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Why I Picked The Vanguard All-World ETF As My Global Tracker

It’s hard to deny that passive investing, particularly using global equity trackers, is one of the best strategies you can follow. Some of my money is invested this way with the Vanguard All-World ETF. It’s not been without a few niggles, though.

While this blog mostly covers investment trusts, I also use it to flesh out my thinking on my own portfolio, hence this divergence from normal programming.

Why use a global tracker?

The idea behind using global trackers is relatively simple:

1. Shares offer the highest returns

Shares have produced the highest long-term returns of the major asset classes, although they can be volatile from year to year. Numerous studies from the likes of Barclays and CSFB have reams of data on this.

2. Diversify away from home

Equity returns vary significantly from country to country, so diversifying globally avoids the risk that you pick an underperforming country/region because of home bias.

The UK has the world’s third-biggest stock market, but it only accounts for about 5% of the total global market value.

3. Active funds underperform the market

The ‘average’ active fund is doomed to underperform the market due to costs. That’s because the sum of all active funds effectively is the market.

4. Trackers, on average, beat active funds

Trackers are cheap to run, as they don’t need expensive fund managers and they tend to trade less than active funds. They still tend to underperform the market by a small amount due to their costs, but not by as much as the average active fund.

(There’s a longer and more eloquent rationale for using global trackers on Monevator.)

Four things to consider

When you are looking at global trackers, I’d say that there are four main things to consider:

1. The size of the fund/reputation of the group

In other words, I want a fund that I think is going to stick around for the long term.

2. Do you want an open-ended fund or an ETF, or are you indifferent?

Platform costs are usually the key determinant here. Open-ended funds are usually cheaper to buy and sell but more expensive to hold. These costs vary a lot from provider to provider.

3. The proportion of the global market you want to track

Most global trackers are either developed markets only or they are developed and emerging markets.


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Another common distinction is that some just track the largest stocks while others include small caps as well.

4. The charges it levies

Obviously, the cheaper the better. Trackers that cover emerging markets and/or small caps tend to be a little more expensive.

My road to VWRL

Back in 2013, when I was first looking for a global tracker, the choice seemed quite limited. From what I can recall, the Vanguard All-World ETF, or VWRL to its friends, was the standout option.

VWRL had been going for 18 months when I first bought it. However, Vanguard is one of the largest fund managers in the world and the inventor of the index fund. I felt pretty comfortable that this ETF was going to be around for at least as long as I was.

I preferred an ETF rather than an open-ended fund, as the platform charges were cheaper. I would have gone for a fund if needed.

VWRL uses the FTSE All-World Index. This “measures the market performance of large- and mid-capitalisation stocks of companies located around the world. It includes approximately 2,900 holdings in nearly 47 countries, including both developed and emerging markets. It covers more than 90% of the global investable market capitalisation.”

Its ongoing charges figure is currently 0.25% and I think it was the same when I first bought it.

A drawback with dividends

VWRL does have one disadvantage in that it pays out its quarterly dividends in US dollars. You normally lose a little cash when these are converted into pounds.

I’m charged 1% for foreign currency dividends and the yield on VWRL is typically around 2%. That effectively increases the cost of the fund to me from 0.25% to 0.27%.

There’s one further dividend-related drawback if you hold this ETF outside of an ISA or SIPP, as I do, but more on this later.

Building my global empire

I built up my VWRL position gradually between November 2013 and October 2015, with an average purchase cost of just over £40 a share.

My strategy at the time was highly sophisticated…

We’d just had our first child. Time was therefore in very short supply, so passive investing was highly appealing. Whenever the share price dropped back near £40 and I wasn’t drowning in nappies and baby sick, I topped up!

Indeed, looking back at the share price chart, it’s surprising to see that apart from one big spurt to £50 the share price of this ETF was essentially flat for three years from March 2013 to March 2016. So, I got the opportunity to top up a number of times.

More recently, a weaker pound and the strong-performing US market has driven the VWRL share price to around £65. And it’s paid around 2% in dividends each year as well.

As a quick and crude comparison, at the time of writing, VWRL had returned 83% over the last five years. Seven out of twenty trusts in the global sector for investment trusts beat that on a net asset value basis.

On a weighted average basis, the global investment trust sector has returned 95%. However, that percentage is boosted considerably by the fact that top-performer Scottish Mortgage accounts for one-third of the sector.

Would I go for the Vanguard All-World ETF today?

I’m not sure I would choose VWRL right now if I was picking a global equity tracker, but it would be on my short list.

According to Monevator’s list of cheapest trackers, there seem to be quite a few more options available now compared to 2013. That said, the cost difference isn’t that large for those that offer both developed and emerging markets as VWRL does.

For example, for our children’s Junior ISAs, I have gone with Fidelity Index World. This is a developed-market only tracker and charges just 0.12%. HSBC offers an open-ended fund with the developed/emerging combo for just 0.18%.

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Emerging markets only account for around 10% of VWRL’s asset value. Therefore, one option to reduce my costs might be to put 90% in a developed-market tracker and then stick 10% in an emerging-markets tracker to go alongside it. Emerging-market trackers are available for around 0.2%.

Vanguard has launched a fund that tracks the FTSE Global All Cap index. This adds small caps to the mix as well. It covers 6,200 stocks compared to VWRL’s 3,200. The ongoing charge is about the same, at 0.24%, but it’s still quite a small fund with assets of just £120m. VWRL’s assets are around £2bn.

Irritatingly, though, I can see that the equivalent Vanguard ETF in the US is noticeably cheaper than VWRL. It costs just 0.09% and covers some 8,000 stocks compared to 3,200 for VWRL.

The perils of excess reportable income

The other dividend-related drawback I mentioned earlier arises because VWRL is an offshore fund (it is based in Ireland).

Unfortunately, this means we need to get into the weeds regarding the taxation of offshore funds.


Please bear in mind that I am not a tax expert. If you think this is something that might impact your own tax situation, it’s worth seeking professional advice.


If you hold a fund like this inside an ISA or SIPP then its offshore status shouldn’t be a problem. Outside of these tax shelters, it’s a different story.

Most offshore funds have what is known as UK reporting status. This is a good thing as it means that when you sell them, any profit you make is classed as a capital gain rather than income (the latter generally attracts a higher rate of tax).

But if the fund doesn’t distribute all the income it receives over the course a year then you may have to pay tax on what is known as ‘excess reportable income’ as well on any dividends you actually receive.

In other words, even though the fund in question didn’t pay out all this income, you are still deemed to have received it for tax purposes.

Here things can get tricky because excess reportable income generally doesn’t get included on the year-end tax certificates that brokers provide you with. You have to go the fund’s website and dig it out yourself.

Vanguard puts this information together on this page, although it was a lot harder to find a few years back.

A worked example

VWRL’s year-end is 30 June. It’s the number of shares you hold on the fund’s year-end date that determines your tax liability. The distribution date is 31 December, so that is when the excess reportable income is deemed to be paid.

Let’s assume I held 100 shares in VWRL on 30 June 2018 and then work through the specifics.

We can see from Vanguard’s report to participants for that year that we need to include an extra dividend of 4.42 US cents which is notionally paid out on 31 December 2018. This would, therefore, need including in a tax return for the year ended 5 April 2019.

You need to convert the dollar amount into pounds as well, using the exchange rate as of 31 December 2018.

I make the calculation: 100 * $0.0442 / 1.275 = £3.47.

VWRL’s total dividends for the year ended 30 June 2018 were $1.62 a share. So, the excess reportable income adds less than 3% to the total dividend amount.

Since I have owned VWRL the excess reportable income has ranged between zero and 8.05 cents. So, 4.42 cents is pretty typical.

I calculate that I have effectively lost in the region of 0.02% to 0.03% each year due to the tax payable on the excess reportable income for this particular ETF. The time I have had to spend getting on top of it all over the years has probably cost me considerably more.

There is one further detail to be aware of. Any excess reportable income you have reported can be added to your cost basis for capital gains tax purposes. This might reduce your capital gains liability when you sell.

Brokers should be doing more to help

Excess reportable income is a lot of bother for something that often seems to be pretty immaterial and gets netted off your cost base in the end anyway.

From the taxman’s viewpoint, I suppose the tax is collected earlier this way and usually at a higher rate. Presumably, it was set up to make sure high net worth individuals didn’t play fast and loose with offshore funds, but ordinary retail investors have got caught in the crossfire.

Apparently, there are moves to get brokers to include excess reportable income on their annual tax certificates but that seems to be a few years off still. It looks like we’re stuck with doing it ourselves for the time being.

I wasn’t aware of this when I first bought VWRL. Luckily, I found out about it before I needed to complete my subsequent tax returns.

Holding on, for now

I plan to stick with VWRL for a little while yet, although I might trim my holding at some point to make use of my annual capital gains allowance.

The dollar dividends and excess reportable income mean my effective cost for this fund is around 0.3% rather than the headline 0.25%, but I don’t think that merits a wholesale switch into another global tracker as that would entail some costs as well.

But my experience with this ETF highlights the fact that even passive investing can get complicated sometimes.


Disclaimer

Please note that I may own some of the investments mentioned above -- you can see my current holdings on my portfolio page.

Nothing on this website should be regarded as a buy or sell recommendation as I'm just a random person writing a blog in his spare time and I am not authorised to give financial advice. Always do your own research and seek financial advice if necessary!


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27 Replies to “Why I Picked The Vanguard All-World ETF As My Global Tracker”

  1. When I no longer wish to do the research we will probably go all-in with Vanguard. However, It is not hard to find a better option than a passive if you have the time to do some research. Even a quick look at standard Global IT’s such as F&C, Monks and Mid Wynd show that they have outperformed the ETF by huge amounts over 5 years, VWRL is 73%, F&C 100%, MWY 105% and MNKS 134%.

  2. I’d agree with that to a certain extent. But I think it’s worth remembering that the share prices of many global ITs have benefitted from narrowing discounts over the last five years, so their NAV performances are much closer to that of VWRL. It doesn’t seem likely that we’ll get a similar tailwind over the next 5/10 years, but who really knows?

  3. Discounts have fallen but not by the margin of outperformance of those common choices. That does, of course, highlight a potential problem should discounts widen so the investor needs to be careful. For me, passives make some sense but they will also track a market down, buyer beware.

  4. Re the Vanguard FTSE Global All Cap index, could you explain why you see the relatively small size of this fund at £120m is a barrier to investing in it. Thanks.

  5. @investicles — not a barrier really just a mild preference based on the theory that fund managers are more likely to stick with their largest funds and may end up closing their smaller ones. Vanguard plays the long game of course, so there’s probably a very small likelihood that would happen. It would be an inconvenience rather than a problem.

  6. It’s worth noting that some ETFs are reinvesting dividends for an ‘accumulation’ share class and Excess Reportable Income is clearly more significant for those. I understand that Vanguard are now offering some of these in the UK, this should eliminate the small charge relating to currency conversion of a dividend.

    Like most ETFs ( and funds, ITs etc) there are foreign withholding taxes which add to the cost of 0.25% of VWRL Last time I checked the figures for VWRL the total cost of VWRL was nearer 0.5% including transaction charges in the fund.

    VWRL is a great choice for a one stop solution for Global Equity investing as you point out.

  7. I’m not an expert.

    Could you tell me why you chose Vanguard FTSE All-World ETF over the FTSE Global All Cap.

    Fees are similar. Allocations are similar. Are they much the same?

    I am currently invested in Vanguard US Equities Index and recently added FTSE All-Share (as it currently appears cheap).

    Whilst the US Equities Index offers significant diversification, I would like to own the world. Hence my question.

    Thanks

  8. Hi Mark,

    They are pretty similar I’d say. However, when was I looking to build up my position in a global tracker several years ago, Vanguard hadn’t yet launched its Global All Cap tracker (it came along in late 2016 I think).

    VWRL invests in about half the number of companies the FTSE Global All Cap does (3300 vs 6500), so the latter gives a little more exposure to smaller companies. However, their annual performances in 2017, 2018, and 2019 were very similar.

    I guess the main thing to consider if the holding and transaction costs you pay for a fund versus an ETF. Funds tend to be cheaper to trade but a little more expensive to hold.

    So, if you think you’re likely to be buying and selling frequently, that might indicate the fund would be more cost effective. But these costs vary quite a lot between platform providers, making it almost impossible to give a definitive answer as to which is better for any one individual – in my opinion anyway.

    VWRL does have this additional complication of excess reportable income if you hold it outside of an ISA or SIPP, so that’s another thing that might push you towards a fund.

    Hope that’s useful.

  9. Thanks, really helpful.

    I was concerned that there was something I was missing.

    Im 30 and have no need to sell for a long time. I read The Simple Path to Wealth by JL Collins recently. This book, i believe will have saved me many thousands of pounds over the years.

    I was previously investing with a company similar to St James Place. I believed that I was doing the prudent thing, right? Go to an expert with fancy offices. I mean, its a converted barn. They must be successful. Give them 5% of your wealth initially. But dont worry, this 5% is cheap considering the service you get………

    I did a simple compounding interest calculator on the initial 5% fee over 30 years. Wow, the outperformance of their funds must be significant and consistent.

    Lets not go into the ongoing management fees.

    I believe I am now in the right place with Vanguard. Whilst I understand the European arm of Vanguard is not ‘owned’ by the European investors in the same way as it is in America, there is still nothing comparable out there.

    If I have a query they have always answered the phone in 20 seconds.

    Thanks

  10. Hi.
    Great article. Could you tell me which section of the UK tax return you specify your VWRL dividends in? Is it UK dividends or offshore? I was thinking it maybe UK due to the UK tax reporting status?

  11. Thanks Rhino. I put it in the “Dividends from foreign companies” section with IRL as the territory. I think that’s the correct place but I’m not a tax expert.

  12. Many thanks, making headway with the tax return now. Did you specify any value for ‘Special Withholding Tax and any UK tax taken off: (optional)’ for your VWRL holding?

  13. Is the Vanguard FTSE Global All Cap Index Fund better than say Vanguard Lifestrategy 100%

    What is the simplest way of evaluating a funds annual returns, and which funds perform better than others.

    Would investing in Berkshire Hathaway ‘B’ within an ISA be good for a UK investor.

    Thanks

  14. Unfortunately, those are very tricky questions to answer definitively, Metro! So here are some vague thoughts and considerations…

    The main difference between the Global All Cap fund and LS 100% is the amount invested in the UK. The former is around 4% (which is what the UK actually represents as a proportion of global markets) whereas LS 100% is around 20% (although I think this figure is expected to reduce over time).

    I would say the Global All Cap is probably the more sensible of the two as it reflects actual market weightings and so is a purer global tracker whereas the LS 100% is a bit more of a bet on the UK. But it depends on what you are looking for really. It’s definitely worth looking under the hood of a few global trackers so you can see what their differences are – some ignore smaller companies and emerging markets for example.

    As for evaluating returns, that’s the question everyone would like to know the answer to!

    I can only speak for myself and my preference is to evaluate funds and trusts over longer periods of 5 or 10 years and look for more consistent performers rather than ones that tend to swing from big gains to big losses and then back again. However, if the manager of the fund/trust or its approach has changed over the period you’re looking at then it’s questionable how much of its past performance is relevant. Sometimes you’ll see a deputy manager take over from the lead manager, if which case you might see a little more continuity of performance and style. But it’s all very subjective.

    And there have also been lots of studies that show that good (or bad) performance doesn’t tend to persist over time. So if you look at the best performers over one year you may well find that half of them beat the market the following year and the other half do worse.

    I would also say funds/trusts with fewer holdings and investing in more specialised areas will tend to have the highest potential returns but also the greatest potential for losses. So I tend to start off considering well-diversified funds/trusts as my core holdings and then branch out from there into other areas I like.

    I haven’t looked closely at Berkshire Hathaway for a while but I understand a lot of its market cap is now dependent on its position in Apple and its chunky cash reserves. Then there is also the fact that Warren Buffett is now 90 and so may not be running things for that much longer (although there does appear to be a long-standing and well thought out succession plan in place). As big US stocks go, however, it’s probably at the slow and steady end.

    Hope that’s useful.

  15. @The Rhino – nope, I just entered the amount I received in sterling in my trading account plus excess reportable income mentioned in the post above.

  16. @ITinvestor
    Incredible blog and resource! Thank you for sharing you views. I have only started looking at investments in the past few weeks. Your blog and Monevator have been a revelation. As I have very little experience , my plan is to put most of my savings (excluding usual emergency/slow year money) in Vanguard Global All Cap but as I discover more, it seems like I should look into some specialised funds and run it all under an ISA wrapper. So here a a few questions for you and the wider community here. Views would be greatly appreciated.
    1) If I go with Vanguard only, I’ll probably invest via Vanguard’s platform. If I want to expand and hold a mix of funds – I should go with a platform such as Interactive Investor?
    2) Hopefully the vaccine will protect us all and normality will return. Now that Brexit is ‘sorted’ do people feel UK is likely to get its long overdue 5min in the sun? Would LS100 make more sense for a little while with its larger UK exposure?
    3) Central Bankers have pumped lots of money into the system. Governments have huge debts. Does this suggest that central bankers will tolerate a level of inflation that might eat up a portion of COVID debt? What sectors would you recommend for the Short/Medium term (5 years?)
    4) Many seem to suggest that the 20’s might be boom time. What advice do you have for a total beginner like me? What would you tell yourself if you were starting just now and what is the most efficient way of getting an investment education?

    I am freelance and I work in creative industry. Investing has been a thing that ‘other’ people do. I am afraid there is a total lack of creativity when it comes to finances. COVID has been very challenging and I am re-assessing now. My goal is to ensure I have some kind of income later in life (15 years?) I don’t dream of being rich but Financial Independence and a couple of JISAs for our two children would be very nice indeed.

    This might sound like a request for financial advice. It’s not – I am simply asking for tips and your usual disclaimers apply 😉 Any words of wisdom would be greatly appreciated. Thank you for your time.

  17. Hi instantlight,

    Sounds like you are already thinking along the right lines.

    With regards to platforms, it’s always hard to make blanket suggestions as they all have slightly different charging structures and features. So it depends on how much you’re likely to invest, how frequently you’re likely to trade and so on.

    The Monevator broker table is great for seeing how the main platforms compare. II tends to be most competitive for larger portfolios, for example. The new apps like Freetrade might be worth a look as well. I don’t think they do funds but you are able to buy a decent range of ETFs without paying commission.

    You can transfer between providers at a later date although it’s not always a straightforward process and some brokers charge exit fees per line of stock (which can add up if you have a diversified portfolio).

    ISAs are definitely worth considering, even if you’re investing fairly small amounts to begin with as it’s surprising how quickly your portfolio can grow in size when you’re making regular contributions.

    Many people now seem to suggest these days newer investors concentrate their efforts on putting more money away than trying too hard to eke out a little more in the way of performance and I think that makes sense as well. That’s just because a little more money invested per month can have a bigger impact. It also gives you an opportunity to get comfortable with the way the market gyrates and how you react to its moves.

    Personally, I am still a bit cautious on the long-term prospects for the UK market, given its weighting towards banks, miners, oil companies etc. It could see a short-term uplift of course, but I still feel the growth prospects for many of these businesses are a little limited.

    As for getting an investment education, there’s so much good stuff around these days we’re spoilt for choice. The weekly reading links on blogs like Monevator, Banker on Fire, Dr Fire, and aggregators like Sovereign Quest are great for finding new sources of info. Morgan Housel’s book is excellent, too.

    If I was starting now, I would say make an effort to track your performance from the start, keeping your own records of what you have invested and when. It’s easy to lose track over the years and relying on the records at brokers leaves you vulnerable to losing historical figures when they merge, get taken over, migrate to new systems and so on. It’s especially important if you’re taking a more active approach.

    Finally, I would say there’s no need to rush into making decisions. Be prepared to make plenty of mistakes on the way as well. I think it probably takes 3-5 years before you feel like you have a decent handle on what you’re doing but, in reality, you never stop learning when it comes investing!

  18. Thanks so much for that ITinvestor!

    I have not been investing but luckily, I have been saving. I have a pot of £100K. Stupidly, I have not been saving into an ISA over the last 10 years and I don’t have a SIPP. As I have no experience, I think the safest way is to place 80% into a Vanguard Global All Caps Index and forget about it while drip-feeding about £600 + p/m once my ISA allows it. The goal is to grow the pot to about £350K in 12 years. Any alternative to Vanguard Global and why? Should I allocate a portion to UK Bonds?

    I would also like to put 20% (£20k) into a mix of perhaps up to 5 funds. Even though the ‘evidence’ seems to suggest there is no point and I should stay passive, I am angling for best of both worlds set-up, dip my toe and all that.

    Could I please have views on the above and a £20k fantasy portfolio of 5 funds or less for the long term which require minimum maintenance to grow while I learn. Hopefully I will get some skills to prune/trim/tweak in about 2/3 years. This investing stuff is increasingly starting to look like very risky gardening.

    All opinions gratefully received. Thanking you kindly.

  19. Hi again instantlight

    £100k is certainly a great starting pot! I think a lot of this is straying towards advice so I am going to plead the 5th on a few of the things you mentioned.

    Even though you haven’t invested in ISAs so far, you can put in £20k this tax year (up to 5 April 2021) and a similar amount in the next (from 6 April 2021 – assuming they don’t reduce the annual limit significantly in the Budget next month). And your spouse could do the same, assuming you’re comfortable doing that. This could get you £80k protected in ISAs within the next few months.

    You could transfer more into an ISA in later tax years (some brokers offer a service to do this specifically from existing trading accounts – known as ‘bed and ISA’).

    But it’s worth looking at SIPPs as well as you might get income tax relief on any contributions you make. SIPPs are a little less flexible and tend to be a little more expensive than ISAs, so you need to make a call on whether the extra tax benefits you get are worth it.

    Lots of people go for a mixture of SIPPs and ISAs of course. There’s not really a right answer to these sort of questions (i.e. how much to put into each) as you never know what the future will hold and individual circumstances vary so much.

    As for other global trackers rather than Vanguard, I would look at this recent Monevator post for starters: https://monevator.com/best-global-tracker-funds/

    Their wider tracker comparison list should have a few more ideas: https://monevator.com/low-cost-index-trackers/

    Growing £100k to £350k in 12 years seems quite punchy as that’s equivalent to 11% a year. While global markets have done that over the past decade, they’ve produced a couple of percentage points less than that when you look at longer periods.

    And if you did decide to add some bonds to the mix, that would probably reduce your overall returns a little although it should also make them less volatile.

    I would say it’s ok to have this as a target for starters but you would need to be prepared to adjust it (and maybe invest more money) as the years progress depending on what global markets actually produce.

    Putting 20% into active funds has some merit I think. It’s enough to make a difference should you pick some good performers but not so much as to undermine your global trackers if you happen to pick some duds.

    Hope that’s useful.

  20. Hi ITinvestor,

    Am I correct in thinking that Vanguard’s FTSE All-World ETF (VWRL) is more tax efficient than the FTSE Global All-Cap fund when it comes to foreign withholding tax? The ETF is domiciled in Ireland and so withholding tax on US dividends is 15% as opposed to Vanguard’s Global All-Cap fund which is UK based and so withholding tax on US dividends is 30%? Perhaps this difference will give the ETF an advantage over the fund, especially as over 50% of global market cap is USA.

    I would also be holding outside of an ISA / SIPP.

  21. I’m not sure to be honest, Tommy, although I don’t recall this being mentioned as a reason why you might choose between different funds before.

    I suspect both funds would be able to receive dividends with just 15% withholding tax taken off, similar to the way individual investors can if they sign a W-8BEN should they want to hold US shares directly.

    It’s probably something you’d need to contact Vanguard about directly, in order to get a definitive answer.

  22. Hi ITinvestor

    I’m in my late 20’s with a decent EF pot and house deposit saved so now looking at investing. I am going down the Vanguard route and looking to invest around £600 a month. My current chosen holdings are the LifeStrategy 100% fund (60%), FTSE 100 Unit trust (10%), S&P 500 ETF (25%) and ESG Emerging Markets all Cap (5%).

    My plan is not to touch this money for the next 15-20 years at least and I am happy to risk not holding bonds due to my age. How does this holding sound to you? And what do you think about the current allocation? Would you go down one global fund instead?

    Thanking you in advance.

  23. Hi Ezekiel,

    I’m not authorised to give financial advice but I can offer some more general thoughts.

    I’ve not invested much in bonds myself (early 50s now) so I probably a little biased on that front. But I know many folks suggest 100% equities is the way to go when you have several decades of investing ahead.

    However, bonds do provide a cushion when markets get volatile therefore it can be worth keeping an open mind about this. If you find larger market falls make you uncomfortable (something you never know until experience them for real) then adding a few bonds may be worth considering at a later date, especially once your portfolio gets a bit larger.

    As for the mix of funds, I reckon that works out as roughly 25% UK, 51% US, 11% Emerging, and 14% other (Europe and Japan mostly). That makes it closer to the basic LS100 country mix than a broad global tracker. Essentially, you’re favouring the UK at the expense of Europe, Japan and the US (mostly the first two), so I think you need to decide if you’re happy with that.

    But you can adjust course as you go so I wouldn’t fret too much about this at the very start. The main thing is to get money invested for the long term and ideally within a tax-protected wrapper like an ISA.

    Hope that’s useful and good luck!

  24. Hi again ITinvestor

    Thank you very much for all your replies so far. My eyes hurt from all the reading I have done 🙂 I was wondering if you could provide some feedback on my fund choices?

    I have gone through many versions of this portfolio. It may seem too aggressive for a beginner and perhaps a bit too BG heavy? My focus was on equities and the least number of funds possible. The idea is to focus on growth using funds with clear purpose over the long term – 10/20 years after which preservation will be more appropriate (if there are funds to preserve that is). I realise there will be bumps along the way. However, I do hope these funds will be strong enough and able to recover. No guarantees of course.

    SMT is the large part of the ‘core’ because it seems to me that the managers have a clear idea of what is going on in the world and they appear to act with purpose. The decision to trim Tesla recently can be seen as a sign that they are not just ‘running their winners’.

    I have very little experience but I have tried to balance some of my ideas. It would be very helpful if you could provide feedback and/or alternative funds that warrant further research in your view. I am very grateful for your time. Thank you.

    % Passive
    30 VANGUARD FTSE GLOBAL ALL CAP INDEX ACCUMULATION

    % Active
    30 SMT
    10 Allianz Technology ATT
    10 BG Global Discovery
    10 BG Positive Change
    10 T Rowe Price Global Focused Growth Equity

  25. Hi instantlight,

    I’m not sure I can add too much. It’s pretty aggressive, as you say, and a lot of those funds invest in fairly similar companies so I would expect their prices will tend to move in the same direction at the same time and probably be more volatile than the wider market.

    But if you’re prepared for that, as you seem to be, and are happy taking a very long-term view then it’s an approach that can work very well.

    I would continue to keep reading and maybe keep a watchlist of other funds you liked but didn’t quite make the grade so you can see how they do as well. Keeping a journal of why you chose particular funds and made particular decisions can also be useful.

    You never stop learning about investing, in my view. Indeed, I feel I’ve learned more about investing these past two years, partly as a result of writing this blog, than I did in the previous 20!

  26. I invest in both Vanguard Global All Cap and Fidelity World index across my family’s ISAs, plus a couple of well known active funds you cover on this excellent blog. I prefer the funds as they are accumulating.

    The Fidelity World index fund has been a dark horse with great returns. A charge of only 12 points to buy most of the World. The long term performance of my wife’s PEPs/ISAs is a lesson in the benefits of regular investing in to index funds (initially UK index then Fidelity World index). Through thick and thin every month for over 20 years and she has absolutely no interest in investing. She has probably outperformed many armchair and professional investors with almost no effort.

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