Would love some thoughts on my desire to move away from Vanguard investing

[turnaround]

Hi all

Fairly new to investing (did minimum pension contributions & kept savings in current accounts / cash ISA) so now trying to catch up.

Would love to get peoples thoughts on the below plan (allocation, split etc):

Current position in Vanguard is:
~£45k ISAs in Vanguard (split ~ 47% Global All Cap Accum, 43% Life Strategy 80 & 10% Emerging Markets Index Acc Fund).
~£9k in cash ISA (from prior year allowance).

Thinking of stopping further contributions to Vanguard account (as well as transfering the LS80 into Global All Cap), transferring the £9k cash ISA and then doing a drip feed of ~£1.7k/month into ETFs on a new platform. Im thinking of going in a more thematic / higher risk-reward route with the following split:

Tech (thinking ATT or PCT) - 30-40%
Healthcare / Biotech (Ishares Healthcare Innovation DRDR? BIOG?) 10-15%
Automation & Robotics (Ishares RBOD?) 10-15%
Water (L&G GLGG / Ishares IH20?) 10-15%
EV-Driving Tech (Ishares ECAR / Wisdom Tree CHRG?) 10-15%
Mining / Commodities (VanEck GDIG?) 10-20%
China exposure 10-20% (ideally the non tech companies which are likely to be captured in ATT/PCT)

Appreciate the above doesn't add up to 100%! Perhaps some have too much overlap so no point doing both (e.g. is EV-Driving tech really necessary?)
The mining / commodities i was thinking purely as inflationary hedge but tbh im not sure how much better theyd perform than any of the other ones in a hyper inflation scenario...Water too...obviously something will be a scarcity in the future but i cant help but thinking that the biggest developments will be to improve supply / distribution in 3rd world...and how much money is there in that?

Further, i am concerned that having too many ETFs will ramp up the charges....i haven't figured out which platform would be best but assuming an average ETF purchase price of ~£10 (in line with HL), having 5 ETFs x 12 x 10 = 600 in fees...~3% of 20k ISA limit...

Would love any thoughts/suggestions on the splt /ETF choices and suggested platforms given above. No investment horizon...most likely keep going for 10-20 years minimum (early 30s atm).

[tjh290633]

In your 30s I would suggest that Life Strategy is something you can forget. Presumably your ISA is with Vanguard, which rather limits your choice.

I would suggest that you open an ISA with a low cost ISA provider, like Halifax, and transfer your existing holdings into it. If you have subscribed to the Vanguard one this financial year, this may cause problems. Best to read the rules on the subject. Once you are able to subscribe to the new one, you have a vast choice of investment options.

The Global Investment Trusts - Alliance, F&C and Witan - may be a good starting point. For individual companies, probably best to stick to the FTSE100 and the upper reaches of the FTSE250 when choosing an investment, but do your own research. Look at Annual reports to get the flavour of a company, and look at how it has done over the years.

TJH

[turnaround]

In your 30s I would suggest that Life Strategy is something you can forget. Presumably your ISA is with Vanguard, which rather limits your choice.

I would suggest that you open an ISA with a low cost ISA provider, like Halifax, and transfer your existing holdings into it. If you have subscribed to the Vanguard one this financial year, this may cause problems. Best to read the rules on the subject. Once you are able to subscribe to the new one, you have a vast choice of investment options.

The Global Investment Trusts - Alliance, F&C and Witan - may be a good starting point. For individual companies, probably best to stick to the FTSE100 and the upper reaches of the FTSE250 when choosing an investment, but do your own research. Look at Annual reports to get the flavour of a company, and look at how it has done over the years.

TJH

yes, my 45k ISA is with Vanguard. I have not contributed to it since Feb so i am free to open a new S&S ISa this financial year with a new provider. Havent chosen which one but have heard Halifax mentioned a few times so will check them out.

Ideally hoping to stick to ETFs though rather than individual companies.

[AleisterCrowley]

As you don't want to be a passive investor any more, you might want to ask your question in a different forum where the active investors can advise

not being argumentative but i would have thought this is quite passive? i have no plans on rebalancing month on month or doing individual stock picks. What counts as passive if not this (initial selection then just direct debit buying each month same time each month)?

i've also posted in "Investment Strategies" for what its worth!

If you're buying managed funds it's active - even if you just put a dollop in and leave it. You're basically paying someone else to do the stock picking for you! Something fund managers don't do particularly well to be honest.

[Alaric]

Further, i am concerned that having too many ETFs will ramp up the charges....i haven't figured out which platform would be best but assuming an average ETF purchase price of ~£10 (in line with HL), having 5 ETFs x 12 x 10 = 600 in fees...~3% of 20k ISA limit...

You can avoid these charges by sitting on your hands. By all means feed monthly cash into the iSA, but wait until a decent sum has accumulated and buy in bulk. With the £ 20,000 ISA limit don't think in terms of investing less than £1000 in one go. Your buying commission is thus £200, lower if you set a higher threshold on individual purchases.

If you invest in OEICs, you may find Brokers who don't charge commissions on purchase. They are likely to charge on the value of the assets you hold with them.

"Passive" in the jargon and board classification refers to how a fund is managed. If it just follows an index that's "passive" and if there's a manager making buy/sell decisions, that's "active".

[turnaround]

If you're buying managed funds it's active - even if you just put a dollop in and leave it. You're basically paying someone else to do the stock picking for you! Something fund managers don't do particularly well to be honest.

Fair enough. i was under the impression that ETFs were much more passive than Investment Funds (which have the higher charges).

You can avoid these charges by sitting on your hands. By all means feed monthly cash into the iSA, but wait until a decent sum has accumulated and buy in bulk. With the £ 20,000 ISA limit don't think in terms of investing less than £1000 in one go. Your buying commission is thus £200, lower if you set a higher threshold on individual purchases.

If you invest in OEICs, you may find Brokers who don't charge commissions on purchase. They are likely to charge on the value of the assets you hold with them.

"Passive" in the jargon and board classification refers to how a fund is managed. If it just follows an index that's "passive" and if there's a manager making buy/sell decisions, that's "active".

I actually have another £36k sitting in cash in addition to the above mentioned sums but thats more my rainy day marcus fund/current account. My personality would never allow to throw a £20k chunk in one go. Id need to dollar cost average buy if i were to ever hit the invest button! otherwise id be suffering from analysis paralysis! But as i did mention my plan is to start this new S&S by transferring a £9k cash ISA & adding an initial £4-5k contribution from the years 20k limit. After that it would be a monthly £1.5-£1.7k drip feed.

Looking at Halifax and it seems they charge £36 + £2/regular scheduled investment. I've messaged them to confirm but it seems that total fees would then be £36 + 12x5x2 = £156 / year (assuming 5 ETFs only) which isnt too bad imo.

& understood regarding board classification. my impression was that ETFs on the most part are passive management ie follow an index (even if its thematic).

Anyway, apologies for wondering into wrong place, if you guys dont hang out in other places then its still good to hear opinions from different people imo!

[billG]

On the assumption you are investing for 20+ years, do not anticipate drawing the investments until retirement and that you have a high risk tolerance (i.e. will not sell when the markets drops) then taking a high equity position would (based on historical US data) give you the best chance to get a good return on your money. Assuming you want a fairly hands off approach then you may wish to consider the following general points.
My own portfolio the equity portion is about 50% low cost trackers (like Vanguard) and 50% a collection of investment trusts. Investment trusts are in general more complicated to understand than unit trusts but the past returns over the longer term have been superior.

In your case I would be tempted by a mix of global general trusts and given the long term nature of your timescales you may consider an aggressive approach and aim for some smaller companies and emerging market exposure – perhaps 10% in each.

As far as specific sectors (themes) I do not have any strong views on which will be winners. Take commodities for instance. A case can be built for strong returns over the next few years but this sector tends to be volatile and I am not convinced that over twenty years this sector will give stronger returns than the market. If you have strong view on sectors like technology, commodities, environment etc. then back your judgement with a small proportion of your portfolio. The future is hard to judge/predict and it is unlikely you, others on the forum or me have any special insight. For what it is worth I am overweight smaller companies, technology, pharmaceuticals and commodities by a few percent in each and will probably rebalance these back to global tracker proportions when I judge the time is right - but will be very lucky if I get my timing correct.

So to answer some of your specific points.

I have found Interactive Investor a reasonable platform for my investment portfolios.

Unless you need the cash in an ISA I would move your cash ISA to a stock and shares ISA. The advantage not having to worry about either dividend tax or CGT is valuable especially when your portfolio get larger. A Stocks and Shares ISA is more likely to grow faster over the 20 year investment period that a cash ISA.

Your choices do not have any smaller company exposure. Such shares tend to do well in the second half of a bull market - like now. But can be volatile. However over the longer term smaller company funds dominate the table for 10+ years returns. So I would add some small company exposure. At present IT's have outperformed ETF's for both smaller companies and emerging markets.

As a general rule I would not have any more than 50% of your portfolio as themes. As to which themes are best I refer you to my remark above.

Good luck.

[AleisterCrowley]

I was more responding to the later IT suggestions
From memory most ETFs are passive or pseudo passive index funds but there are some actively-managed ones

There's an argument that you buy anything other than a global tracker you are investing actively, becuase you are making a decision on which countries/sectors will outperform. Seems a bit extreme to me, and it is a grey area!!!
You just need to avoid the potential Woodfords..

[mc2fool]

In your 30s I would suggest that Life Strategy is something you can forget.

I disagree, there's nothing wrong with the Vanguard Life Strategy funds for any age, although if the OP wants to up the risk level then swapping the LS80 for the LS100 would be a reasonable move. The main difference between that and the mooted Global All Cap is the LS funds have a bigger than mkt cap allocation to the UK, which is something to take a view on (either way...)

[turnaround]

On the assumption you are investing for 20+ years, do not anticipate drawing the investments until retirement and that you have a high risk tolerance (i.e. will not sell when the markets drops) then taking a high equity position would (based on historical US data) give you the best chance to get a good return on your money. Assuming you want a fairly hands off approach then you may wish to consider the following general points.
My own portfolio the equity portion is about 50% low cost trackers (like Vanguard) and 50% a collection of investment trusts. Investment trusts are in general more complicated to understand than unit trusts but the past returns over the longer term have been superior.

In your case I would be tempted by a mix of global general trusts and given the long term nature of your timescales you may consider an aggressive approach and aim for some smaller companies and emerging market exposure – perhaps 10% in each.

As far as specific sectors (themes) I do not have any strong views on which will be winners. Take commodities for instance. A case can be built for strong returns over the next few years but this sector tends to be volatile and I am not convinced that over twenty years this sector will give stronger returns than the market. If you have strong view on sectors like technology, commodities, environment etc. then back your judgement with a small proportion of your portfolio. The future is hard to judge/predict and it is unlikely you, others on the forum or me have any special insight. For what it is worth I am overweight smaller companies, technology, pharmaceuticals and commodities by a few percent in each and will probably rebalance these back to global tracker proportions when I judge the time is right - but will be very lucky if I get my timing correct.

So to answer some of your specific points.

I have found Interactive Investor a reasonable platform for my investment portfolios.

Unless you need the cash in an ISA I would move your cash ISA to a stock and shares ISA. The advantage not having to worry about either dividend tax or CGT is valuable especially when your portfolio get larger. A Stocks and Shares ISA is more likely to grow faster over the 20 year investment period that a cash ISA.

Your choices do not have any smaller company exposure. Such shares tend to do well in the second half of a bull market - like now. But can be volatile. However over the longer term smaller company funds dominate the table for 10+ years returns. So I would add some small company exposure. At present IT's have outperformed ETF's for both smaller companies and emerging markets.

As a general rule I would not have any more than 50% of your portfolio as themes. As to which themes are best I refer you to my remark above.

Good luck.

thank you for the reply. Agreed - no plan on keeping cash ISAs. Simply moved £9k there last year as i didnt use my allowance fully and wanted to move to something other than what was available on Vanguard.

Good point about smaller companies and additional de-risking by continuing to have Global trackers. One thing to note i guess is that by the end of the year this new S&S ISA will have £29k contributed to it...so my "global tracker" exposure is still 60% on a cost basis (existing Vanguard account - Global all cap , LS80 & EM fund)...but perhaps in Year 2/3 some rebalancing might be needed....but i agree that some earlier small cap exposure is needed.

Are you happy to share your small cap / phama choices? would be great to have some starting points for research / googling.

[billG]

My Worldwide Healthcare choice 20 years ago was WWH. I am overweight 3% compared with a global tracker.
There is more choice now in the IT world.....
https://www.theaic.co.uk/aic/find-compa ... &desc=true

Smaller caps you have the choice between global or regional.
Global...
https://www.theaic.co.uk/aic/find-compa ... &desc=true
Many of these have a high US/UK weighting.

My personal choice is a collection or regional trusts: MRC, SLS, HSL, BRS, JESC, BGS, ATR, ISP6 (ETF). This collectively makes up about 10% of my portfolio. I have held these many years (10+) and it is unclear if I would make the same choices today but not unhappy with the results so far.

I suggest you look at the trusts that you think fit your remit and read the investment management reports and make your best guesses.
Last years winners tend not to be next years top performers and look for a consistent performance - a manager with a tracker record with ideally skin in the game.

[torata]

I want to look at this from a different angle.

You seem to want to move away from Vanguard so that you can tilt your portfolio to various geographic and themes that Vanguard doesn't provide.

Sure, but why not leave the vanguard stuff where it is and move it all into their worldwide tracker or similar. That way you have a solid core, and then you can start to tilt using a different provider with money added from now on. Tilts are fine, and I tilt my pension towards EM, small cap, PE and infra, but speaking from experience, I think it's important to have a clear process (or processes) that you stick to, otherwise, as I discovered, there's a danger of flipping your themes more and more frequently.

The guy who runs the pensioncraft youtube site has all his funds with vanguard and it might be an idea to look at some of his videos - don't get me wrong, he's not by any means trying to sell Vanguard - to see what seem to be sound ideas based on solid research.

torata

[Arborbridge]

If you're buying managed funds it's active - even if you just put a dollop in and leave it. You're basically paying someone else to do the stock picking for you! Something fund managers don't do particularly well to be honest.

And some private investors do much more badly!
I'm not particularly thick or disorganised, but my feeling after being in the game since 1986 is that I find it difficult or impossible to consistently "outrun" professional active fund managers. Therefore I would not dismiss them lightly.

Arb.

[turnaround]

I want to look at this from a different angle.

You seem to want to move away from Vanguard so that you can tilt your portfolio to various geographic and themes that Vanguard doesn't provide.

Sure, but why not leave the vanguard stuff where it is and move it all into their worldwide tracker or similar. That way you have a solid core, and then you can start to tilt using a different provider with money added from now on. Tilts are fine, and I tilt my pension towards EM, small cap, PE and infra, but speaking from experience, I think it's important to have a clear process (or processes) that you stick to, otherwise, as I discovered, there's a danger of flipping your themes more and more frequently.

The guy who runs the pensioncraft youtube site has all his funds with vanguard and it might be an idea to look at some of his videos - don't get me wrong, he's not by any means trying to sell Vanguard - to see what seem to be sound ideas based on solid research.

torata

sorry perhaps im not making myself clear. i am happy to keep my existing 45k in Vanguard (and infact probably consolidating it all into 1 global tracker from its current 47% Global All Cap, 43% LS80 , 10% EM). I am just keen on doing the next ~2 years of ISA allowances in something else, somewhere else.

So my portfolio will still be broadly 50% global tracker with Vanguard + 50% something else, somewhere else.

I could of course do something like: open another cash ISA, put 5-6k there (from this years allowance), transfer it to Vanguard so i have 50k there, then use last years 9k cash ISA, transfer it into a new S&S ISA then do my remaining 15-16k from this years allowance there (or something to that effect, unclear if i can do partial cash ISA transfers into S&S) so that i have an even higher weighting to global tracker to counteract the more riskier themed investments.

[Arborbridge]

So my portfolio will still be broadly 50% global tracker with Vanguard + 50% something else, somewhere else.

Could I ask which fund you mean by this? Could you tell me the code - I get pretty mixed up looking at Vanguard as there are just so many funds!

Thanks.

[torata]

sorry perhaps im not making myself clear. i am happy to keep my existing 45k in Vanguard (and infact probably consolidating it all into 1 global tracker from its current 47% Global All Cap, 43% LS80 , 10% EM). I am just keen on doing the next ~2 years of ISA allowances in something else, somewhere else.

So my portfolio will still be broadly 50% global tracker with Vanguard + 50% something else, somewhere else.

I could of course do something like: open another cash ISA, put 5-6k there (from this years allowance), transfer it to Vanguard so i have 50k there, then use last years 9k cash ISA, transfer it into a new S&S ISA then do my remaining 15-16k from this years allowance there (or something to that effect, unclear if i can do partial cash ISA transfers into S&S) so that i have an even higher weighting to global tracker to counteract the more riskier themed investments.

Turnaround,

Apologies, you were in fact clear in your original email now that I reread it.

The iShares ETF site has some interesting material on themes for the future, which may give other ideas. Personally I'm happy to use both ETFs and ITs, but you may find it easier to use ETFs in order to stick clearly to your themes. if you don't already know it, justetf.com may be useful.

Once you've decided your themes and vehicles though, to come back to my point above about having a process to try to limit the possible danger of continually flipping the ETFs (or ITs) for a different theme, I'd suggest having weights to each theme and then re-balancing, say yearly.

HTH
torata

[turnaround]

So my portfolio will still be broadly 50% global tracker with Vanguard + 50% something else, somewhere else.

Could I ask which fund you mean by this? Could you tell me the code - I get pretty mixed up looking at Vanguard as there are just so many funds!

Thanks.

47% in FTSE Global All Cap Index Fund Accumulation
43% in LifeStrategy® 80% Equity Fund - Accumulation
10% in Emerging Markets Stock Index Fund - Accumulation

Ill probably move all 100% into the FTSE GLobal All Cap as im no longer extra bullish on UK and ill seek my EM diversification in the new platform (currently thinking Halifax might be good idea if i understand their fee structure correctly).

[Arborbridge]

So my portfolio will still be broadly 50% global tracker with Vanguard + 50% something else, somewhere else.

Could I ask which fund you mean by this? Could you tell me the code - I get pretty mixed up looking at Vanguard as there are just so many funds!

Thanks.

47% in FTSE Global All Cap Index Fund Accumulation
43% in LifeStrategy® 80% Equity Fund - Accumulation
10% in Emerging Markets Stock Index Fund - Accumulation

Ill probably move all 100% into the FTSE GLobal All Cap as im no longer extra bullish on UK and ill seek my EM diversification in the new platform (currently thinking Halifax might be good idea if i understand their fee structure correctly).

So Im still a bit confused - this Global Fund is not the same as VWRP or VHYL, then - but i'm not sure what the difference is as they look like they invest similarly.

I need to make a decision in the next few days as I am advising my daughter who wants a fit and almost forget option. I'd been thinking of VWRP or FCIT being suitable. (Sorry, not wanting to highjack your thread, but just wondered what the difference was between your global fund and the VWRP I had in mind)

Arb.

[AleisterCrowley]

If you're buying managed funds it's active - even if you just put a dollop in and leave it. You're basically paying someone else to do the stock picking for you! Something fund managers don't do particularly well to be honest.

And some private investors do much more badly!
I'm not particularly thick or disorganised, but my feeling after being in the game since 1986 is that I find it difficult or impossible to consistently "outrun" professional active fund managers. Therefore I would not dismiss them lightly.

Arb.

But.... professional fund managers find it difficult to consistently "outrun" the index.

[Arborbridge]

If you're buying managed funds it's active - even if you just put a dollop in and leave it. You're basically paying someone else to do the stock picking for you! Something fund managers don't do particularly well to be honest.

And some private investors do much more badly!
I'm not particularly thick or disorganised, but my feeling after being in the game since 1986 is that I find it difficult or impossible to consistently "outrun" professional active fund managers. Therefore I would not dismiss them lightly.

Arb.

But.... professional fund managers find it difficult to consistently "outrun" the index.

Quite, that's why I'm thinking of a global tracker for my daughter. She's a classic case where it would be the best option, just to get her investing and not overwhelm with having to think about opening the can of worms we've all been through.

Arb.