Adding to tracker funds - need to diversify?

[zico]

I currently have about £60k in the following 2 tracker funds, and am planning to add another £20k to £60k in the next month or so.
Would you recommend that I simply add to my current positions in these funds, or would it spread my risk to add instead to similar funds run by different companies - and if so, do you have any recommendations? I currently invest via the AJ Bell platform.

Vanguard FTSE 100 UCITS ETF + Vanguard FTSE All-World UCITS ETF GBP

[Lootman]

I currently have about £60k in the following 2 tracker funds, and am planning to add another £20k to £60k in the next month or so.
Would you recommend that I simply add to my current positions in these funds, or would it spread my risk to add instead to similar funds run by different companies - and if so, do you have any recommendations? I currently invest via the AJ Bell platform.

Vanguard FTSE 100 UCITS ETF + Vanguard FTSE All-World UCITS ETF GBP

I'm not sure how you could spread your risk any more than an All-World index fund. Unless you wanted to consider bonds, property, gold, commodities etc.

Nor do I see a need to diversify your ETF provider, at least as long as you are with one of the big three, which you are.

Do you have any market, sector or company views that you'd like to take a punt on? Or are you still more concerned with building a solid core to your portfolio? If the latter then I'd just add to the All-World ETF.

[mc2fool]

I currently have about £60k in the following 2 tracker funds, and am planning to add another £20k to £60k in the next month or so.
Would you recommend that I simply add to my current positions in these funds, or would it spread my risk to add instead to similar funds run by different companies - and if so, do you have any recommendations? I currently invest via the AJ Bell platform.

Vanguard FTSE 100 UCITS ETF + Vanguard FTSE All-World UCITS ETF GBP

While I certainly wouldn't encourage you to worry about Vanguard at all, using another "big boys" ETF provider could give you a little free peace of mind, and in fact the iShares equivalents are a teeny bit cheaper, by a huge 2 basis points.

The iShares Core FTSE 100 ETF (ISF) has an ongoing charge of 0.07% (vs 0.09 for VUKE) and the iShares Core MSCI World ETF (SWDA) 0.20% (vs 0.22 for VWRL).

Note though that SWDA Is an accumulation ETF, which may or may not suit you....

[zico]

Thanks for your response. I don't have particular views on a sector, but just thinking that if I put (say) another £60k into the FTSE All-World units, I'd have over 20% of my holdings in just one tracker which is maybe getting a bit too large for comfort.

Just wondering if it would be good for diversification to have smaller investments in 2 negatively correlated funds (e.g. Iran FTSE v USA FTSE, or Growth v Capital, China v USA) but maybe holding the FTSE All-World units just does pretty much the same thing, but more simply and mechanically?
I'm not the type of investor who stays regularly interested in stock market developments over a long period of time, so prefer to buy and then ignore as much as possible.

Mc2Fool - Thanks, from the brief bit I've read, accumulation ETF is better for growing capital, which is my main aim here.

[Lootman]

Thanks for your response. I don't have particular views on a sector, but just thinking that if I put (say) another £60k into the FTSE All-World units, I'd have over 20% of my holdings in just one tracker which is maybe getting a bit too large for comfort.

Comfort is important. I trust the major ETF providers, not least because I worked for one for 5 years. But everyone is different in that regard and if you want to split between ETF providers then the other two biggies are iShares and State Street/SPDRs.

Just wondering if it would be good for diversification to have smaller investments in 2 negatively correlated funds (e.g. Iran FTSE v USA FTSE, or Growth v Capital, China v USA) but maybe holding the FTSE All-World units just does pretty much the same thing, but more simply and mechanically?

Yes, I'd say the All-World takes care of growth versus value, this region versus that region, and so on. If you don't have a view on the markets then I would not make bets like that. The broadest index is neutral and agnostic on sectoral bets.

[mc2fool]

Mc2Fool - Thanks, from the brief bit I've read, accumulation ETF is better for growing capital, which is my main aim here.

Yes, but if it's not in a tax shelter (ISA or SIPP) then accumulation units is a bit of faff paperwork wise, as you have to still declare (and pay tax on) the dividends, even though they don't reach your pocket, and you have to keep records of them long term as they will increase your cost basis for capital gains purposes when you finally sell.

[AJC5001]

Mc2Fool - Thanks, from the brief bit I've read, accumulation ETF is better for growing capital, which is my main aim here.

Vanguard have recently(?) introduced accumulation versions of some of their ETFs.
From what I've seen, VWRL has an accumulation equivalent of VWRP. However, the HL page for that https://www.hl.co.uk/shares/shares-search-results/v/vanguard-ftse-all-world-ucits-etf-gbp is not clear that it is accumulating, compared with the VUKE equivalent of VUKG https://www.hl.co.uk/shares/shares-search-results/v/vanguard-ftse-100-ucits-etf-gbp-acc which clearly says 'ACC' in the title.

Has anyone invested in any accumulating Vanguard ETFs?

Adrian

[GeoffF100]

Mc2Fool - Thanks, from the brief bit I've read, accumulation ETF is better for growing capital, which is my main aim here.

It makes no difference, provided that you reinvest the dividends in the same stock when they are paid. Actually, it could make a small difference if your broker is tardy paying your dividends. Even in a tax free account, the income versions of the funds have the advantage that you can reinvest the money elsewhere, or use some of it to cover fees. On the other hand, you may have to pay a fee to reinvest. Of course, you can always sell a little of an accumulating fund, but, again, you may have to pay a fee for that.

As far as the main question is concerned, a world tracker is about as diversified as you can get with equities. It may not include small companies, however. Whether it is a good idea to invest in small companies is another matter. Perhaps you should consider investing some of your money in bonds to reduce risk.

[xxd09]

zico-well done you have made a good start
I am 73-17 years retired
I have 2 funds only . A Vanguard World Equity Index Tracker Fund and Vanguard World Bond Tracker Index Fund hedged to the Pound
That’s it
If you are young the Equity fund is all you need at the moment -Bonds come later
The funds you have are good-a World Equity Index Fund however contains U.K. FTSE shares -avoid duplication
Your platform is good
You have it well set up -cheap, simple and easy to understand
Now leave it alone -concentrate on the day job and making money for you savings/investments
Read and learn as you capital grows-these boards, Monevator.com and Lars Kroijer,s website etc
xxd09

[mc2fool]

Vanguard have recently(?) introduced accumulation versions of some of their ETFs.
From what I've seen, VWRL has an accumulation equivalent of VWRP. However, the HL page for that https://www.hl.co.uk/shares/shares-search-results/v/vanguard-ftse-all-world-ucits-etf-gbp is not clear that it is accumulating, compared with the VUKE equivalent of VUKG https://www.hl.co.uk/shares/shares-search-results/v/vanguard-ftse-100-ucits-etf-gbp-acc which clearly says 'ACC' in the title.

How curious that neither can be found on https://www.vanguardinvestor.co.uk/ ...

[todthedog]

Only 3 funds in ours

Vanguard World Equity Index Tracker Fund
Vanguard World Bond Tracker Index Fund hedged to the Pound
Dirt cheap and Diversified.

Capital Gearing Trust, great long time record and adds to diversification into other areas, good record in last crash.
I sleep easy at night.

Held in iweb £5 a trade .

[MartynC27]

Only 3 funds in ours

Vanguard World Equity Index Tracker Fund
Vanguard World Bond Tracker Index Fund hedged to the Pound
Dirt cheap and Diversified.

Capital Gearing Trust, great long time record and adds to diversification into other areas, good record in last crash.
I sleep easy at night.

Held in iweb £5 a trade .

I understand there is a £25 Flat Charge when you initially join iweb which covers having a Trading Account, an ISA and a SIPP Account.
Are there any other charges in the ISA and SIPP besides the £5 a trade ?

In your asset allocation do you have an equal amounts of World Bond Tracker Index Fund and Capital Gearing Trust to offset the Equity Risk of the World Equity Index Tracker ?

[JohnB]

I'd have 2 providers of funds, and 2 brokers, however rock solid they are, you don't want to be unable to get any cash if they do get into difficulties, and its takes 6 months for your ring-fenced assets to be made available by the administrators.

ACC units for ISAs and Pensions, INC for unsheltered, makes tax returns so much easier.

[todthedog]

60% vwrl
30% CGT
10% bonds

£25 set up fee payable once
No other charges from iwebb
Plus charges from the funds themselves.

Hope this helps

[mc2fool]

I understand there is a £25 Flat Charge when you initially join iweb which covers having a Trading Account, an ISA and a SIPP Account.
Are there any other charges in the ISA and SIPP besides the £5 a trade ?

Actually the £25 covers a trading account and an ISA. Opening a SIPP is free (even if you don't already have the other types of a/c).

Other than the £5 per trade, trading accounts and ISAs have no regular charges but SIPPs cost £90pa if they're less than £50K and £180pa if more. https://www.iweb-sharedealing.co.uk/pro ... counts.asp

And there are drawdown charges. https://www.iweb-sharedealing.co.uk/cha ... harges.asp