I have XLKQ as well as an S&P Tech ETF but with XDEQ All World as core (plus 10% in other various ETFs). I have doubts about US economy and maybe Feds being too optimistic esp when US gov artificially pumps money into US business - may be OK short term but not long term, so I prefer global spread for core portfolio.
Not necessarily though there is a fair amount of overlap but that’s not necessarily a negative. Most important thing is to get started and build your income over time to continue investing more as time goes on. I just surpassed ~£150K from an initial deposit of 35K seventeen months ago...
I lost a lot chasing individual stocks and I feel pretty stupid for not understanding how investing works. I have a double major in economics but I’ve been trying to make sense of the market. Well done on profits!
It's weird though. He got so excited by 0.01 change in fee but at the start totally dismissed any real difference between msci and ftse which had a performance difference of 0.03 annualised. Three times the difference of the fee change....
Mmm - y'all. S&P500 - and 'world' which is very heavily S&P500 - are great places *_to have had_* your money in for the last 15 years or so. Firstly: beware recency bias - and don't assume it will always be thus. Secondly: the S&P has some very well-established cycles (when looking at total return and adjusting for inflation): a more or less 15-year bull market followed by a more or less 15-year flat period. This has been happening since WW2: 1945 to 1965 = bull; 1965 to 1981 = flat; 1981 to 1999 = bull; 1999 - 2009 = flat (or worse) etc. We've now had a 15-year bull market and 'are due' a flat 15 years or so. I concede: 1) this time it 'might be different' with the Mag7 2) black swan events can mess with the cycle. But history tells us that the US is due a flat time and that EM's - with their great GDP growth yet flat stock markets - can't remain depressed indefinitely. So, I'm definitely looking towards EM's for my next 15 years or so - not a dead cert, but history telling me the odds....
I'm having similar reservations and have chosen for a different tilt in my portfolio (see my comment). Europe also is relatively cheap and the growth to value ratio tells me value-stocks are the better buy right now.
@@cyclingphilosopher8798 Same here... I have 1/3 Finland... 1/3 China & EM Asia... 1/3 global bonds & US stocks etf. I'd also like some other Nordic countries & Europe... but I bought Finland because it was cheaper and has good dividends & solid long term history. Lots of cash still. Will buy more USA only if/when it crashes big time. Smaller crash will suffice for Nordic countries fund/Germany/Europe.
I prefer to avoid China. The education sector suddenly became not for profit, returns are expropriated for common prosperity, they don't recognise westerners ownership of Chinese shares, and what will happen when they invade Taiwan?
Some ETFs cheaper than the 0.22 fee of Vanguard (acc or dist) are achieved through less stocks. For example Amundi All Country World Dist (WEBG) is 0.07, but the sampling to track the index only has 1109 stocks vs 3643 of VWRL. Same for FWRA Invesco FTSE Acc, it's 0.15 fees, but has 2039 stocks vs 3643 of VWCE of Vanguard. Can this impact the tracking in the long term?
Bid/offer spread can be more expensive than the TER. Don't just pick a fund because it has a low ongoing charge, check the bid/offer spread! A fund with a higher AUM will generally have a lower bid/offer spread because of higher volume inflows. Stick with passive, highly liquid indexes.
Yes, and allow me to add one more: out-of-market risk. You can easily lose 10 years of ‘cost savings’ by being uninvested for a day or two during a fund switch. (Less of a concern if you can switch ETFs quickly.)
My number one fund is Legal and General Global 100 Fund. All the big companies , all the different sectors and if these go wrong , the whole market goes wrong.
Always enjoy your fund overview vids. Would love to see a similar vid on 'safe funds' I'm about 10 years from drawdown with 90% of my current investments in equities, so I will want to start shifting that balance over the coming years. Money market funds are an easy pick at the moment for a safe fund, but I have no idea where to start with bond funds, which I'm guessing will be my best option longer term.
I see a lot of people on bogleheads UK choose the global bond index. Vanguard global bond index fund, GBP Hedged to cut out any currency fluctuation as you don't want to much volatility in your bond allocation, needs to be fairly stable ideally. Also Vanguard, ishares and some other providers do etfs that track the same index. I think it's Bloomberg Barclays global bond index. This bond index is well diversified and not as long duration as UK gilt index, so not so sensitive to interest rate movements.
Check one of the latest Ramin videos about 'safe' funds and maybe give it a second thought on moving there, if there's need for income maybe moves to quality dividend funds is safer. Video is Retirement Game-Changer: Has Vanguard: Got It Wrong?
@@leecrowther8322 The movement will be slow and not yet. The majority of my money will remain in equities. My only goal is that when drawdown begins I have 5 years of income in a 'safe' fund and I will drawdown from that. Ongoing I will top it up after a good year for my equities, but not after a bad. So worst case scenario, equities can under perform for 5 years without me taking from them. For me this plan should be sustainable indefinitely.
@@svladylen I'm not tied to any particular ideas about safe funds and I have plenty of time, worst case the safe fund is a 90 day access savings account 🙂
In Spain there is a difference between mutual funds and etfs relevant for tax purposes. You can transfer indefinitely from one mutual fund to another without taxes and fees while for etfs you have to sell and incur in tax payment as if they are stocks. In a long period and with some basic changes for adjustment, the etf option can eat a huge performance of the portofio. If you have gains of 30% for a period in your fund, lets say 100 fiat value from 75 fiat, having taxes of 21%, at the time of exiting the fund (if etf) for another fund (let's imagine full fiat amount change), you will pay about 5% of 100 to make the change possible and new fund will start with 95 fiat value. On the other hand, the new mutual fund will start compounding 100 fiat value after the change allocation from old mutual. Only after selling finally (not transfers between funds) you will pay taxes (it could be a lifetime or never).
Hi Ramin, great video as always - was wondering- Do favourable tracking error and bid/offer spreads outweigh the benefit of a slightly lower OCF/AMC cost?
One of the most popular index funds is the vanguard FTSE global index which is popular because it includes small cap. Is this a factor worth considering and do any of the funds mentioned include this sector?
They are correct, as they are taken from ishares/blackrock site. The trouble is with the indices which simply aren't very good/complete. Also the MSCI divide between developed/emerging seems rather questionable.
@@thetjt No they are simply not correct, must be from some other context. There are plenty of Danish, Spanish, Swedish etc. companies in the MSCI developed world index (and also owned in the actual iShares sampled ETF), so the countries should be highlighted. Same for Brazilian companies in EM etc.
@@mortenborg Ok. You are correct... I checked iShares Core MSCI World UCITS ETF... the map shows same countries as in Ramin's video but I can find businesses from other countries as well, tried Saab (swedish) & Nokia (Finnish), very small percentages but still there. So the map on blackrock site is not quite accurate.
@@mortenborg Ok. I checked... The maps are from correct source but the blackrock/Ishares site seems to have data missing from the maps. There indeed are for example Swedish, Finnish & Danish stocks, although the countries are not coloured on the map, or listed in the percentages on official site. The companies however can be found under "holdings".
So what type of moneymarket fund are worth looking at for the safe part after you pick your Index poison? Thats the bit that really confuses me now i understand Indices better
CSH2 (Lyxor Smart Overnight Return) is as good as any. Note that the returns will not continue to be as high as they are now forever...once the BoE and Fed start to cut interest rates expect money markets to reduce their returns.
Do you have a video that outlines how you differentiate between 'safe' and 'risky' funds? Also - is this all in context of a pension/SIPP? I'm wondering if your approach differs in terms of types of funds, spread of risk between a pension/SIPP and a Stocks and Shares ISA. I'm currently looking at Vanguard VWRL / VWRP for S&S ISA (a global fund) - I had considered them medium risk, would you consider it risky? For my pension/SIPP I'm looking at FTSE Global All Cap Index Fund (both via Vanguard). Would you consider this one a risky fund? When you say 'a more risky global fund' are you saying that all global funds are risky or that you are just going to choose a global fund that happens to be higher risk?
Great videos as always thanks for sharing! Are ETFs covered by the FCA in the event the fund goes bust ? Would love to see a video showing how to break down fund performance using the financial times ticker sheet please there's some terminology used which may be clearer by one of your world class videos Thanks 😊
Etfs not covered by fca. Don't take my word for it just ask Vanguard UK or HL etc. I think it's because they aren't domiciled in the UK, and some open ended funds aren't UK domiciled. For example Vanguard global small cap index fund, Vanguard global bond index fund not UK domiciled last time I looked. And most etfs domiciled in Ireland and some in Luxembourg. I guess popular etfs from large providers like Vanguard, ishares should be safe??
Great video Ramin, thank you. I have a question please. I have seen most of your videos, especially the one about what happens if my invest platform goes bust. I have invested in a global stock VHVG. However my question is - what would you recommend the maximum in this single ETF before you invested the next amount. (Let’s say I have £250k) E.g should I: VHVG - £250k or VHVG - £100k FWRG - £100k Find a new one £50k to 100k
@@jan2000nl The KIID says "Entry and exit charges will only apply when shares are subscribed or redeemed directly from the Sub-Fund, and will not apply when investors buy or sell such shares on stock exchanges. Investors dealing on exchange will pay fees charged by their intermediaries. Such charges can be obtained from intermediaries."
Keep in mind that looking back over past decades the US has not always outperformed the rest of the world and many "experts" say the US is over-priced currently. Having said that, I'm mostly invested in US, just not 100%, about 65% last time I checked.
@@Simon-xi8tb Just Googled this: “The average S&P 500 stock has joined the "Magnificent Seven" in overvalued territory, according to Goldman Sachs Group. While this doesn't necessarily mean the rally that began in October 2022 is nearing its end, high valuations typically lead to weaker returns over the months ahead, according to Goldman's analysis.” You can also look at historical P/E ratios for S&P 500 to see this.
looking at the KIID for the HSBC fund it says "The ongoing charges figure is based on last year’s expenses for the year ending 15/11/2023. Charges may vary from year to year." so i guess that's why they don't make some big announcement of a fee cut. some element of that figure is an outcome of their costs divided by AUM rather than a % amount they decide to charge holders. in the future those economies of scale they seem to have gained recently might go in reverse and the number might creep back up.
Consistently outperforms "All World" and "Global All Cap" and has cheaper fees. "Developed World" is the go to passive global index for anyone who doesn't have donkeys years to wait for an emerging market to possibly take off.
Definitely. Alhough it seems that South America tends to historically weigh down rest of the emerging markets index.... so I got myself some (well, a lot) MSCI China and some EM Asia index... Perfectly happy to hold the latter for next 20 years no matter what happens in the markets.
Don't switch. The bid-offer spreads and tracking error aren't worth it. Poor video from Ramin. Many have told him he needs to stop obsessing over fractions of TER and learn how these costs arise. But he refuses. Only switch if your investment strategy has. E.g. you want ESG filtering; risk tolerance changes; etc.
I'm in the Vanguard Global Developed World. I'm not interested in emerging markets which only add greater volatility. China funds are down 50% on the last 5 years, there's no recovery from that now.
I'm on the younger side so I don't care about anything that happens on a timescale of just 5 years. Owning a share of everything for decades and decades is fine.
I’m still 25 years from my preference retirement date and expect EM to not only recover but grow better than developed so I’m VWRP for my investments. Ramin is at that age he won’t get the benefit from it EM investing now and clearly doesn’t. He may not have that extra 15yrs I have
@@adm58 How low can it go? Look at Russia, when stocks collasped Blackrock sold all Russian stocks for next to nothing. The ETF retail investors lost, I don't know who bought thir Russian stock and could potentially gain a lot over the next 40 years once Putin is long gone.
Really enjoying your very informative videos. Thank you. One question, why do you not mention the bid offer spread on any of these ETFs or funds? Surely it's as important to ensure the spread is low.
Hedged funds are generally used to protect your currency from short term fluctuation, usually less than 5 years. Long term it's not recommended to hedge equities because of the higher annual cost. The USD has strengthened against the GBP over the long term, so if you were invested in a GBP hedged fund you would be worse off now and have paid higher charges to do so.
@@UndisturbedMonk I’m not talking about hedged/ unhedged , it’s the conversion of our money into dollars and the benefits of having a fund which trades in gbp but still is a usd fund.
@@coderider3022 If you invest into a GBP domiciled fund with an underlying currency of USD, then that is a unhedged fund. You're essentially placing a bet that the USD will strengthen against the GBP by investing in this type of fund. The benefits of a unhedged fund would be a lower annual cost. Long term equity positions shouldn't be hedged, it's for short term protection from currency fluctuation and you pay a premium by doing this. By investing into a fund that isn't domiciled in your home currency (USD, EURO) you're adding an extra level of complexity for no added gain. You will have to pay an FX fee each time you trade and depending on your broker this can be upwards of 1% or more. Invest into a fund that is domiciled in your home currency, the underlying currency of the fund doesn't matter but a GBP fund into EURO/USD has actually proven to be more beneficial long term as both EURO and USD have strengthened against the GBP and will probably continue to do so.
@@coderider3022 I am British so use funds were the trade currency is GBP or GBX to avoid having to pay FX fees. If the base currency is USD the fund manager pays next to nothing in FX fees compared to retail investors.
@coderider3022 the fund manager is converting your pounds into various currencies anyway to buy the stocks within the fund. The base currency is not something to worry about and is just the currency in which the fund calculates its NAV and the currency in which reports are produced.
Great video. That said, it’s much harder for those of us who feel uncomfortable investing in Global Equity funds / ETFs for ethical reasons. The reality is that by investing in any of these funds in this video, we financially support the production and sale of weapons, and companies involved in vice products (adult entertainment, alcohol, gambling, tobacco). Whilst a Global Equity ESG fund may not be perfect and certainly not as cheap, people like me wouldn’t mind spending an extra 0.1% in fees knowing our money is invested in a slightly more ethical way… My comment is not to pass judgement on anyone, but more to bring this to the conversation for people who may not have considered this (as I once hadn’t!). In such cases where people do feel this way, perhaps the FTSE Global All Cap Choice Index may be worth considering?
For the most part, I think the only way is to invest in individual companies due to ESG often being tokenistic and, even when not, it's always down to each individual's ethics which is unlikely to match with a manager's.
If investing via a S&S ISA can we actually invest in ETFs? ETFs allow fractional shares which currently aren't allowed by HMRC. INstead shouldn't we be sticking to funds labelled as 'Index'? I know ETF and Index are used interchangeably in the USA
Thank you for the video. When you choose to change from an existing fund to a new, different fund, do you exit you existing fund positions, or you just start investing in the new one? And if you sell to buy the new fund, do you drip feed into it, or just buy it in one go? Thank you.
Hi, @5.42, the graph shows that ACWI has a return of 369% and SWDA 419%. But the small table at the bottom shows ACWI's return as 12% and SWDA as 10.9%. Is it due to different time frame?
Plenty will be doing that, and if small caps aren't in there then they may add in those too with another fund. Some will also have geographical trackers to emulate the breakdown of a global one, and often save on costs by doing so... though it's more managing to do, of course.
'Safe' and 'risky' have to have context. Cash is safe for short term, I would say it's is risky for long term (inflation). Quality equities the opposite. Even then, one has to consider risk appetite - a 20-year-old certainly has the time horizon for 100% equities but what use is it if they panic sell on the 50% crash and stop investing... so words like this are very contextual and personal.
Surely switching funds incurs excessive fees and isn’t worth it though, Ramin? As I understand it, you were previously invested in the FTSE Global All Cap UCITS Acc with a 0.23% fee? I’m also invested in this, but, after watching this and another video you’ve done where you can basically get the same exposure (minus some emerging markets as you said) for a significantly lower fee, I’m beginning to consider changing. Is is straightforward and does it incur penalties, etc?
Good question. I'm the same. All gac up until this cheaper one became available. I haven't moved my gac yet. My understanding is you need to sell it and buy the new fund. That may not be correct!
I think the .15 on vanguard offsets the .23 for fund and it’s nothing to the fund growth. Even a £1m size pot, it’s only £83 a month to cover the 0.1 difference to the ETF he uses. Are you really going to sit there and complain about this knowing it’s up 9% a year and you see all those zeros in your statement.
@@stephen4865 This is true. I think I might just sit tight and hope Vanguard do reduce their fee, which they surely will in time to remain competitive if all these others continue to keep popping up.
@@coderider3022 That's £1000 per year on a million. So over 30 yrs £30000 and most likely more because of compounding as the value of your portfolio grows hopefully. We should be so lucky. The only problem with the etfs is if you want to do regular pound cost averaging, a regular amount going into your etf. Then you won't be able to buy partial shares of the etf and so each month some money not invested. So for that an index fund is better. But unfortunately Vanguard doesn't do open ended funds that track ftse dev world or ftse all world indexes. Just their ftse global all cap index fund, which I guess is OK but not ideal, or ftse dev world ex UK which is OK but a bit limited in terms of overall diversification
Is that index-comparison chart at 3:40 correctly labelled? FTSE is up 193% over 10 years while ACWI is 186%. Yet the annualised return is 12.0% for ACWI, but 'only' 11.7%!!! Or am I somehow misreading the chart? That said, it looks like much of the difference has only happened in the past month or so, so maybe the apparent difference has some time-period averaging artefact? Or is the difference maybe down to different expenses for the 2 funds. (I think the charts are of 2 funds rather than the pure indices???) And, while I'm here: Some more consistency over small % differences would be good to see. If you think it's worth saving 0.15% to switch platforms from Vanguard to eg Trading212 then why isn't a 0.3% difference in annual return something to headline?
I did this, went from inc S&P to ACC. Very easy and quick on vanguard with no fees. There's a switch option so you don't have to sell and then buy separately.
Can you also do a video on synthetic funds vs physical funds? I understand synthetic are more tax efficient re US witholding tax but also carry more risk than physical replication? Also domicile Ireland vs Luxembourg which also has different tax implications. Ultimately do these things make much difference to returns?
Hi Ramin, another great video. I'm currently invested in VUSA which, as you know is an S&P tracker. The fee is only 0.07% for this. Would you say this is better due to the fact most funds are heavily U.S. weighted anyway. Also,do you know at what intervals Vanguard re-invest any gains back into your portfolio?
In podcast / prev vids he shows USA stats that say it only outperforms 55% in long term. Buying sp500 is a form of recency bias. Us tech mega cap responsible for this and drag up index. Obviously it’s all down to us personally.
Took this on board . I’m 55 Reduced to 5 % EM up DM to 60 % and rest SP500. For my young lad 60% in DM , 30% in Dm&Em . 10 % in EM- told him to monitor it especially the ratios when he’s an adult and adjust as necessary
No point in investing in emerging markets because if you stick with US Equity large and mega cap, the companies themselves invest in emerging markets ( Coca Cola, Google, Apple). I’m out of everything £ based and the LSE.
About to invest my first 500 quid a month next month I have no clue what I'm doing and will follow the recommendations of most of the youtubers, developed world it is and I'm leaving it at 500 a month for 21yrs hopefully it works out for me lol
Hi Ramin, another great informative video. Did I see a similar 1 by you where you said the 10% was an emerging market fund? And previously the 10% was made up by various bonds. ? Just trying to learn from the timeline of these changes/ developments. Thanks.
Hi Ramin, I have to admit to now being a bit confused. Based on yours and others videos talking about 100% global index trackers for pension schemes, I've been moving away from bonds. But now you're saying that a safer fund is recommended? So does this mean moving back to some bonds in my pension scheme?
Hi I don't have the answer, and it might depend how far out you are. But I do recommend joining the Pension craft community for more complex enquiries. You can always try for a month or two to test it.
Personal risk appetite, time horizon and aims are all that matter when investing at any given time. These guide a person to invest in a way that makes sense for them. If you find yourself watching videos and changing funds to create a different risk profile (say from a 60/40 to 100% equities) then it should be because you identified your risk appetite ('I accept seeing a 50% crash'), time horizon (say 10+ years) and aims match 100% equities. Ultimately you don't want to chop and change without very good reason for your own circumstances, nor end up carrying a level of risk completely unsuitable to your appetite. Both can lead to worse returns, and sometimes dramatically so.
Hi Ramin, Another very insightful video, thank you. I noticed that the HSBC FTSE All-World Income Index fund only pays dividends annually where as a lot of other pay quarterly. What happens to the withheld income until the dividend payment date and does this less frequent dividend payment penalise investors?
Money market funds, bond funds and individual gilts are considered safer as their volatility is lower, but perform poorly over the long term, especially when inflation is high.
There is no safe equity fund. All markets fall, and fall big, often at the same time. That's what cash, direct investments, socialism, your own skills, and your community is for.
When you say you wouldn't buy the HSBC fund on HL as its expensive to do so - does this still apply if you have a LISA with HL? When I looked at it, as there are limited providers with LISAs, HL seemed like a reasonable choice but as far as I can see no matter if you invest in an ETF or fund you still have to pay the 0.45% management fee with HL. Am I correct or is there a better alternative for investments in a LISA? Thanks
HL do charge the 0.45% on ETF as well but they cap the fees differently on different accounts eg on an isa the max you pay is £45 a year. So much cheaper to hold an etf on larger amounts. They do show this on the charges page in the web site but it is less obvious if you look at the charges tab of the fund page.
As the other emerging markets excluding China seem to be performing better is it worth having a small Emerging Markets ex China ETF/fund alongside a main Developed Market Fund (even for older investors?) Ps looking forward to seeing what ‘safer’ funds you recommend!
All you need is an S&P tracker ETF like Vanguard VOO or VUAG (accumulating) if you are in the UK. Ultra low fees, 0.07%. Hold for 20-40 years and buy the dips. Not much else to it. I don't get why people make it so complicated. We know what works.
As well as the fee, should you not also consider how well a company tracks the particular index? I looked at the Invesco fund but this has only been around for less than a year making it unclear how well it actually tracks the index. Companies like Vanguard and Ishares on the other hand seem able to consistently track the index correctly
You'll find that most funds actually outperform the index and this is because the fund is either a synthetic replication fund (which I avoid), or the fund lends shares to make extra income to offset costs. The funds that lend shares are usually fully replicated because they actually hold the assets to lend. Ideally a fund that tracks the index or even outperforms would show that it's up to the task.
I found myself getting probably a bit too obsessed with tracking errors recently. I was looking at an SPDR MSCI World ETF which was cheaper than equivalents from iShares and Vanguard but when I compared the three it was noticeable how much more the SPDR fund deviated from the index it was tracking. I then came across a Vanguard article "tracking errors, the ofter over-looked cost" which now makes me think twice before investing in a new'ish fund until there is enough performance data available@@UndisturbedMonk
@@stevelloyd9372 Yep, a new fund may appear better on the surface generally in the form of a lower ongoing fee and this is how they entice you to invest in their fund, but in reality are just not as good as the slightly more expensive annual fee, higher liquidity, more established funds from the big providers like Ishares and Vanguard. There's a lot more to ETFs than just the fund charge. Good job on doing your research on fund tracking error, it's a super important metric when choosing an investment that you're going to potentially be putting money in for decades! I wish for more new investors to go a little bit more in-depth into what they're actually investing in and NOT just "well this fund seems to track the same index and has a lower fee, so it must be better", because that's not always the case.
@stevelloyd9372 I've taken a look at all of the All World ETFs available to us in the UK and your best bet would be the: iShares Core MSCI World UCITS ETF USD (Acc) with the ticker symbol: SWDA This ETF has the highest Assets Under Management (AUM) of any All World fund at over 57 billion euros under management and has the highest year after year volume inflows as well at around 10 billion euros in 2022 and 15 billion euros in 2023, which shows positive yearly fund growth. Some funds are very niche/specific to certain strategies and themes, which makes their year to year growth unstable and unpredictable as these funds can come and go as economy's and markets change which can trigger more selling than buying (which you don't generally want for a long term position). An all world fund doesn't have this problem as it captures everything, including those niche markets, which makes the future outlook of an all world fund steady in growth as it's seen as a buy and hold investment, not a 'buy so i can capture this specific theme while it's doing well, then sell a couple months later to gain the profit' investment like a theme specific ETF. It's been out since 2009 (which makes it the oldest of All Worlds funds) and has performed slightly more positive than the index it tracks every year since 2013 (which is what you want). When a fund launches, its liquidity is low, hence why it performed slightly worse than the index within its first 3 years of launch (2009 - 2012). This is normal among All World funds compared to say an S&P 500 fund, because the All World fund holds and tracks lower liquidity markets, which the S&P 500 doesn't as the top 500 US companies are all large cap, highly liquid companies. Now that it has grown in size to become the largest All World fund, so has its liquidity, allowing it to outperform the index and should continue to do so as more investors put money into it, which has been shown by its strong yearly growth. It's an Optimized Sampling fund, so it holds a portion of the stocks within the index and it can lend those stocks to a third party for interest in order to offset some of the fund costs, which is what helps to produce a positive tracking error. It's virtually impossible for a fund provider to buy and hold every stock in the world (Full Replication) due to low liquidity, niche markets and general high cost, so it only holds a portion of those stocks, usually the biggest companies that make up the largest portion of the index, so your Apple, NVIDIA, Tesla, Microsoft, etc. The fund's performance has matched SPDR's All World fund (they track the same index, so identical performance), while the Ishares fund offers an overall better fund that ticks all the boxes with a longer track record (2009 vs 2019) as well as the most AUM which = higher liquidity = lower bid/offer spreads each time you buy which will make the Ishares one cheaper long term while offering identical performance due to both funds tracking the same index. Hope this has helped selecting your fund.
I have no clue how stocks and shares work, ive mainly invested in gold coins for years and done pretty well. Im going to start investing, £500 a month into the developed world fund and not think about it for 20years, i no theres always risk but would that seem like a sensible move? Or do i need to monitor and possibly move money around over that time period, as thats what i want to avoid as my knowledge is zero?
Ive held HMWO (a global index tracker) for a long time. Over 1,3,5 years gold has beat it by around 10% (much to my surprise). Over 10 years though HMWO (just regard that as a global index) is up 150% compared to Gold 75% eg double.. So, whilst past performance etc, it seems youd do well to diversify into a global index. Do not move your money around, why would you do that? If you knew what was going to happen (spoiler, no one does) then you woudlnt need to ask. Buy HMWO or similar (I chose it as its low cost) and just stick with it same as youve been doing with gold. WHen choosing an index tracker choose the one with a lower charge. Thats why i picked HMWO its 0.15% which is relatively low. There probably are cheaper trackers now.
Amundi Prime Global (PRIW) is a Solactive-indexed developed market ETF for 0.05%, so half the cost of LGGG. Yes it's an income ETF, but why pay twice as much in fees for an accumulation ETF that tracks the same(ish) index?
I have a 3 fund portfolio but I have finally decided to invest in ETFs, alongside. I’m looking at SCHD, VOO, XLK or SCHG.
Great picks! I like XLK and SCHD equally!
I have XLKQ as well as an S&P Tech ETF but with XDEQ All World as core (plus 10% in other various ETFs). I have doubts about US economy and maybe Feds being too optimistic esp when US gov artificially pumps money into US business - may be OK short term but not long term, so I prefer global spread for core portfolio.
@@ShelleyfromCali thank you! Actually would it be silly to have both?
Not necessarily though there is a fair amount of overlap but that’s not necessarily a negative. Most important thing is to get started and build your income over time to continue investing more as time goes on. I just surpassed ~£150K from an initial deposit of 35K seventeen months ago...
I lost a lot chasing individual stocks and I feel pretty stupid for not understanding how investing works. I have a double major in economics but I’ve been trying to make sense of the market. Well done on profits!
Great vid as usual. Only Ramin could get so excited about a 0.01% change in fees lol.
It's weird though. He got so excited by 0.01 change in fee but at the start totally dismissed any real difference between msci and ftse which had a performance difference of 0.03 annualised. Three times the difference of the fee change....
Saturdays are nicer with Ramin's insightful videos!😍
What about PRIW, any good?
Great video. I've transferred my ISA and SIPP from HL to Freetrade and saving loads
Did freetrade have all the funds you had in HL?
Thanks @neilus0
Good decision, HL are a bunch of thieves!
Did you convert all to cash before transfer? HL charge for fund transfers right?
Mmm - y'all. S&P500 - and 'world' which is very heavily S&P500 - are great places *_to have had_* your money in for the last 15 years or so. Firstly: beware recency bias - and don't assume it will always be thus. Secondly: the S&P has some very well-established cycles (when looking at total return and adjusting for inflation): a more or less 15-year bull market followed by a more or less 15-year flat period. This has been happening since WW2: 1945 to 1965 = bull; 1965 to 1981 = flat; 1981 to 1999 = bull; 1999 - 2009 = flat (or worse) etc. We've now had a 15-year bull market and 'are due' a flat 15 years or so. I concede: 1) this time it 'might be different' with the Mag7 2) black swan events can mess with the cycle. But history tells us that the US is due a flat time and that EM's - with their great GDP growth yet flat stock markets - can't remain depressed indefinitely. So, I'm definitely looking towards EM's for my next 15 years or so - not a dead cert, but history telling me the odds....
I'm having similar reservations and have chosen for a different tilt in my portfolio (see my comment). Europe also is relatively cheap and the growth to value ratio tells me value-stocks are the better buy right now.
Good post. Although I think Mag7 will contribute heavily to next flat market.
@@cyclingphilosopher8798 Same here... I have 1/3 Finland... 1/3 China & EM Asia... 1/3 global bonds & US stocks etf. I'd also like some other Nordic countries & Europe... but I bought Finland because it was cheaper and has good dividends & solid long term history. Lots of cash still.
Will buy more USA only if/when it crashes big time. Smaller crash will suffice for Nordic countries fund/Germany/Europe.
If you are 50 with a life expectancy in excess of 80, thats 30 years. Not sure I would want to leave out EM for that long.
Good point.
I prefer to avoid China. The education sector suddenly became not for profit, returns are expropriated for common prosperity, they don't recognise westerners ownership of Chinese shares, and what will happen when they invade Taiwan?
Because EM returns are garbage 🗑 that's probably why
True
What is EM?
Some ETFs cheaper than the 0.22 fee of Vanguard (acc or dist) are achieved through less stocks. For example Amundi All Country World Dist (WEBG) is 0.07, but the sampling to track the index only has 1109 stocks vs 3643 of VWRL. Same for FWRA Invesco FTSE Acc, it's 0.15 fees, but has 2039 stocks vs 3643 of VWCE of Vanguard. Can this impact the tracking in the long term?
Really want to know this too!
Bid/offer spread can be more expensive than the TER. Don't just pick a fund because it has a low ongoing charge, check the bid/offer spread! A fund with a higher AUM will generally have a lower bid/offer spread because of higher volume inflows. Stick with passive, highly liquid indexes.
Yes, and allow me to add one more: out-of-market risk. You can easily lose 10 years of ‘cost savings’ by being uninvested for a day or two during a fund switch. (Less of a concern if you can switch ETFs quickly.)
@@rezwhap also look at the tracking error
Also, the fees are less relevant than how the fund performs to its benchmark. If it keeps up with its benchmark, its fee might as well be 0.
This isn't mentioned enough
My number one fund is Legal and General Global 100 Fund. All the big companies , all the different sectors and if these go wrong , the whole market goes wrong.
What is their long term annualised returns?
@@odnilniloc better than a global tracker
Same here...this is my biggest holding in my SIPP and ISA.
@@odnilniloc According to Morningstar the annualised return over 10 years is 14.37%.
@odnilniloc 10 years it's approx 200% growth . £100 - £300.
Always enjoy your fund overview vids. Would love to see a similar vid on 'safe funds'
I'm about 10 years from drawdown with 90% of my current investments in equities, so I will want to start shifting that balance over the coming years. Money market funds are an easy pick at the moment for a safe fund, but I have no idea where to start with bond funds, which I'm guessing will be my best option longer term.
I see a lot of people on bogleheads UK choose the global bond index. Vanguard global bond index fund, GBP Hedged to cut out any currency fluctuation as you don't want to much volatility in your bond allocation, needs to be fairly stable ideally. Also Vanguard, ishares and some other providers do etfs that track the same index. I think it's Bloomberg Barclays global bond index. This bond index is well diversified and not as long duration as UK gilt index, so not so sensitive to interest rate movements.
Moving that balance with ten years to go would you not be losing out in potential growth?
Check one of the latest Ramin videos about 'safe' funds and maybe give it a second thought on moving there, if there's need for income maybe moves to quality dividend funds is safer. Video is Retirement Game-Changer: Has Vanguard: Got It Wrong?
@@leecrowther8322 The movement will be slow and not yet. The majority of my money will remain in equities. My only goal is that when drawdown begins I have 5 years of income in a 'safe' fund and I will drawdown from that. Ongoing I will top it up after a good year for my equities, but not after a bad. So worst case scenario, equities can under perform for 5 years without me taking from them. For me this plan should be sustainable indefinitely.
@@svladylen I'm not tied to any particular ideas about safe funds and I have plenty of time, worst case the safe fund is a 90 day access savings account 🙂
In Spain there is a difference between mutual funds and etfs relevant for tax purposes. You can transfer indefinitely from one mutual fund to another without taxes and fees while for etfs you have to sell and incur in tax payment as if they are stocks. In a long period and with some basic changes for adjustment, the etf option can eat a huge performance of the portofio. If you have gains of 30% for a period in your fund, lets say 100 fiat value from 75 fiat, having taxes of 21%, at the time of exiting the fund (if etf) for another fund (let's imagine full fiat amount change), you will pay about 5% of 100 to make the change possible and new fund will start with 95 fiat value. On the other hand, the new mutual fund will start compounding 100 fiat value after the change allocation from old mutual. Only after selling finally (not transfers between funds) you will pay taxes (it could be a lifetime or never).
Hi @ivivivir Good to know. Thanks
So what would be the pros and cons of choosing the fidelity index fund over say the vanguard etf vhvg?
Hi Ramin, great video as always - was wondering- Do favourable tracking error and bid/offer spreads outweigh the benefit of a slightly lower OCF/AMC cost?
Don’t the vanguard funds also have a 0.15% platform fee?
No. Funds don’t have platform fees. Platforms may platform fees. So it depends on the platform.
@@andydonaldson That's a bit misleading...Vanguard charges 0.15% irrespective of the funds you have with them...
One of the most popular index funds is the vanguard FTSE global index which is popular because it includes small cap. Is this a factor worth considering and do any of the funds mentioned include this sector?
Do you mean FTSE Global All Cap Index Fund (VAFTGAG)? Where did you see that it's one of the most popular funds? I'm also considering it.
Thoughts on Vanguard FTSE Global All Cap?
Misses its benchmark by more than its fees sometimes but overall quite a nice fund.
EM + Don't touch. Sorry to be a drag.
@@helixvonsmelix What about small cap? I'm thinking of including them as well...
Hi Ramin, what is the percentage of your networth in index fund ?
Excellent. Really helpful! Thank you 🙂
You're very welcome! @alexm7310
Market maps at 4:46 are incorrect. What about Italy, Spain, Denmark etc. in Developed, and what about Brazil, Mexico etc. in Emerging?
They are correct, as they are taken from ishares/blackrock site.
The trouble is with the indices which simply aren't very good/complete.
Also the MSCI divide between developed/emerging seems rather questionable.
@@thetjt No they are simply not correct, must be from some other context. There are plenty of Danish, Spanish, Swedish etc. companies in the MSCI developed world index (and also owned in the actual iShares sampled ETF), so the countries should be highlighted. Same for Brazilian companies in EM etc.
@@mortenborg Ok. You are correct... I checked iShares Core MSCI World UCITS ETF... the map shows same countries as in Ramin's video but I can find businesses from other countries as well, tried Saab (swedish) & Nokia (Finnish), very small percentages but still there. So the map on blackrock site is not quite accurate.
@@mortenborg Ok. I checked... The maps are from correct source but the blackrock/Ishares site seems to have data missing from the maps. There indeed are for example Swedish, Finnish & Danish stocks, although the countries are not coloured on the map, or listed in the percentages on official site. The companies however can be found under "holdings".
Shouldn't you have looked at tracking error for the various ETFs as well?
And bid-offer spread.
Really informative video. Great content.👍
Thanks @Nousmourronsseuls
Good video, Major ETF changes made after watching. I like the VHVG ETF
VWRP 👌
So what type of moneymarket fund are worth looking at for the safe part after you pick your Index poison? Thats the bit that really confuses me now i understand Indices better
CSH2 (Lyxor Smart Overnight Return) is as good as any. Note that the returns will not continue to be as high as they are now forever...once the BoE and Fed start
to cut interest rates expect money markets to reduce their returns.
Do you have a video that outlines how you differentiate between 'safe' and 'risky' funds? Also - is this all in context of a pension/SIPP? I'm wondering if your approach differs in terms of types of funds, spread of risk between a pension/SIPP and a Stocks and Shares ISA.
I'm currently looking at Vanguard VWRL / VWRP for S&S ISA (a global fund) - I had considered them medium risk, would you consider it risky? For my pension/SIPP I'm looking at FTSE Global All Cap Index Fund (both via Vanguard). Would you consider this one a risky fund?
When you say 'a more risky global fund' are you saying that all global funds are risky or that you are just going to choose a global fund that happens to be higher risk?
Didn’t you want to drop the U.K. exposure in your Vanguard fund?
I think those were different funds 60 80 etc.
@@MrDuncl no it was not.
Could go DEV WLD ex-uk, then a little bit of ESG Dev World.
@@helixvonsmelix what is an ESG?
I think he did. Poor video, really,
Great videos as always thanks for sharing!
Are ETFs covered by the FCA in the event the fund goes bust ?
Would love to see a video showing how to break down fund performance using the financial times ticker sheet please there's some terminology used which may be clearer by one of your world class videos
Thanks 😊
Etfs not covered by fca. Don't take my word for it just ask Vanguard UK or HL etc. I think it's because they aren't domiciled in the UK, and some open ended funds aren't UK domiciled. For example Vanguard global small cap index fund, Vanguard global bond index fund not UK domiciled last time I looked. And most etfs domiciled in Ireland and some in Luxembourg. I guess popular etfs from large providers like Vanguard, ishares should be safe??
@@fredatlas4396 thanks for the reply - I had heard the same thing but many platforms are plugging ETFs and thought I missed something
Cheers 😎
Hi Ramin you mentioned that you hold VHVG, why would some choose the other Fidelity one when this is jusst the same?
Vanguard is bigger than Fidelity
Great video Ramin, thank you.
I have a question please. I have seen most of your videos, especially the one about what happens if my invest platform goes bust.
I have invested in a global stock VHVG. However my question is - what would you recommend the maximum in this single ETF before you invested the next amount. (Let’s say I have £250k)
E.g should I:
VHVG - £250k or
VHVG - £100k
FWRG - £100k
Find a new one £50k to 100k
Priw, 0.05pc fee. Top notch for a global fund imo.
Why no mention of Amundi's PRIW, which charges 0.05%?
Which platform?
Maybe because of the 3% entry fee and 3% exit fee?
@@jan2000nl The KIID says "Entry and exit charges will only apply when shares are subscribed or redeemed directly from the Sub-Fund, and will not apply when investors buy or sell such shares on stock exchanges. Investors dealing on exchange will pay fees charged by their intermediaries. Such charges can be obtained from intermediaries."
@@K3end0
T212
@@K3end0 InvestEngine, HL, Interactive Investor, Trading 212, probably others.
I'll stick with S&P 500 @ 0.07%. If it's good enough for Buffett, it's good enough for me.
Keep in mind that looking back over past decades the US has not always outperformed the rest of the world and many "experts" say the US is over-priced currently. Having said that, I'm mostly invested in US, just not 100%, about 65% last time I checked.
@@stevegeekWhich stocks are overpriced?TSLA, AMZN, GOOG, NVDA?
@@Simon-xi8tb Just Googled this:
“The average S&P 500 stock has joined the "Magnificent Seven" in overvalued territory, according to Goldman Sachs Group. While this doesn't necessarily mean the rally that began in October 2022 is nearing its end, high valuations typically lead to weaker returns over the months ahead, according to Goldman's analysis.”
You can also look at historical P/E ratios for S&P 500 to see this.
Just go for a global tracker, they're weighted to the US anyway so why not get the diversification over S&P
looking at the KIID for the HSBC fund it says "The ongoing charges figure is based on last year’s expenses for the year ending 15/11/2023. Charges may vary from year to year." so i guess that's why they don't make some big announcement of a fee cut. some element of that figure is an outcome of their costs divided by AUM rather than a % amount they decide to charge holders. in the future those economies of scale they seem to have gained recently might go in reverse and the number might creep back up.
My Vanguard ISA is 100% VHVG
Consistently outperforms "All World" and "Global All Cap" and has cheaper fees. "Developed World" is the go to passive global index for anyone who doesn't have donkeys years to wait for an emerging market to possibly take off.
Hi Ramin, the base currency for the invesco fund is USD, how much of a different does that make?
That's a new gbp version. FWRG.
@@chrisdoona6582 thank you!
Also to be aware of fund liquidity
Ramin, you should review the work of Rick Ferri on Asset Allocation and returns.
Really practically helpful, thank you. Please do regularly.. thanks
Thank you, I will @MrHotrod79
Emerging markets are massively undervalued at the moment compared with US. I would overweight them.
Definitely.
Alhough it seems that South America tends to historically weigh down rest of the emerging markets index.... so I got myself some (well, a lot) MSCI China and some EM Asia index... Perfectly happy to hold the latter for next 20 years no matter what happens in the markets.
Will HSBC's index fund be available to their customers on their website?
Would you sell out of your global fund in total and buy the cheaper option or simply start buying the cheaper option & leave the original as is ?
Depemds on taxes I guess. But I personally wouldn't buy global fund now because US is too expensive & weighted way too heavily.
@@thetjt let's say within a tax advantage acc. And just a percentage of your allocation?
Don't switch. The bid-offer spreads and tracking error aren't worth it. Poor video from Ramin. Many have told him he needs to stop obsessing over fractions of TER and learn how these costs arise. But he refuses.
Only switch if your investment strategy has. E.g. you want ESG filtering; risk tolerance changes; etc.
How about S&P 500 and Nasdaq 100 funds?
I'm in the Vanguard Global Developed World. I'm not interested in emerging markets which only add greater volatility. China funds are down 50% on the last 5 years, there's no recovery from that now.
I'm on the younger side so I don't care about anything that happens on a timescale of just 5 years. Owning a share of everything for decades and decades is fine.
Up 10 percent since the bottom. Officially in a new bull market ;-)
I’m still 25 years from my preference retirement date and expect EM to not only recover but grow better than developed so I’m VWRP for my investments. Ramin is at that age he won’t get the benefit from it EM investing now and clearly doesn’t. He may not have that extra 15yrs I have
If down 50% that could make them a good buy. I want to buy when things are cheap not, like now, mostly more expensive than ever
@@adm58
How low can it go? Look at Russia, when stocks collasped Blackrock sold all Russian stocks for next to nothing. The ETF retail investors lost, I don't know who bought thir Russian stock and could potentially gain a lot over the next 40 years once Putin is long gone.
What do you think about Nasdaq 100 as an investment? Too risky to go all in?
Really enjoying your very informative videos. Thank you. One question, why do you not mention the bid offer spread on any of these ETFs or funds? Surely it's as important to ensure the spread is low.
Superb video Ramin. May swap my SSAC after seeing that.
What's the best way to swap ETF's ? Or should you just leave money in the one and just start buying a cheaper one?
This really is a tremendously helpful video. Thank you.
You're very welcome @quirkism
Question. World ETF are usd but the funds are gbp share class (with usd base currency/unhedged) should I care about this ?
Hedged funds are generally used to protect your currency from short term fluctuation, usually less than 5 years. Long term it's not recommended to hedge equities because of the higher annual cost. The USD has strengthened against the GBP over the long term, so if you were invested in a GBP hedged fund you would be worse off now and have paid higher charges to do so.
@@UndisturbedMonk I’m not talking about hedged/ unhedged , it’s the conversion of our money into dollars and the benefits of having a fund which trades in gbp but still is a usd fund.
@@coderider3022 If you invest into a GBP domiciled fund with an underlying currency of USD, then that is a unhedged fund. You're essentially placing a bet that the USD will strengthen against the GBP by investing in this type of fund. The benefits of a unhedged fund would be a lower annual cost. Long term equity positions shouldn't be hedged, it's for short term protection from currency fluctuation and you pay a premium by doing this. By investing into a fund that isn't domiciled in your home currency (USD, EURO) you're adding an extra level of complexity for no added gain. You will have to pay an FX fee each time you trade and depending on your broker this can be upwards of 1% or more. Invest into a fund that is domiciled in your home currency, the underlying currency of the fund doesn't matter but a GBP fund into EURO/USD has actually proven to be more beneficial long term as both EURO and USD have strengthened against the GBP and will probably continue to do so.
@@coderider3022
I am British so use funds were the trade currency is GBP or GBX to avoid having to pay FX fees.
If the base currency is USD the fund manager pays next to nothing in FX fees compared to retail investors.
@coderider3022 the fund manager is converting your pounds into various currencies anyway to buy the stocks within the fund. The base currency is not something to worry about and is just the currency in which the fund calculates its NAV and the currency in which reports are produced.
Excellent video & Very helpful! Thank you
You're very welcome @TrobridgeFendlason
Well said
Awesome
Great video. That said, it’s much harder for those of us who feel uncomfortable investing in Global Equity funds / ETFs for ethical reasons. The reality is that by investing in any of these funds in this video, we financially support the production and sale of weapons, and companies involved in vice products (adult entertainment, alcohol, gambling, tobacco). Whilst a Global Equity ESG fund may not be perfect and certainly not as cheap, people like me wouldn’t mind spending an extra 0.1% in fees knowing our money is invested in a slightly more ethical way… My comment is not to pass judgement on anyone, but more to bring this to the conversation for people who may not have considered this (as I once hadn’t!). In such cases where people do feel this way, perhaps the FTSE Global All Cap Choice Index may be worth considering?
For the most part, I think the only way is to invest in individual companies due to ESG often being tokenistic and, even when not, it's always down to each individual's ethics which is unlikely to match with a manager's.
The Solactive index quoted has a simple ESG screen. TMK it screens out the bad stuff (UN compact violators etc.). Up to you where you draw the line.
If investing via a S&S ISA can we actually invest in ETFs? ETFs allow fractional shares which currently aren't allowed by HMRC. INstead shouldn't we be sticking to funds labelled as 'Index'? I know ETF and Index are used interchangeably in the USA
What are the drawbacks of going from the previous Dev World ex Uk FUND to an ETF ? Isn’t it denominated in USD?
Incomparable investment help.I'm so grateful. But what about India?
Get China, India, Taiwan , South Korea with Ishares EM Asia...
Also, probably not a good idea to put large sums in MSCI world with current US prices.
Great video, as always. Thank you! 😊
My pleasure! @user-pn2lq2tb1w
Thank you for the video. When you choose to change from an existing fund to a new, different fund, do you exit you existing fund positions, or you just start investing in the new one? And if you sell to buy the new fund, do you drip feed into it, or just buy it in one go? Thank you.
How do you hold the Vanguard fund that is 90% of your overall investments? Via a pension or an ISA? Or what's the split? Thanks.
Hi, @5.42, the graph shows that ACWI has a return of 369% and SWDA 419%. But the small table at the bottom shows ACWI's return as 12% and SWDA as 10.9%. Is it due to different time frame?
One is cumulative, other annualised.
@eups7, @Ramin, but the cumulative ACWI is lower than SWDA yet the annualised ACWI is higher than SWDA. Something is wrong, Ramin.
Hi,if an index is a FTSE index is it always Sterling Denominated? And is VHVG Sterling denominated?
Does anyone know if Vanguard will be offering fractional shares in its ETF on the UK platform anytime soon? Thanks!
What about State Street? They do have a developed market fund SPDR MSCI World UCITS ETF for 0,12%. Would you consider it as well?
Would it make sense to hold two funds? Global developed fund and then 6% of your contributions into an EM fund?
Plenty will be doing that, and if small caps aren't in there then they may add in those too with another fund. Some will also have geographical trackers to emulate the breakdown of a global one, and often save on costs by doing so... though it's more managing to do, of course.
@@adrianl5899 thanks for that!
@@adrianl5899 On other hand, with uncorrelated geographical indexes it's easier to buy low & sell high...
HL waive their fees (including the 0.45% fund fee) on Junior ISAs.
Worth being aware of, as it creates an 'exception' to the general rule on HL fees.
L&G Global 100 the largest 100 multinational companies. Avoids diworsification
Are you copying my suggestion Ian ? Haha . I mentioned this on your channel the other day .
I think S&P 500 still beat that global 100 index
@@fredatlas4396 and the Nasdaq beats the s&p 500
It does @@fredatlas4396
At the start you say 2 funds, a safe and a risky one. What is safe? I thought global was the safe
Ramin means a bond fund is safe(ish) to sit along side a global tracker to dial down the volatility.
'Safe' and 'risky' have to have context. Cash is safe for short term, I would say it's is risky for long term (inflation). Quality equities the opposite. Even then, one has to consider risk appetite - a 20-year-old certainly has the time horizon for 100% equities but what use is it if they panic sell on the 50% crash and stop investing... so words like this are very contextual and personal.
Anybody know ones that you can get on the American stock exchanges? Looking to invest directly using USD rather GBP.
Surely switching funds incurs excessive fees and isn’t worth it though, Ramin?
As I understand it, you were previously invested in the FTSE Global All Cap UCITS Acc with a 0.23% fee?
I’m also invested in this, but, after watching this and another video you’ve done where you can basically get the same exposure (minus some emerging markets as you said) for a significantly lower fee, I’m beginning to consider changing.
Is is straightforward and does it incur penalties, etc?
Good question. I'm the same. All gac up until this cheaper one became available. I haven't moved my gac yet. My understanding is you need to sell it and buy the new fund. That may not be correct!
I think the .15 on vanguard offsets the .23 for fund and it’s nothing to the fund growth. Even a £1m size pot, it’s only £83 a month to cover the 0.1 difference to the ETF he uses. Are you really going to sit there and complain about this knowing it’s up 9% a year and you see all those zeros in your statement.
The Global All Cap also includes small caps which I don’t think any of the options in this video include.
@@stephen4865
This is true. I think I might just sit tight and hope Vanguard do reduce their fee, which they surely will in time to remain competitive if all these others continue to keep popping up.
@@coderider3022 That's £1000 per year on a million. So over 30 yrs £30000 and most likely more because of compounding as the value of your portfolio grows hopefully. We should be so lucky. The only problem with the etfs is if you want to do regular pound cost averaging, a regular amount going into your etf. Then you won't be able to buy partial shares of the etf and so each month some money not invested. So for that an index fund is better. But unfortunately Vanguard doesn't do open ended funds that track ftse dev world or ftse all world indexes. Just their ftse global all cap index fund, which I guess is OK but not ideal, or ftse dev world ex UK which is OK but a bit limited in terms of overall diversification
I currently have SWDA in my account. Would I be better off swapping that to LGGG you think?
Is that index-comparison chart at 3:40 correctly labelled? FTSE is up 193% over 10 years while ACWI is 186%. Yet the annualised return is 12.0% for ACWI, but 'only' 11.7%!!! Or am I somehow misreading the chart? That said, it looks like much of the difference has only happened in the past month or so, so maybe the apparent difference has some time-period averaging artefact? Or is the difference maybe down to different expenses for the 2 funds. (I think the charts are of 2 funds rather than the pure indices???)
And, while I'm here: Some more consistency over small % differences would be good to see. If you think it's worth saving 0.15% to switch platforms from Vanguard to eg Trading212 then why isn't a 0.3% difference in annual return something to headline?
On Vanguard, does it cost to turn an existing income ETF into an accumulation ETF where that option exists?
You're subject to bid-offer spread and the risk of losing while out of the market. But I do not believe there's a sell/buy charge, so to speak.
@@adrianl5899 👍
I did this, went from inc S&P to ACC. Very easy and quick on vanguard with no fees. There's a switch option so you don't have to sell and then buy separately.
What's your thoughts on FWRG?
hello?
Can you also do a video on synthetic funds vs physical funds? I understand synthetic are more tax efficient re US witholding tax but also carry more risk than physical replication? Also domicile Ireland vs Luxembourg which also has different tax implications. Ultimately do these things make much difference to returns?
Thanks for explaining some of the terminology here. As a new investor it’s sometimes difficult to understand the language used.
You're very welcome @Petersworld77
Hi Ramin, another great video. I'm currently invested in VUSA which, as you know is an S&P tracker. The fee is only 0.07% for this. Would you say this is better due to the fact most funds are heavily U.S. weighted anyway.
Also,do you know at what intervals Vanguard re-invest any gains back into your portfolio?
In podcast / prev vids he shows USA stats that say it only outperforms 55% in long term. Buying sp500 is a form of recency bias. Us tech mega cap responsible for this and drag up index. Obviously it’s all down to us personally.
Your videos never fail Ramin 💪🏻 keep them up sir
Thanks @williamowen1316
Took this on board . I’m 55 Reduced to 5 % EM up DM to 60 % and rest SP500. For my young lad 60% in DM , 30% in Dm&Em . 10 % in EM- told him to monitor it especially the ratios when he’s an adult and adjust as necessary
No point in investing in emerging markets because if you stick with US Equity large and mega cap, the companies themselves invest in emerging markets ( Coca Cola, Google, Apple). I’m out of everything £ based and the LSE.
I want to invest in a S&P 500 etf from the UK, what is the best platform in terms of costs should I use ?
Really helpful vid. I do wonder why you rarely mention Interactive Investor (ii) whose fixed fee model offers value - is there an issue with them?
About to invest my first 500 quid a month next month I have no clue what I'm doing and will follow the recommendations of most of the youtubers, developed world it is and I'm leaving it at 500 a month for 21yrs hopefully it works out for me lol
Lol, I guess losing that 500 quid won't break the bank😁
VWRL or VAFTGAG ?
I like the sponsored platform in this video, solid company
Hi Ramin, another great informative video. Did I see a similar 1 by you where you said the 10% was an emerging market fund? And previously the 10% was made up by various bonds. ? Just trying to learn from the timeline of these changes/ developments. Thanks.
Hi Ramin, I have to admit to now being a bit confused. Based on yours and others videos talking about 100% global index trackers for pension schemes, I've been moving away from bonds. But now you're saying that a safer fund is recommended? So does this mean moving back to some bonds in my pension scheme?
Hi I don't have the answer, and it might depend how far out you are. But I do recommend joining the Pension craft community for more complex enquiries. You can always try for a month or two to test it.
Personal risk appetite, time horizon and aims are all that matter when investing at any given time. These guide a person to invest in a way that makes sense for them.
If you find yourself watching videos and changing funds to create a different risk profile (say from a 60/40 to 100% equities) then it should be because you identified your risk appetite ('I accept seeing a 50% crash'), time horizon (say 10+ years) and aims match 100% equities. Ultimately you don't want to chop and change without very good reason for your own circumstances, nor end up carrying a level of risk completely unsuitable to your appetite. Both can lead to worse returns, and sometimes dramatically so.
Hi Ramin, Another very insightful video, thank you. I noticed that the HSBC FTSE All-World Income Index fund only pays dividends annually where as a lot of other pay quarterly. What happens to the withheld income until the dividend payment date and does this less frequent dividend payment penalise investors?
"And that's not surprising because, there's only one world with all the same stocks in it." LOL! 🤣
So if this is a riskier global fund? What’s the safe fund? S&P 500?
Money market funds, bond funds and individual gilts are considered safer as their volatility is lower, but perform poorly over the long term, especially when inflation is high.
There is no safe equity fund. All markets fall, and fall big, often at the same time. That's what cash, direct investments, socialism, your own skills, and your community is for.
When you say you wouldn't buy the HSBC fund on HL as its expensive to do so - does this still apply if you have a LISA with HL? When I looked at it, as there are limited providers with LISAs, HL seemed like a reasonable choice but as far as I can see no matter if you invest in an ETF or fund you still have to pay the 0.45% management fee with HL. Am I correct or is there a better alternative for investments in a LISA? Thanks
HL do charge the 0.45% on ETF as well but they cap the fees differently on different accounts eg on an isa the max you pay is £45 a year. So much cheaper to hold an etf on larger amounts. They do show this on the charges page in the web site but it is less obvious if you look at the charges tab of the fund page.
Great video thank you as always
Thanks for watching! @timetraveller3063
Thank you for the video
Thanks for watching! @dozo6541
As the other emerging markets excluding China seem to be performing better is it worth having a small Emerging Markets ex China ETF/fund alongside a main Developed Market Fund (even for older investors?)
Ps looking forward to seeing what ‘safer’ funds you recommend!
All you need is an S&P tracker ETF like Vanguard VOO or VUAG (accumulating) if you are in the UK. Ultra low fees, 0.07%. Hold for 20-40 years and buy the dips. Not much else to it. I don't get why people make it so complicated. We know what works.
As well as the fee, should you not also consider how well a company tracks the particular index? I looked at the Invesco fund but this has only been around for less than a year making it unclear how well it actually tracks the index. Companies like Vanguard and Ishares on the other hand seem able to consistently track the index correctly
You'll find that most funds actually outperform the index and this is because the fund is either a synthetic replication fund (which I avoid), or the fund lends shares to make extra income to offset costs. The funds that lend shares are usually fully replicated because they actually hold the assets to lend. Ideally a fund that tracks the index or even outperforms would show that it's up to the task.
I found myself getting probably a bit too obsessed with tracking errors recently. I was looking at an SPDR MSCI World ETF which was cheaper than equivalents from iShares and Vanguard but when I compared the three it was noticeable how much more the SPDR fund deviated from the index it was tracking. I then came across a Vanguard article "tracking errors, the ofter over-looked cost" which now makes me think twice before investing in a new'ish fund until there is enough performance data available@@UndisturbedMonk
@@stevelloyd9372 Yep, a new fund may appear better on the surface generally in the form of a lower ongoing fee and this is how they entice you to invest in their fund, but in reality are just not as good as the slightly more expensive annual fee, higher liquidity, more established funds from the big providers like Ishares and Vanguard. There's a lot more to ETFs than just the fund charge. Good job on doing your research on fund tracking error, it's a super important metric when choosing an investment that you're going to potentially be putting money in for decades! I wish for more new investors to go a little bit more in-depth into what they're actually investing in and NOT just "well this fund seems to track the same index and has a lower fee, so it must be better", because that's not always the case.
@stevelloyd9372
I've taken a look at all of the All World ETFs available to us in the UK and your best bet would be the:
iShares Core MSCI World UCITS ETF USD (Acc) with the ticker symbol: SWDA
This ETF has the highest Assets Under Management (AUM) of any All World fund at over 57 billion euros under management and has the highest year after year volume inflows as well at around 10 billion euros in 2022 and 15 billion euros in 2023, which shows positive yearly fund growth. Some funds are very niche/specific to certain strategies and themes, which makes their year to year growth unstable and unpredictable as these funds can come and go as economy's and markets change which can trigger more selling than buying (which you don't generally want for a long term position). An all world fund doesn't have this problem as it captures everything, including those niche markets, which makes the future outlook of an all world fund steady in growth as it's seen as a buy and hold investment, not a 'buy so i can capture this specific theme while it's doing well, then sell a couple months later to gain the profit' investment like a theme specific ETF.
It's been out since 2009 (which makes it the oldest of All Worlds funds) and has performed slightly more positive than the index it tracks every year since 2013 (which is what you want). When a fund launches, its liquidity is low, hence why it performed slightly worse than the index within its first 3 years of launch (2009 - 2012). This is normal among All World funds compared to say an S&P 500 fund, because the All World fund holds and tracks lower liquidity markets, which the S&P 500 doesn't as the top 500 US companies are all large cap, highly liquid companies. Now that it has grown in size to become the largest All World fund, so has its liquidity, allowing it to outperform the index and should continue to do so as more investors put money into it, which has been shown by its strong yearly growth.
It's an Optimized Sampling fund, so it holds a portion of the stocks within the index and it can lend those stocks to a third party for interest in order to offset some of the fund costs, which is what helps to produce a positive tracking error. It's virtually impossible for a fund provider to buy and hold every stock in the world (Full Replication) due to low liquidity, niche markets and general high cost, so it only holds a portion of those stocks, usually the biggest companies that make up the largest portion of the index, so your Apple, NVIDIA, Tesla, Microsoft, etc.
The fund's performance has matched SPDR's All World fund (they track the same index, so identical performance), while the Ishares fund offers an overall better fund that ticks all the boxes with a longer track record (2009 vs 2019) as well as the most AUM which = higher liquidity = lower bid/offer spreads each time you buy which will make the Ishares one cheaper long term while offering identical performance due to both funds tracking the same index.
Hope this has helped selecting your fund.
Great video.
Thanks so much @DeusZechiel
Can anyone assist. Im in the ftse 250 vmig by vanguard and down £180 since 2022 with a current value of £1978. Should sell this stock or keep it?
I have no clue how stocks and shares work, ive mainly invested in gold coins for years and done pretty well. Im going to start investing, £500 a month into the developed world fund and not think about it for 20years, i no theres always risk but would that seem like a sensible move? Or do i need to monitor and possibly move money around over that time period, as thats what i want to avoid as my knowledge is zero?
Ive held HMWO (a global index tracker) for a long time. Over 1,3,5 years gold has beat it by around 10% (much to my surprise). Over 10 years though HMWO (just regard that as a global index) is up 150% compared to Gold 75% eg double.. So, whilst past performance etc, it seems youd do well to diversify into a global index.
Do not move your money around, why would you do that? If you knew what was going to happen (spoiler, no one does) then you woudlnt need to ask. Buy HMWO or similar (I chose it as its low cost) and just stick with it same as youve been doing with gold.
WHen choosing an index tracker choose the one with a lower charge. Thats why i picked HMWO its 0.15% which is relatively low. There probably are cheaper trackers now.
Which one is better Vanguard FTSE all world (acc) or Invesco FTSE all world (acc)?
Amundi Prime Global (PRIW) is a Solactive-indexed developed market ETF for 0.05%, so half the cost of LGGG. Yes it's an income ETF, but why pay twice as much in fees for an accumulation ETF that tracks the same(ish) index?
Can you do the same for ESG funds?
Take a close look at the lgim etf referred to in this video, lggg. Lgim have esg criteria in the selection process.