jester
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Post by jester on Dec 14, 2021 11:25:30 GMT
Perhaps anyone investing in P2P isn't entirely sane but that aside .....
65% of my investment pot is in equities, this is invested in hands off low cost global trackers! I've had it suggested this isn't suitably diversified despite being global trackers. I'd appreciate some opinion on whether you'd be comfortable investing entirely in this form of investment.
Equities split 50/50 purely for fund provider diversifcation, but both aiming to track broadly the same HSBC Global FTSE All World Vanguard FTSE Global All Cap
Both are held in IWEB so no holding platform diversification.
I have no interest in handpicking stocks and my aim was a worldwide broadly diversified, hands off long term investment with low holding cost.
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adrianc
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Post by adrianc on Dec 14, 2021 11:59:18 GMT
HSBC - www.morningstar.co.uk/uk/funds/snapshot/snapshot.aspx?id=F00000TXY8Vanguard - www.morningstar.co.uk/uk/funds/snapshot/snapshot.aspx?id=F00000XXVVAren't they just tracking exactly the same index? So, really, you've got precisely zero diversification at all. OK, you're exposed to ~7,000 companies all over the world, of various sizes, based in different currencies. You're ~100% in equities - no properties, no gilts, no corp bonds, no currency, no... - and look at the list of the biggest holdings... Microsoft, Apple, Amazon, Alphabet (Google), Meta(Facebook), Tesla... That's about 1/8th of the total. Half a dozen companies all in the same market sector in the same country in the same currency. Yes, the two might have ever so slightly different allocations of each... but we're talking fractions of a percent, and the holdings listed on those MorningStar pages are as of dates a month apart. So, apart from anything else, you've got needless duplication. You might as well put 100% into whichever of the two is cheaper. MorningStar reckons fees on a £10k investment for 5yrs would be £45 for HSBC, £178 for Vanguard (I thought Vanguard were meant to be cheap...?)
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aj
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Post by aj on Dec 14, 2021 12:07:44 GMT
When it comes to equities you can't get more diversified than a global tracker can you? They get a bit of stick for being overweight in US tech but they're only matching what people are buying.
Are those criticising the diversity perhaps suggesting that you have too much in equities? Have you also considered cash/fixed interest/property/fine wines/classic automobiles/precious metals/rare pokemon cards/cryptocurrencies?
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jester
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Post by jester on Dec 14, 2021 12:41:26 GMT
adrianc I'm open to all critique but I think we're at some major misunderstandings - the two trackers aren't supposed to be diversified from each other, initially I was happy with just one vanguard all world tracker, holding two is only a small safety net in case of any issue with Vanguard themselves - I also stated I have 65% of my pot in S&S equites which is split 50/50, I have 35% spread across cash, bonds, P2P, property REITs, property platforms, crypto I'll edit the post to try make this even clearer! Going back to my original query, is investing all of your equities in low cost All World Trackers an acceptable and suitably diversified way to invest or do I need a more elegant approach?
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mogish
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Post by mogish on Dec 14, 2021 12:53:41 GMT
im no expert by any means , however I have been increasing my holdings in Vangaurd global all cap and Vanguard FTSE all world when they dip, prob same reasons as yourself, low cost , diversified and generally perform as well as managed funds. These are in addition to a mix of more defensive funds.
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jester
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Post by jester on Dec 14, 2021 12:59:33 GMT
When it comes to equities you can't get more diversified than a global tracker can you? aj this had been my opinion up to this point as it's a representation of the global market and you aren't looking to gain any advantage by choosing specific investments However as you suggest, this doesn't appear to be everyone's opinion as it's heavy in US software So I was just looking for some opinions on how others would build a passive equity investment? Solely with All World Trackers or in another way!
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adrianc
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Post by adrianc on Dec 14, 2021 13:44:17 GMT
adrianc I'm open to all critique but I think we're at some major misunderstandings - the two trackers aren't supposed to be diversified from each other, initially I was happy with just one vanguard all world tracker, holding two is only a small safety net in case of any issue with Vanguard themselves Ah, I understand. I was a bit concerned you thought they were two different indices. OK, now I'm a tad intrigued. Why so happy to get involved in the nuts'n'bolts there - especially that major bargepole (for many people) of crypto? Yet so totally oppositely hands-off with the equities which are 2/3 of your wealth? From here, I've got a chunk in ii spread across a bunch of low-cost trackers. Several UK indices of different types, Euro ex-UK, couple of different All World. You'd be surprised how different the returns have been on the upside, so no reason to suspect they'd all be the same on downside.
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aj
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Post by aj on Dec 14, 2021 14:28:46 GMT
At the point you're saying 'US Tech is overweight in a global tracker' you're moving towards stock picking. If you wanted to make this call you could add in ETFs for Europe and Emerging Markets which would be a cheap/easy way to bet against the US.
However, your not handpicked, global, long term, low cost strategy is perfectly valid and I think your current holdings match this strategy well.
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Post by Deleted on Dec 14, 2021 15:55:29 GMT
I'd think you might also like something more European, despite Europe's recent (20 year) performance there are good funds in there. Threadneedle does pretty well. Over the years I have found good deals in Europe but struggle to do so today. Even one of my favorites SRE is too highly priced.
I'd also have something in Bonds. I don't like bonds as the risks seem to be too high compared to the benefits but RECI might interest you, it is a high return bond solution (high return =high risk) and probably won't worry the horses but not a bad steady performer
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tallsuk
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Post by tallsuk on Dec 14, 2021 16:04:23 GMT
I tend to think that the global trackers are very heavy on US stocks normally about 60-65% and as someone above said that means 20-25% of your portfolio is in about 6-8 large teach companies which actually means it is not very diverse.
I chose to look for low cost trackers that cover all the major regions and then I added a commodities basket as well. I am also long in Gold and I have a small bit in a FTSE 250 tracker but AJ Bell says (based on historical returns which of course dont mean anything etc) that I have similar profit to global large cap tracker but with quite a bit less risk.
I dont have any exposure to bonds just yet as I am worried about short term inflation but I do want/expect to add another etf or two to cover them in the not too distant future.
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jester
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Post by jester on Dec 14, 2021 17:32:29 GMT
adrianc I've really tried to strike the balance between investing in different areas and keeping a broad portfolio with minimal ongoing management as I'm quite time starved at this stage of life! So much of cash is in Premium Bonds, Bonds are similar trackers, for better of worse P2P is now invest and mostly forget type stuff, REITs I did a little research and took some advice to get a little more property exposure, crypto I basically bought some Bitcoin and held it .... far from nuts'n'bolts really! I've always followed the "don't try to beat the market" approach in equities but I can see the wisdom in that leaving me over-exposed to US Tech so I'll perhaps add some broad Euro, UK, developing markets trackers going forward.
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jester
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Post by jester on Dec 14, 2021 17:34:24 GMT
At the point you're saying 'US Tech is overweight in a global tracker' you're moving towards stock picking. If you wanted to make this call you could add in ETFs for Europe and Emerging Markets which would be a cheap/easy way to bet against the US. However, your not handpicked, global, long term, low cost strategy is perfectly valid and I think your current holdings match this strategy well. I think this absolutely nails my previous thinking of not stock picking versus concerns I've been given about US-Tech exposure ..... perhaps a balance of the two is pragmatic!
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jester
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Post by jester on Dec 14, 2021 17:39:04 GMT
I'd think you might also like something more European, despite Europe's recent (20 year) performance there are good funds in there. Threadneedle does pretty well. Over the years I have found good deals in Europe but struggle to do so today. Even one of my favorites SRE is too highly priced.
I'd also have something in Bonds. I don't like bonds as the risks seem to be too high compared to the benefits but RECI might interest you, it is a high return bond solution (high return =high risk) and probably won't worry the horses but not a bad steady performer
Thanks @bobo I appreciate your input as always, I hold some SRE in my REIT/Property basket from your previous recommendation! I think I will add some Europe/UK/Emerging Markets to balance out the US Heavy Global trackers but it will again be whole market trackers. I don't have your time or talent for fund/stockpicking!
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macq
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Post by macq on Dec 14, 2021 18:28:31 GMT
At the point you're saying 'US Tech is overweight in a global tracker' you're moving towards stock picking. If you wanted to make this call you could add in ETFs for Europe and Emerging Markets which would be a cheap/easy way to bet against the US. However, your not handpicked, global, long term, low cost strategy is perfectly valid and I think your current holdings match this strategy well. I think this absolutely nails my previous thinking of not stock picking versus concerns I've been given about US-Tech exposure ..... perhaps a balance of the two is pragmatic! Might not help with top heavy US exposure with global funds due to market size but maybe to avoid the top heavy tech you could always look at the likes of consumer staples etfs or minimum volatility etfs which tend to leave out the tech for (hopefully) more defensive stocks but still in a cheaper/passive way
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daveb
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Post by daveb on Dec 14, 2021 21:46:48 GMT
Not quite so cheap, but ITs such as Capital Gearing, Personal Assets, RIT might provide some diversification and theoretically capital preservation
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