cut it.
Better off with index linked bonds.
Fund domicile is a critical consideration.
Shocked for a better word. Vanguard LS100 has surprised me there big time. Thanks, Ramin.
Great Video, it helps me to prepare my portafolio. Please, can you also prepare a video to help how to chose a good platform to invest? Thanks
Great content, really helpful.
Glad it was helpful @ostelloj70
Hi, why are you trapped in the Vanguard system? I have a vanguard life strategy 100, guessing I can start a Fidelity index fund without any issues.
Would it make sense to buy these funds via a SIPP? Have already used my ISA allowance
My understanding of SIPP is that its most advantageous to do using pre-tax income. If thats where your funds are coming from, you really cannot lose. If not pre-tax income, what is the advantage?
@@seanphurley You invest in SIPPs post tax with your net income. SIPP providers will claim basic rate tax back for you and add it the SIPP. You can then write to Revenue and tell them about your ongoing contributions to get a new tax code which includes any higher and additional rate tax relief (they basically increase your tax free allowance). The benefit is you get to keep some of the tax relief now and some goes into your SIPP. Another potential benefit is you may not have to pay tax when you take money from the SIPP later. A downside is you can't take it before a certain age depending on when you were born. Typically you are better off using AVCs through a workplace pension as you also get national insurance relief on contributions but you have less control over where the money is invested.
Currently trying to find a Emerging market etf excluding china, not many available unfortunately
True @AjitB07 the problem is that China totally dominates Emerging Market funds just as the US dominates Developed Market funds. I suspect that's why many funds don't exclude it. Thanks, Ramin.
Brilliant as usual.
Thank you @timwood101
Can I also buy the CDF for those funds and ETF .. and not pay th fee ?
I wouldn't focus too much on the TER when picking an index fund. In my understanding, TERs are just estimations of the fund's operating cost in comparison to its assets. They are also subject to change. It makes more sense to look at the tracking difference (how much does the ETF deviate from the value of the underlying index?).
Hi f bu Total Expense Ratio is important because it is always negative i.e. it is a persistent drag on return. Tracking error can go both ways as a fund might underperform or outperform an index. So for example if comparing a group of passive funds tracking the same index the natural way to discriminate between them is to compare the ongoing expense charged by the fund manager. Thanks, Ramin.
Hi Ramin how about the following set up when trying to emulate a global index in Vanguard with an appropriate UK weighting:
U.S. Equity Index Fund - Accumulation 60% at 0.1% =6
FTSE Developed Europe ex-U.K. Equity Index Fund - Accumulation 14% at 0.12% =1.68
Pacific ex-Japan Stock Index Fund - Accumulation 12% at 0.16% =1.92
Vanguard Emerging Markets Stock Index Fund GBP Acc 10% at 0.23% =2.3
FTSE U.K. All Share Index Unit Trust 4% at 0.06% =0.24
This comes in at about 0.12% if my maths is correct?
I found the data visualization quite a refreshing take, for eg the use of the dendrogram to highlight clustering between different global funds. Great content!
Glad it was helpful @khtan5531
Great content as ever. Can you comment on currency risk hedging with respect to Index fund's like Fidelity World ?
Most of the emerging markets are forever emerging, so I'm not convinced by the investment thesis that they will outperform.
How do very similar ETF's charge very different fees (e.g. VT .08% vs ACWI .32%)? The high fee fund enjoys a captive set of investors within 401K plans.
Hi Mark that's interesting. Why are they captive? Is it because they are offered a limited range of funds in their 401k all of which have a very high fee?
@@Pensioncraft Employers in the U.S. are not adequately motivated to demand low cost funds in their 401K plans administered by outsiders. I've participated in two plans where the only investment offerings to select from were mutual funds with fees in the 1% range. One other plan I used did offer just one S&P 500 low cost ETF.
Very helpful - thank you!
Glad it was helpful!
I’d be interested to hear what you think about the new “V3A: Vanguard ESG Global All Cap UCITS ETF (USD/GBP/EUR)” ?
Anything with esg on the title is a big bag of marketing shit. And when rates go up u ll be one of those holding that stinky bag. Does that answer u?
Hi, just wondering what the main differences are between funds like life strategy and Global equity funds like ACWI? Is it just that one is actively managed and comes with a higher cost? Thank you in advance.
Best one so far. Very practical !
Glad it was helpful @pmhego
Succinct! I would really like to attend one of your courses.
Hi Ramin. What % are small cap stocks in the Fidelity Index World Fund?
IF dollar cost averaging is such a good strategy for spreading the risk for investing. Would you apply this strategy to transferring a 50K non vanguard S&S ISA by drip feeding partial transfers say 5 or 10k a month?
sorry, would you opt for 💯 equity or blended approach if investing in index funds for a long period. Just your opinion
What’s your thought about VWRA.
Are there any equity funds that exclude the USA?
Yes there are lots, although it might be hard to find a Global Ex-US fund. L&G's UK index fund for example is UK equity only, and euro and emerging markets funds will also not have US equity.
What’s a good option for a US investor for globally diversified small cap value investing?
Please can you revisit SMT. Im considering dumping everything into SMT
Thank you!
You're welcome!
The problem is a 'global' fund is very US-heavy - and US equities are due for a slow-down
Time for a moment's silence... 😢 David Swensen, the head of Yale University’s endowment who helped reshape how institutions manage their money, has died from cancer aged 67
Thank you Alexander. I have learned a lot from David's Ivy Portfolio approach how to construct global long term portfolios.
Hi Ramin
I understand the need to keep costs down when it comes to index funds that all essentially track the same index.
What I am interested in knowing your thoughts on is wether you would think it worth investing in a global active fund or trust with a long track record of out performance for a potential better return, fees up around 0.5/1%.
Maybe 50/50 active/passive?
Hi 132 Buckleup1000 as soon as I find an active fund that has outperformed for 20 years or more I would consider it, as long as the fees aren't too high. But I don't know of any in the UK. Personally I find the fact that there are so few is quite revealing. So I wouldn't do that given the evidence, but if you believe that an active fund manager will continue to outperform over your investment horizon then some active management would make sense for you. Thanks, Ramin.
@@Pensioncraft That's a fair point Ramin, I think with actives you have to watch them more and be prepared to change it up, that takes Judgement getting out at the right time.
Do you put any credence into talk of a passive bubble, or is that just vested interests trying to talk passive down?
Fundsmith has about 11 years of outperformance.
@@NoRegertsHere history is full of examples of these stellar funds falling flat on their face, and it tends to be shortly after when most people have invested in them. See Ben Felix's video on this.
Great advice AND great voice/accent.
Thankyou @Azteca
HI Ramin in the preferred UK section - if I understood you correctly you said that the Fidelity Index World Fund - didn't need splitting out ( ie: using separate Dev and EM holdings) - however all the info I can see seems to say that this fund has only a tiny EM component. Did I miss understand please? Thank you
Hi Craig you're right the EM allocation is tiny for "Fidelity Index World Fund" so if you want any significant EM allocation (in line with market capitalisation) you'll have to buy a separate EM fund. Good spot! Thank you, Ramin.
Confused. Previously, the life strategies were seen as great. Now, they're underperforming and over priced! Why not state this before? 🤨
Hi tamsinwood2 LifeStrategy is okay, but if you watch my video on LifeStrategy I mention the UK domestic bias and the fact I don't like it. And "expensive" is relative. I was talking to a client in a Power Hour today who is paying 2% (!!!) for a global equity tracker. But I'm annoyed that US Vanguard investors get a global equity fund for 0.08% fee whereas in the UK it costs 0.23%. Thanks, Ramin.
@@Pensioncraft Hi Ramin, can I ask you if you only hold the FTSE Global All Cap Index Fund in your Vanguard ISA for your equity allocation or do you also hold the global small cap index?
Cheers :)
Hi @@johndupont8596 I just have the FTSE Global All Cap, I'm happy to have a slight tilt to mid-caps and small-caps at the moment. If there was a big equity market tumble I might go for a much bigger small-cap allocation so would consider a separate global small-cap allocation if that were to happen. Thanks, Ramin.
Wow if you would of looked into fidelity mutual funds you'd might be shocked to see the zero expense funds.
Hi K Roddy I did look at them and couldn't find a global equity zero fund. Is there one? Thanks, Ramin.
thank you Ramin
Always welcome
I may zoom you soon!
Got a 3x growth stock ETF?