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I am a bit ignorant on funds?
chubby bunny
Posted: 15 March 2017 14:20:28(UTC)
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Frenchman 96;44654 wrote:
This is out of my league, so I assume I need to find the cheapest platform and add the 0.15 to the platform charge, am I correct.


Yes. Cheapest platform depends on what kind of investments you will be holding, how much you plan to invest and how frequently you deal.

Here are some resources to plug numbers into and help figure out which platform would be best for you:

http://www.comparefundplatforms.com/compare.aspx

https://drive.google.com...KI1UzlfTDV3VG1XX1U/view
Alan Selwood
Posted: 15 March 2017 14:21:55(UTC)
#45

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Frenchman 96;44654 wrote:
Hi Guys

I have now decided that Vanguard FTSE Developed World ex UK Equity Index is a good way to start investing in funds, discovered by me from this forum.

Can anyone conform, that the fee of 0.15 charged by Van is great, but to deal with them direct, the minimum investment is £100k.

This is out of my league, so I assume I need to find the cheapest platform and add the 0.15 to the platform charge, am I correct.


Try buying through iWeb or Halifax Share Dealing (sister platforms), since they don't seem to charge an annual platform fee. If they let you use the I Class units, you're well away!
Jeff Liddiard
Posted: 12 April 2017 17:00:45(UTC)
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King Lodos;44080 wrote:
S Dobbo;44073 wrote:
Quote:
So in all, there are good reasons to invest as cheaply as possible ... But at the same time, people love certainty, and have clutched onto low-cost index investing like it's the Holy Grail ... You can make just as strong arguments that it's lack of diversification that's going to kill most people's returns going forwards.


The thing is there are so many index funds & ETF's covering every asset and sector, there is no reason why you cant be diversified using just physical trackers.

How about core trackers:-
Global Large Cap Tracker
Global Small Cap Tracker
Global Consumer Staples ETF (These tend to heavily weighted to US)
Regional trackers as desired.
High Yield Bond Tracker.
Gold Tracker.

Satellite trackers:-
Health care
Commodities
Etc.

Some areas it might be worth using IT's or OEICS where proven track records are higher. And a capital preservation fund as well PNL, Trojan or RICA). Having trackers for the core and where possible must be beneficial, this is why Lifestrategy has taken off so much.


Oh of course. I use passive wherever possible because it takes manager risk out of the equation.

But over here we're still a little limited .. e.g. Value is the most robust way to generate long-term outperformance, but we have very few options in that space.

And even in the US, where people do buy Value and Small-Cap Value trackers, the MSCI Value index isn't constructed properly, and doesn't capture the Value premium. (The MSCI and Vanguard version is basically just the cheap half of the market, and to capture the premium you need to go for the really cheap end of the market.)

These are 'dumb' funds, but they can have some really dumb human management behind them .. They can also carry fees that don't make them much better than active funds pursuing the same closet strategies.

What I like about the active fund space is competition .. If you're not capturing the value premium properly, you'll hire a manager who does .. Sometimes that will justify a fee.


The problem I see with trackers, as examples, Lifestrategy 100% = 52% return over 3 years (Trusnet figures), LS 80% 44%, FTSE All World VWRL 56% which are, I accept, reasonable returns, but Funsmith is 99% and SMT is 91%. So there does appear to be more to be had with these two very popular managers.
xcity
Posted: 12 April 2017 20:44:57(UTC)
#46

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Alan Selwood;44662 wrote:
Try buying through iWeb or Halifax Share Dealing (sister platforms), since they don't seem to charge an annual platform fee. If they let you use the I Class units, you're well away!

I don't think the HL Fund and Share account has a platform charge either. It does.
Mickey
Posted: 13 April 2017 07:17:29(UTC)
#48

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There is a 0.45% charge for funds in the Fund & Share a/c with a reduction above £250,000. No holding charge for Investment Trusts and ETF's.

http://www.hl.co.uk/help#charges-and-fees

Mickey
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xcity on 13/04/2017(UTC)
markus
Posted: 13 April 2017 09:41:31(UTC)
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Jeff Liddiard;45759 wrote:


The problem I see with trackers, as examples, Lifestrategy 100% = 52% return over 3 years (Trusnet figures), LS 80% 44%, FTSE All World VWRL 56% which are, I accept, reasonable returns, but Funsmith is 99% and SMT is 91%. So there does appear to be more to be had with these two very popular managers.


you're never going to shoot the lights out with funds like Lifestrategy, but you may get a smoother ride over alonger time period & not get stuck in a dog of a fund wondering whether to wait for it to turn around or ditch it & risk moving into another dog of a fund.

How much longer can the managers keep generating those returns in Fundsmith, SMT?
Which fund will set you up for the next 50-90% return over 3 yrs?

nobody knows for sure

I'm trying to move my pot so its largely comprised of Lifestrategy with the remainder in low cost funds/IT
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Jeff Liddiard on 13/04/2017(UTC)
xcity
Posted: 13 April 2017 11:03:03(UTC)
#49

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Mickey;45782 wrote:
There is a 0.45% charge for funds in the Fund & Share a/c with a reduction above £250,000. No holding charge for Investment Trusts and ETF's.

Thanks. I don't hold funds and hadn't managed to drill through to the charges.
It does mean that if I ever want to hold funds I will go elsewhere unless one of my HL accounts has shrunk below the point at which the cap hits.
Mickey
Posted: 13 April 2017 11:50:34(UTC)
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xcity;45792 wrote:
Mickey;45782 wrote:
There is a 0.45% charge for funds in the Fund & Share a/c with a reduction above £250,000. No holding charge for Investment Trusts and ETF's.

Thanks. I don't hold funds and hadn't managed to drill through to the charges.
It does mean that if I ever want to hold funds I will go elsewhere unless one of my HL accounts has shrunk below the point at which the cap hits.


There was an interesting thread recently that there's little point just looking at the broker costs, it showed you have to look at the costs of the fund, any broker discount and the holding costs. In some cases HL or another broker may surprise and be cheaper than holding the same fund with a broker offering a lower holding charge. It all gets very complicated so I just concentrate on returns :-)
King Lodos
Posted: 13 April 2017 16:01:25(UTC)
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markus;45787 wrote:
Jeff Liddiard;45759 wrote:


The problem I see with trackers, as examples, Lifestrategy 100% = 52% return over 3 years (Trusnet figures), LS 80% 44%, FTSE All World VWRL 56% which are, I accept, reasonable returns, but Funsmith is 99% and SMT is 91%. So there does appear to be more to be had with these two very popular managers.


you're never going to shoot the lights out with funds like Lifestrategy, but you may get a smoother ride over alonger time period & not get stuck in a dog of a fund wondering whether to wait for it to turn around or ditch it & risk moving into another dog of a fund.

How much longer can the managers keep generating those returns in Fundsmith, SMT?
Which fund will set you up for the next 50-90% return over 3 yrs?

nobody knows for sure

I'm trying to move my pot so its largely comprised of Lifestrategy with the remainder in low cost funds/IT


The big problem Lifestrategy solves is investor behaviour..

If Fundsmith and SMT are due periods of underperformance (and long-term, no sector really edges ahead of any other), then chances are you hold on waiting for performance to turn around; the media starts asking "Has x lost his touch?"; the fund drops its star ratings; no one's recommending it anymore; and you're either selling, or you're buying what's been doing well for the past 5 years..

This constant rotation into yesterday's winners defines active fund investing, and means most investors underperform the likes of Lifestrategy by far more than they realise.

The problem with Lifestrategy is it's concentrated in the two most expensive asset classes: US equities and treasuries (the two most heavily trafficked parts of the market)..

The question is whether there's any benefit tilting away from the market (e.g. towards Value, Small-caps, Emerging Mkts or Private Equity) or risk's priced correctly? .. I'd perhaps consider 5-10% in Gold – quarterly rebalance – with a Lifestrategy fund, and maybe the same Private Equity.

2 users thanked King Lodos for this post.
Jeff Liddiard on 13/04/2017(UTC), Guest on 13/04/2017(UTC)
Jeff Liddiard
Posted: 16 September 2017 19:07:28(UTC)
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King Lodos;45803 wrote:
markus;45787 wrote:
Jeff Liddiard;45759 wrote:


The problem I see with trackers, as examples, Lifestrategy 100% = 52% return over 3 years (Trusnet figures), LS 80% 44%, FTSE All World VWRL 56% which are, I accept, reasonable returns, but Funsmith is 99% and SMT is 91%. So there does appear to be more to be had with these two very popular managers.


you're never going to shoot the lights out with funds like Lifestrategy, but you may get a smoother ride over alonger time period & not get stuck in a dog of a fund wondering whether to wait for it to turn around or ditch it & risk moving into another dog of a fund.

How much longer can the managers keep generating those returns in Fundsmith, SMT?
Which fund will set you up for the next 50-90% return over 3 yrs?

nobody knows for sure

I'm trying to move my pot so its largely comprised of Lifestrategy with the remainder in low cost funds/IT


The big problem Lifestrategy solves is investor behaviour..

If Fundsmith and SMT are due periods of underperformance (and long-term, no sector really edges ahead of any other), then chances are you hold on waiting for performance to turn around; the media starts asking "Has x lost his touch?"; the fund drops its star ratings; no one's recommending it anymore; and you're either selling, or you're buying what's been doing well for the past 5 years..

This constant rotation into yesterday's winners defines active fund investing, and means most investors underperform the likes of Lifestrategy by far more than they realise.

The problem with Lifestrategy is it's concentrated in the two most expensive asset classes: US equities and treasuries (the two most heavily trafficked parts of the market)..

The question is whether there's any benefit tilting away from the market (e.g. towards Value, Small-caps, Emerging Mkts or Private Equity) or risk's priced correctly? .. I'd perhaps consider 5-10% in Gold – quarterly rebalance – with a Lifestrategy fund, and maybe the same Private Equity.




Just getting back to the Tracker question. Assuming 100% equities are wanted, what are the pros and cons of choosing one of the following three, apart from the fact that the ETF can be traded at anytime but the OEICs are only traded once per day and you often don't know the price you will get when buying or selling.

VWRL Vanguard FTSE All World UCITS ETF GBP OCF 0.25%
Vanguard Lifestrategy 100% Equity A ACC OEIC 0.22%
Vanguard FTSE Global All Cap Index A ACC GBP OEIC 0.24%

(There is no stamp duty on ETFs or OEICs)

Is an OEIC safer in anyway than an ETF or vice versa?

Are all three rebalanced periodically?

Does any one of the above have an overall advantage?
chubby bunny
Posted: 16 September 2017 21:17:49(UTC)
#52

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Lifestrategy doesn't track an index and the geographical allocation is at Vanguard's discretion, hence the significant overweight in UK equities compared to VWRL (25% versus 6%).

VWRL holds 3014 stocks with a median market cap of $50.3 billion whereas the Global All Cap index holds 4872 stocks with a median market cap of $29.3 billion. According to Morningstar, VWRL has only 13.2% in mid caps and 0.3% in small caps, compared to 18.5% and 5% for the Global All Cap index. Otherwise they are both very similar geography and sector wise.

Out of the three I'd probably prefer the Global All Cap index for it's higher exposure to mid and small caps and lower allocation to the UK.

Also, bear in mind that VWRL is domiciled in Ireland whereas the other two are domiciled in the UK. This article from Monevator suggests that VWRL would maybe/maybe not be covered by the Irish compensation scheme, which would only pay 90% up to €20,000 compared to 100% up to £50,000 for the FSCS. This article was written in 2013 and I have no idea if the information is still correct, so it would be great if someone could clarify.
3 users thanked chubby bunny for this post.
Tim D on 16/09/2017(UTC), Harry Trout on 17/09/2017(UTC), Jeff Liddiard on 17/09/2017(UTC)
King Lodos
Posted: 16 September 2017 22:12:36(UTC)
#53

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I think Vanguard's thinking is if you had your pension in Lifestrategy, you'd probably not want to be too exposed to the full currency fluctuations of the pound .. 24% UK is a cheap bit of currency hedging.

Here's LS100 vs VWRL .. Really the only time they deviate noticeably is with the post-Brexit fall in Sterling, and LS might make some of that up now.

The thing is you could probably take whole sectors or regions out of either of these funds, and still get about the same result .. 40% of the return is the market; 30% the sector; 30% the stock itself .. Well at these levels of diversification, the last 30% is completely out the picture ... The 30% from sectors is going to be getting on for the same, unless there's a real overweight somewhere ... Which means you're basically just getting Beta, and currencies are having the major effect .. I think Vanguard's active management of LS is utterly negligible (as it should be)

https://i.imgur.com/tJPYb4Q.jpg
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Jeff Liddiard on 17/09/2017(UTC)
chubby bunny
Posted: 16 September 2017 22:57:15(UTC)
#54

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It looks a bit different on Morningstar, especially with Fidelity's MSCI World index tracker streaking out ahead.

Then more similar to HL graphed on Trustnet.
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Jeff Liddiard on 17/09/2017(UTC)
Harry Trout
Posted: 17 September 2017 06:25:15(UTC)
#56

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I hold VWRL as my benchmark but only a small position so I can be 100% sure of the numbers. I chose the ETF over the OEIC as I am with Hargreaves Lansdown and if I did increase the position in VWRL (which I might well) there would be a saving on costs.
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Jeff Liddiard on 17/09/2017(UTC)
King Lodos
Posted: 17 September 2017 12:54:03(UTC)
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chubby bunny;51183 wrote:
It looks a bit different on Morningstar, especially with Fidelity's MSCI World index tracker streaking out ahead.

Then more similar to HL graphed on Trustnet.


I'd guess the VWRL on Morningstar isn't including reinvested dividends – and the Fidelity fund's MSCI, rather than FTSE World Index.

I don't think there's any reason to believe the MSCI is a better index, long-term
2 users thanked King Lodos for this post.
Jeff Liddiard on 17/09/2017(UTC), Tim D on 17/09/2017(UTC)
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