GeoffF100 wrote:Hariseldon58 wrote:The OP needs to invest and whatever route he uses, the cost differences of .08% Pa is pretty much irrelevant on £30k , it would unlikely make any difference on 300K. The small discrepancy in management charge is likely to be overwhelmed by the small tracking errors that are inevitable.
I just looked at Vanguard Global All Cap, Vanguard All World and HSBC All World ( I hold the latter two plus the Fidelity Dev World, Vanguard Dev World, each with a side of the appropriate Emerging Markets Index ETF) on HL on a total return basis.
The results were very close on a cumulative five year basis (the Vanguard All. Cap has insufficient history , ie less than five years)
The difference was .04% after five years, on a discrete year basis the annual variations were up to 1.7%, obviously the leadership went back and fourth each year, some of these differences is down to time of day the valuations are done.
Whilst Vanguard All World = Vanguard Developed World and Vanguard Emerging Markets in a roughly 9:1 ratio, there are 336 more holdings in the combination than the single fund, thats probably a good thing, but there is bound to be a tracking error between the two for that reason alone.
Getting it roughly right is all thats needed. Costs matter but there comes a point where chasing a few basis points can be lost in tracking error.
An extra 0.08% compounded over 20 years amounts to just over 1.6%. Over 40 years it amounts to just over 3.25%. That is not insignificant if you have £1 million+ at the end. A percentage lost to costs at the beginning has exactly the same effect as the same percentage lost to costs at the end.
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My point was that the tracking error and other small differences can overwhelm a small difference in cost, that looking at a five year record between the HSBC All World VS VWRL the .09% difference in cost, was lost in tracking errors etc.
It was not a criticism of your suggestion of VEVE combined with VFEM ( or accumulation equivalents)
I hold VEVE with VFEM, I hold a collection of regional trackers that match fairly close to VEVE, in addition I hold the HSBC All World, Vanguard All World , the Fidelity Developed World with the iShares MSCI Emerging Markets, the iShares Global Small Cap, the Vanguard Global Small Cap.
I hold a variety of these combinations simply to spread the broker/ provider risk with my portfolio size, without that constraint, any of these combos would work, but in the spirit of Occam's razor, suggest the simplest solution is a sensible choice. My personal choice would be Vanguard Global All Cap for the simplest global equity portfolio with the most diversification, with the proviso that there was no undue cost penalty from the broker for holding an OEIC.