Is VWRL the best bet

[DrFfybes]

I couldn’t see the point of paying for active and getting a below passive retu rn.

LIGHTBULB MOMENT

I just wish I'd discovered that 30-odd years ago. More to the point, I wish I could still accept it now and stop buggering about with things.

Paul

[richfool]

After flirting with ETF's (VEVE), I in fact increased my holdings of investment trusts over the last year. Anticipating interest rate rises and likely falls in the markets (equities), I didn't want to passively track markets downwards. I took the view that IT's can at least take pre-emptive and proactive action to minimise the effects of falling markets.

Yes, but do they take pre-emptive and proactive action to maximise the effects of rising markets?

Well they do have the ability to increase gearing to that end, though like with any investor it depends if they do and if they get it right!

[Monty]

You are wasting your time. Those numbers are in the past. What matters is the future, which is unknown.

I agree the future matters and is unknown, I disagree that I wasted my time, there is much to learn and to be enjoyed from the past. Historically, my portfolio has benefitted greatly from research.
Monty

[Dicky99]

You are wasting your time. Those numbers are in the past. What matters is the future, which is unknown.

I agree the future matters and is unknown, I disagree that I wasted my time, there is much to learn and to be enjoyed from the past. Historically, my portfolio has benefitted greatly from research.
Monty

"The further back you look the further forward you can see"

[GeoffF100]

You are wasting your time. Those numbers are in the past. What matters is the future, which is unknown.

I agree the future matters and is unknown, I disagree that I wasted my time, there is much to learn and to be enjoyed from the past. Historically, my portfolio has benefitted greatly from research.
Monty

If so, you have been lucky. The professionals cannot manage that with more than luck chance of success. Have you compared your risk adjusted total return with a global tracker?

[JohnW]

FTSE and MSCI use different pools for their respective constituents groups of countries/regions. I have previously read that one should be careful of mixing FTSE indices with MSCI indices, better to stick with one or the other. I am not sure if this is necessary though.’

Good point. FTSE includes emerging markets, MSCI doesn’t it seems; otherwise similar. Theoretically you should have EM as it adds diversification, but the performance measures differences would be quite small I’d guess. Anyone done a comparison? There’s a lot of fine print with indexes, like which are harder to ‘front run’ or turn over more or are easier to track by the fund. Vanguard has described why it changed from one index to another for those sorts of reasons. Beyond my pay grade, so it wouldn’t be a deal breaker for me.

‘A further issue is the lack of protection from ETF's whereas IT's tend to have FCA cover I believe’

No idea.

‘IT managers did not appear to be adding any value with their active approach, or rather lack of it. This is unlikely to be a long term issue but in my current circumstances I prefer the smoother ride from the ETF’s’

I’m a bit out of my depth here, but if IT’s is synonymous with active management, and the ETF’s we’re talking about are global trackers, then I disagree about ‘adding value with their active approach’. All the evidence from SPIVA and more academic research finds the you’re likely to get better risk adjusted returns with trackers; the debate now 50 years old is pretty much over. If the IT’s can borrow to leverage their investing, that’s a horse of a different colour; I can see it adding risk but will it add more than commensurate returns?

‘I am interested in JGRE as it has the best Morningstar rating of the Global ETF pack and its perfroamnce has been very good.’

It has 750 stocks reflecting a global index, but actively chosen stocks. It’s not a tracker or a high conviction active fund; is it a closet tracker? Probably doesn’t matter much unless it’s expensive, but I don’t see the attraction over a cap weighted tracker. If it’s done better than a comparable tracker in the past it can also do worse in the future surely, why not? Why bother with it? If the answer is past performance, I'm not convinced.

[mc2fool]

A further issue is thelack of protection from ETF's whereas IT's tend to have FCA cover I believe.

Methinks you mean FSCS cover, and it covers neither:

FSCS protection applies to UK domiciled OEICs and Unit Trusts.
It does not apply to funds domiciled overseas. For example, in Ireland.
Nor will you be compensated if you hold ETFs or Investment Trusts with a fund provider that runs into trouble.
The same goes for individual securities like shares or bonds. Never mind crypto.

https://monevator.com/investor-compensation-scheme/

[GeoffF100]

If the IT’s can borrow to leverage their investing, that’s a horse of a different colour; I can see it adding risk but will it add more than commensurate returns?

No. If they borrow at the "risk free rate" the risk adjusted return remains the same. They may have borrowed more cheaply or more expensively than the "risk free rate", and there may be some risk in their borrowings, but that is active management again.

[Monty]

I agree the future matters and is unknown, I disagree that I wasted my time, there is much to learn and to be enjoyed from the past. Historically, my portfolio has benefitted greatly from research.
Monty

If so, you have been lucky. The professionals cannot manage that with more than luck chance of success. Have you compared your risk adjusted total return with a global tracker?

Hi Geoff,
Good point, yes I track my performance against VWRL. I have tried to add an image of the results for you but am unable to do so as it appears I need to store the image on a website and then add the url here. I think that you may have misinterpreted my comments somewhere, I make no claim to be better than any professional. I merely stated that I switched from IT's to ETF's as a result of their different levels of risk during a recent period of time.
Monty

[mc2fool]

I have tried to add an image of the results for you but am unable to do so as it appears I need to store the image on a website and then add the url here.

Indeed you do. https://imgur.com/ is a popular choice to upload to, and you don't even have to create an account with them (although you have more control over your uploaded images if you do).

[monabri]

If so, you have been lucky. The professionals cannot manage that with more than luck chance of success. Have you compared your risk adjusted total return with a global tracker?

Hi Geoff,
Good point, yes I track my performance against VWRL. I have tried to add an image of the results for you but am unable to do so as it appears I need to store the image on a website and then add the url here. I think that you may have misinterpreted my comments somewhere, I make no claim to be better than any professional. I merely stated that I switched from IT's to ETF's as a result of their different levels of risk during a recent period of time.
Monty

Upload a jpeg file using 'post images (free - try it before creating an account, it's still free even if you sign up ).

Google 'post images' and select



Upload the jpg file from your computer

'Hotlink for forums'..( third option from the bottom of the list) - click on the blue icon ( to copy) on the right hand side of the link

Paste in the copied link.

Preview the post before submitting.

[Monty]

I have tried to add an image of the results for you but am unable to do so as it appears I need to store the image on a website and then add the url here.

Indeed you do. https://imgur.com/ is a popular choice to upload to, and you don't even have to create an account with them (although you have more control over your uploaded images if you do).

Thanks for the link.

[torata]

New to passive investing I switched from Investment Trusts in the last year as IT's failed to navigate the downturn very well, I keep an eye on those but am yet to go back to them despite some tasty discounts appearing.
....
I went with Global for simplicity and have been very happy with it. I started with VWRL and added SWDA to an account that I did not want any dividends adding to.

Hello Monty,

Possibly not an issue but the bit in my bold caught my eye so thought I'd flag it as you say you are new to passive investing.
You do realize that SWDA does actually generate dividends? You just don't see them as it's an accumulating ETF, but if it's held outside of a tax free wrapper, you still have to account for them to the taxman.
torata

[GeoffF100]

New to passive investing I switched from Investment Trusts in the last year as IT's failed to navigate the downturn very well, I keep an eye on those but am yet to go back to them despite some tasty discounts appearing.
....
I went with Global for simplicity and have been very happy with it. I started with VWRL and added SWDA to an account that I did not want any dividends adding to.

Hello Monty,

Possibly not an issue but the bit in my bold caught my eye so thought I'd flag it as you say you are new to passive investing.
You do realize that SWDA does actually generate dividends? You just don't see them as it's an accumulating ETF, but if it's held outside of a tax free wrapper, you still have to account for them to the taxman.
torata

They show up as Excess Reportable Income.

[Monty]

New to passive investing I switched from Investment Trusts in the last year as IT's failed to navigate the downturn very well, I keep an eye on those but am yet to go back to them despite some tasty discounts appearing.
....
I went with Global for simplicity and have been very happy with it. I started with VWRL and added SWDA to an account that I did not want any dividends adding to.

Hello Monty,

Possibly not an issue but the bit in my bold caught my eye so thought I'd flag it as you say you are new to passive investing.
You do realize that SWDA does actually generate dividends? You just don't see them as it's an accumulating ETF, but if it's held outside of a tax free wrapper, you still have to account for them to the taxman.
torata

HI,
Useful info, many thanks.
Monty

[1nvest]

Hello Monty,

Possibly not an issue but the bit in my bold caught my eye so thought I'd flag it as you say you are new to passive investing.
You do realize that SWDA does actually generate dividends? You just don't see them as it's an accumulating ETF, but if it's held outside of a tax free wrapper, you still have to account for them to the taxman.
torata

HI,
Useful info, many thanks.
Monty

In non taxable accounts for accumulation funds you should automatically be referencing and reporting (in your self assessment tax return) the dividend value accumulated as though it was a actual dividend amount received, and increasing your records of average cost per share for that stock (as otherwise you might end up paying more capital gains tax than you should when you sell shares).

Own 100 shares of xyz that originally cost 100p/share, and later the fund reports a 5p dividend accumulated, so you declare a £5 dividend to HMRC, and increase your per share cost base from 100p to 105p/share.

[Julian]

HI,
Useful info, many thanks.
Monty

In non taxable accounts for accumulation funds you should automatically be referencing and reporting (in your self assessment tax return) the dividend value accumulated as though it was a actual dividend amount received, and increasing your records of average cost per share for that stock (as otherwise you might end up paying more capital gains tax than you should when you sell shares).

Own 100 shares of xyz that originally cost 100p/share, and later the fund reports a 5p dividend accumulated, so you declare a £5 dividend to HMRC, and increase your per share cost base from 100p to 105p/share.

I assume this is a simple typo, or else my understanding is totally wrong, but I assume you didn't meant to type that "non" in the bit that I bolded in the first few words of your reply, i.e. it is only taxable accounts where you need to account for dividends received by an accumulation fund but not physically paid out to you whereas for holdings in ISAs or SIPPs none of the record keeping you describe is necessary for tax purposes. (I suppose that even within an accumulation trust some people might want to separate out returns from income from those from capital growth for their own performance monitoring reasons but to lazy old me that feels like masochism!).

On that accumulation thing someone already mentioned VWRL/VWRP where VWRP is simply the accumulating (as opposed to distributing, i.e. paying out the dividends) version of VWRL. It is worth doing a bit of Google searching because many of the Vanguard ETFs come in both distributing and accumulating versions and Vangard's UK site doesn't always seem very good at making it easy to find the accumulation version.

Personally I became a convert to passive investing a few years ago. I still have a lot of actively managed ITs but their performance has been underwhelming so all new investments go into passives and as I top-slice my investments every year to top up income and make full use of my ISA and post-retirement SIPP allowances my active investment pool (ITs and some HYP shares) that form the pool of candidates to sell off so that I can let my passives run untouched until that active pool is gone.

There are already a lot of passives discussed here but I'll finish by throwing in one I think lesser known one because it's fairly new but might be of interest to those wanting maximum simplicity so covering as much market as possible with a single investment. Vanguard have done this as a mutual fund for a while but fairly recently anls announced an ETF that tracks the FTSE Global All-Cap index where the key difference between it and VWRL/VWRP is that the all-cap includes some global smaller cap representation as well as the medium and large cap found in VWRL/VWRP. The tickers for those Vanguard ETFs are V3AM.L (distributing) and V3AB (accumulating).

- Julian

[NotSure]

....

There are already a lot of passives discussed here but I'll finish by throwing in one I think lesser known one because it's fairly new but might be of interest to those wanting maximum simplicity so covering as much market as possible with a single investment. Vanguard have done this as a mutual fund for a while but fairly recently anls announced an ETF that tracks the FTSE Global All-Cap index where the key difference between it and VWRL/VWRP is that the all-cap includes some global smaller cap representation as well as the medium and large cap found in VWRL/VWRP. The tickers for those Vanguard ETFs are V3AM.L (distributing) and V3AB (accumulating).

A bit like the EM component in the global trackers, Vanguard has small cap OEIC (not sure about ETF). Combining with the large cap is cheaper than using the All Cap.

[Newroad]

Hi Julian.

That's very interesting - I did not know.

Having now looked them up, the other advantage I can see is that they are a smaller price per unit - by a factor of around 20 - which will be helpful for many regular investors.

It would also appear they are "ESG" oriented - which might be attractive for some and not for others.

Regards, Newroad

[NotSure]

I was not aware the Vanguard OEIC was ERG? It is not mentioned in the overview:

https://www.vanguardinvestor.co.uk/investments/vanguard-global-small-cap-index-fund-gbp-acc/overview

I think Vanguard have a small-cap ETF, but US not global.