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.

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!

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

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!

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.

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.

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.

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.

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.