Mutual fund vs etf - FTSE AllWorld index

[ISAnoob]

Hi all,

I am new to this game and trying to dip my toe in to start with a fund that tracks the full world market. I like the FTSE All-World rather than the MSCI World as I want to hold the EM countries too. Other factors that are important to me include income accumulation and low fees.

Am I right in saying that no such ETF exists that tracks the FTSE All-World and has accumulation? I looked at VWRL but it pays out 2% - I intend to stick £10k in it soon and just set up a direct debit for £500 a month so after a few years I could be paying £2-3 a quarter to have my dividends reinvested with my HL account. VWRL also charges 0.33% not including the HL charge which I take to be a maximum of £45 a year no matter how many ETFs you hold or the value.

An alternative to this that I see is HSBC FTSE All-World fund. This has an ongoing charge of 0.23% and is accumulation so may be the best option for me.

Would appreciate any thoughts that anyone has please.

[Bathonian]

VWRP is the accumulation version of VWRL and has a charge of 0.22% if I'm not mistaken.

Bear in mind that if you plan to drip feed your investment each month then you will pay I think £1.50 per transaction on Hargreaves (assuming you use the regular investment option).

You could opt to buy a mutual fund instead which would not charge transaction fees although you don't benefit from the fee cap for Hargreaves as you would if you held the ETF instead.

[AJC5001]

Hi all,

I am new to this game and trying to dip my toe in to start with a fund that tracks the full world market. I like the FTSE All-World rather than the MSCI World as I want to hold the EM countries too. Other factors that are important to me include income accumulation and low fees.

Am I right in saying that no such ETF exists that tracks the FTSE All-World and has accumulation? I looked at VWRL but it pays out 2% - I intend to stick £10k in it soon and just set up a direct debit for £500 a month so after a few years I could be paying £2-3 a quarter to have my dividends reinvested with my HL account. VWRL also charges 0.33% not including the HL charge which I take to be a maximum of £45 a year no matter how many ETFs you hold or the value.

An alternative to this that I see is HSBC FTSE All-World fund. This has an ongoing charge of 0.23% and is accumulation so may be the best option for me.

Would appreciate any thoughts that anyone has please.

Vanguard have a whole range of accumulating ETFs, although there doesn't seem to be much information about them. If you look at this link https://www.justetf.com/uk/find-etf.html?groupField=index&ic=Vanguard&assetClass=class-equity and scroll down to FTSE All-World, you will see two entries. The second (Vanguard FTSE All-World UCITS ETF Distributing) is VWRL, the first is the Accumulating version, VWRP. As you mention HL, this is their page https://www.hl.co.uk/shares/shares-search-results/v/vanguard-ftse-all-world-ucits-etf-gbp

HTH

Adrian

[forrado]

An alternative to this that I see is HSBC FTSE All-World fund. This has an ongoing charge of 0.23% and is accumulation so may be the best option for me.
Would appreciate any thoughts that anyone has please.

Basically, I think you won’t go far wrong. Just over a year ago I switched 90% of my SIPP over to tracking the FTSE All-World Index using the HSBC vehicle. The other 10% being exposed to private equity investments, a sector which I consider to have the long-term potential to outperform general equities, and an area not covered by the index.

By way of explanation; the reason why I made the switch was, with a couple of exceptions, the overall performance of my SIPP portfolio of internationally focused investment trusts was beginning to lag the All-World Index. And, the principal reason I discovered for the lag was the accumulated effect of the costs over time I had to pay my selected fund managers for the privilege of running my money.

While private equity has taken a battering of late, the FTSE All-World Index is currently hovering around where it was 12 months ago. What you will need to get comfortable with is such a large exposure to the US market (near 55% of the index), and in particular, to the monolithic-like technology stocks. Of the top 10 stocks (representing some 12.6% of the index at the last count) 9 are US stocks, the odd one out being Alibaba Group Holdings Ltd. However, very large US stocks have generally been to-date the safest place for equity investors to be during the recent turmoil. And, I have no reason to believe that this is about to change; strong companies will continue to survive at the expense of weaker others.

Arguably, the most compelling reasons for index investing I have ever read goes as follows:
• Keeps costs down compared with active funds.
• Avoids the need for expensive detailed analysis company by company, and avoids getting individual company decisions wrong.
• Sells or removes poor performing companies and substitutes better performing companies on a regular basis with an iron discipline.
• Runs its successes, so you hold more value in the winning companies, and less in the losers.
• When an active manager is tempted to take profits, the index holds on. Academic research shows us that much of the extra value holding shares can bring comes from holding just a few big time winners.

I wish all the best of luck during these difficult times.

[Mememe]

I ended up using SWDA (because I don’t want the dividends) and adding an EM Vanguard ETF. You’re still faced with a dividend on the EM ETF though.

If your with HL I think you’re better off taking the dividend and paying the nominal reinvestment charge than going down the OEIC route and ending up paying more account fees

[ISAnoob]

If your with HL I think you’re better off taking the dividend and paying the nominal reinvestment charge than going down the OEIC route and ending up paying more account fees

Why does going with a OEIC mean you end up paying more account fees? Are these funds not included in the max £45/per year HL charge? I know any total of ETFs is capped at £45 a year so even if I have £100k in it then still only £45 for the HL element of the charges.

Thank you.

[ISAnoob]

Arguably, the most compelling reasons for index investing I have ever read goes as follows:
• Keeps costs down compared with active funds.
• Avoids the need for expensive detailed analysis company by company, and avoids getting individual company decisions wrong.
• Sells or removes poor performing companies and substitutes better performing companies on a regular basis with an iron discipline.
• Runs its successes, so you hold more value in the winning companies, and less in the losers.
• When an active manager is tempted to take profits, the index holds on. Academic research shows us that much of the extra value holding shares can bring comes from holding just a few big time winners.

I wish all the best of luck during these difficult times.

I'm 100% convinced that I am going down the index route but my big dilemma is how to hold my indexes. Everyone seems to only talk about ETFs for index investing but the HSBC All-world index mutual fund seems to be the best all rounder but nobody talks about it!

My problem is that I don't fully understand the small differences to do with the charges although I have messaged HL for clarity.

Cheers

[Mememe]

If your with HL I think you’re better off taking the dividend and paying the nominal reinvestment charge than going down the OEIC route and ending up paying more account fees

Why does going with a OEIC mean you end up paying more account fees? Are these funds not included in the max £45/per year HL charge? I know any total of ETFs is capped at £45 a year so even if I have £100k in it then still only £45 for the HL element of the charges.

Thank you.

Shares/ETFs/ITs are capped at £45 p/a

Funds (OEICs) aren’t I’m afraid. I don’t hold any funds partly because I prefer etf’s and ITs because I can sell when I want but also partly due to HLs charging structure.

[Mememe]

Can’t you just use AJ bell?

[ISAnoob]

If your with HL I think you’re better off taking the dividend and paying the nominal reinvestment charge than going down the OEIC route and ending up paying more account fees

Why does going with a OEIC mean you end up paying more account fees? Are these funds not included in the max £45/per year HL charge? I know any total of ETFs is capped at £45 a year so even if I have £100k in it then still only £45 for the HL element of the charges.

Thank you.

Shares/ETFs/ITs are capped at £45 p/a

Funds (OEICs) aren’t I’m afraid. I don’t hold any funds partly because I prefer etf’s and ITs because I can sell when I want but also partly due to HLs charging structure.

ok that is a massive factor in my decision making process then. I am now convinced that VWRP is the one for me then. Thank you for clarifying that.

So if I was also to hold Fundsmith in my ISA, do HL take 0.45% of the total pot value?

Cheers

[ISAnoob]

Can’t you just use AJ bell?

Do AJ not charge to hold OEICs?

[Mememe]

Can’t you just use AJ bell?

Do AJ not charge to hold OEICs?

It’s 0.25% rather than 0.45%. Not sure if it’s capped

Yes you would be paying 0.45% on fundsmith

Spread looks quite big on VWRP. Another factor to consider. It’s your money so take this the way it’s meant but maybe you’re overthinking it? It’s all pretty marginal in the grand scheme. I’d personally go VWRL and just suck up the small dividend reinvestment charge if I wanted to hold one passive and one PE

[ISAnoob]

Can’t you just use AJ bell?

Do AJ not charge to hold OEICs?

It’s 0.25% rather than 0.45%. Not sure if it’s capped

Yes you would be paying 0.45% on fundsmith

Spread looks quite big on VWRP. Another factor to consider. It’s your money so take this the way it’s meant but maybe you’re overthinking it? It’s all pretty marginal in the grand scheme. I’d personally go VWRL and just suck up the small dividend reinvestment charge if I wanted to hold one passive and one PE

hmmm I had not seen that. Why would the spread on VWRP be 1.29% and only 0.15% for VWRL?

[nmdhqbc]

Can’t you just use AJ bell?

Do AJ not charge to hold OEICs?

It’s 0.25% rather than 0.45%. Not sure if it’s capped

At £10k ish it's pretty marginal but when the pot get bigger the price of iWeb buying 4 times a year becomes cheaper at £5 x 4 = £20 a year and no other broker fees. That's the same for OIECs/ETFs and shares so you could go for the HSBC Acc one you like. I think you have to do it manually though. Something to consider.

[Mememe]

Yep don’t know the answer to that. Listed in London and it’s pretty big so not sure. Maybe dual listed and isn’t traded through London often

[nmdhqbc]

so you could go for the HSBC Acc one you like.

Actually maybe not. Can't find it on iWeb. When I look at the KIID for the fund it says it's a sub-fund. Available on HL for some reason but they wipe out all the benefits with 0.45% fee. Maybe this is why it's not talked about so much.

https://www.fundslibrary.co.uk/FundsLib ... urdvwp&r=1

[AJC5001]

I ended up using SWDA (because I don’t want the dividends) and adding an EM Vanguard ETF. You’re still faced with a dividend on the EM ETF though.

If the EM Vanguard ETF is VFEM. the equivalent Accumulating version is VFEG. See https://www.justetf.com/uk/etf-profile.html?groupField=index&ic=Vanguard&assetClass=class-equity&from=search&isin=IE00BK5BR733

Adrian

[EthicsGradient]

If you want to make regular investments in an OEIC, Halifax may end up cheaper over the years; £2 regular investment fee, plus £12.50/yr for running the ISA. I think this is the All-World index fund you're after, isn't it? https://www.investments.halifax.co.uk/f ... 00BMJJJF91

[Mememe]

I ended up using SWDA (because I don’t want the dividends) and adding an EM Vanguard ETF. You’re still faced with a dividend on the EM ETF though.

If the EM Vanguard ETF is VFEM. the equivalent Accumulating version is VFEG. See https://www.justetf.com/uk/etf-profile.html?groupField=index&ic=Vanguard&assetClass=class-equity&from=search&isin=IE00BK5BR733

Adrian

Thanks Adrian. Had a look on Hargreaves and not available. In fact doesn’t look like it’s available on vanguard either. Maybe because of its size.

[Bathonian]

Spread looks quite big on VWRP. Another factor to consider. It’s your money so take this the way it’s meant but maybe you’re overthinking it? It’s all pretty marginal in the grand scheme. I’d personally go VWRL and just suck up the small dividend reinvestment charge if I wanted to hold one passive and one PE

Spread now is showing as 0.18% for VWRP. I hold and have not had an issue with spreads when building my position so far. For me VWRP is a one stop shop although VWRL is also a good choice if you are happy to handle the divis.

Honestly I don’t think you can go too far wrong with any of the ETF choices listed here, VWRL, VWRP, SWDA etc.