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Questions on the accumulation and distributing funds (VWRP and VWRL), is the VWRL black line based on how the fund grows, without reinvesting? Or is it taking into account reinvestment, but only on the quarterly basis it is paid? I currently hold VWRL and VEVE, and want to work out if its worth changing over.
Excellent video as always Ramin. As you mentioned sometimes it's cheaper to hold vanguard funds on different investing platforms - could you do a platform comparison video? Your previous video about this is a few years old now and fees/charges have changed.
VHVG ETF looks attractive. But if he wants a global fund (not just Dev world), why hasn't he mentioned HSBC FTSE All-World Index Fund Accumulation C OGC 0.13%? People have pointed out this fund to him before. Why is he still banging on about Vanguard so much? Is he sponsored by Vanguard either here or somewhere else? Vanguard platform charge capped at £375. Why isn't he recommending for example Lloyds Investment, £40 a year flat rate? I paid £1.20 transaction charge there a few days ago to buy more of the above HSBC. I think Vanguard have become too expensive, at least in the UK (most of their funds tend to have MUCH lower OGCs in the US, hyper-annoying). So, again, why isn't Ramin more interested in other, hungrier and less ostentatious investcos?
@@mikerodent3164 because it's more expensive to use those platforms that provide the HSBC open ended fund, because their platform charges are significantly higher than Vanguard, or they are charging to buy and sell said HSBC fund. Vanguard ftse dev world etf, Acc share class ongoing etf charge just 0.12%, plus vanguard platforn charge 0.15%. Hl charge 0.45%, Fidelity UK 0.35%, aj bell 0.25% plus charges for buying and selling open ended funds etc. I'm using Fidelity UK for a sipp, I had a reasonable amount of money from previously frozen pensions. So put into Fidelity sipp, platforn charge capped at £90 per annum and £7.50 per dealing fees, but I'm not regularly contributing to this and keeping dealing to a bare minimum. So I also have a Vanguard sipp for regular monthly pound cost averaging with 2 index funds Acc class, no buying fees, simple. If you want pound cost average with etfs there maybe dealing charges, plus bid arse spreads and not possible to buy fractional shares of etfs on most platforms. So for monthly, regular investments open ended index funds are more efficient and cheaper
This is about Vanguard releasing new funds, not what similar funds are available from other providers. In fairness to Ramin, he does at 12:30 begin to mention other providers and that the Vanguard offering is not perfect. Sorry, but your comments are unnecessarily harsh.@@mikerodent3164
@@mikerodent3164 Ramin has mentioned the HSBC fund in the past, that's how I found out about it. IWeb (where you can buy all the Vanguard funds and other global trackers, money market funds, and single gilts as well) has a platform fee of zero.
My SIPP with Vanguard is all accumulation funds, but my S&S ISA is all in income funds. I personally enjoy the process of reinvesting the dividends plus if I ever lose my job, I will have a small amount of money coming in from my ISA without having to sell anything.
Indeed. My Vanguard money market in the USA is paying 5.3%. I will retire next March and as long as this pays above 4%, I'm leaving it right there. I will receive a pension and social security as well so I don't need it to gain a lot.
I too have bought the FTSE Global All Cap fund for many years. I think swapping now would be a mistake as I have been buying those smaller companies and a slice of the emerging market held in the fund cheaper because of the Ukraine war etc. I think there is a good chance that the returns will catch back up when the Ukraine war ends. Also, I don't like the idea of chopping and changing to chase returns. My original decision is still sound.
I too are in the same fund (VWRL) although I have just transferred it over to invest engine to save on the platform fees and I find invest engine is streets ahead of vanguard as they have a phone app, auto balancing and reinvesting etc. I have stopped adding to this fund though and instead started the Invesco etf instead as it has lower fees and is pretty much the same as mentioned in the vid. I was going to sell my VWRL and put it all into the Invesco but I have changed my mind in that and just going to hold it. As mentioned in the vid they may drop the fees in future but overall it's been a good fund despite the slightly higher fee.
Dear Ramin, Great Video. I noticed that the trading currency of this VHVG is USD whereas for the FTSE Developed World ex-UK the currency is GBP. What about the costs associated with currency conversion? Would that eat into the 0.02% of reduction of fee that you would be saving?
This is very helpful thanks. When you are approaching or in retirement, why do you need bonds? Why couldn't you just cash in a little of your index fund say once a month for your living costs? (Assuming you have a cash cushion to use if the market is down).
Excellent video and very well thought out as always! Personally though, choosing a developed market only is moving away from the point of picking a global index tracker fund - investing in all of the markets and not making a bet on which you think will perform best. Excluding EM is making that bet from my point of view. The savings in fees will be much greater impact over time by moving to a provider that has lower platform fees.
Modest as you are Ramin, I would say there is a reasonable chance your calling for these funds for the last couple of years could be behind Vanguard UK launching them…. Thank you
Hi Ramin, I currently have money invested into the FTSE Global All Cap on the vanguard platform in a SIPP. Is there a way to transfer that money into one of these new vanguard funds without having to sell them and reinvest it into a new fund or would it be a better idea to leave the money in the existing fund and simply start putting future investments into the new fund? Thank you, Jack
Thank you. With the FTSE Developed World UCITS ETF you have chose, what impact on returns will the fact it trades in USD rather than GBP have? Will this erode the 0.02% fee difference when compared to you previous fund choice? Thanks.
Income ETFs such as VWRL for example, still generate Excess Reportable Income (ERI) so they are also a headache when doing your self-assessment tax returns.
Moneymarket funds are not protected and not zero risk. I heard someone warning they would be vulnerable if there was a sudden move away from MMFs if interest rates dropped. Yellen I think.
The time to sell stocks and buy MM funds was in 2021. It's an overbought market now with a lot of downside risk as interest rates begin to normalize over time.
They do not have a zero risk of loss If enough investors remove their money then the fund manager has to force sell the commercial paper / bond it has to pay investors back Once the market sees this the value of those bonds goes down and hence the other investors in the fund lose money. It’s not possible to just hold until maturity in this case.
No, there will be nearly zero change in value if interest rates change. This is because they're ultra short term bonds (months) and considered functionally equivalent to cash. The yield paid out will drop however if rates drop. You saw the line increase, thinking it might decrease just as well, but that's wrong because it's an accumulation fund, meaning it automatically reinvests its interest payments.
I heard that only about 30% of liquidity in some money market funds. When interest rates fall which they will, might not go back to 0.50% but will fall, people will want out of these MM funds and there is a possibility that it might be hard to get all the cash out.
Where is the transaction fee. Only if you want the bought right now. But if you just set it to buy next day. I dont see and perhaps obviously the hidden fee
@@danesesse it's a fee to cover the buying and selling of the underlying shares, on top of the 0.22% and on top of the vanguard platform fee. It's an annual fee not per etf transaction. It's properly hidden but show on your checkout document
Thank you for another great video. You show Invesco’s FWRA. I’ve got FWRG. I know the difference is the former is in USD and the latter is GBP. Have I made the right choice as a UK investor? I’m a bit unclear on it. Thank you
I have the same question, as a UK investor should we be investing in FWRG? I understand our exposure will be GBP than USD? Is that the only difference?
Hi there, thank you for the great videos! Isn't VHVG currency in USD?? Shouldn't you stick with FTSE Developed World ex-UK simply because it's in GBP? Or will the lower charge offset the exchange charges? Thanks
Im the opposite, I prefer dividend etfs or stocks, lower maintenance is not an issue for me because I enjoy keeping record, but I like to reinvest dividends from one part of my portfolio into another. Also easier to hold a dividend etf, which will likely still pay some dividend during severe downturns, increasing the amount of cash I have for reinvestment at the best time.
Great video as always! I invest each month into Vanguard S&S ISA & Vanguard SIPP, both payments are split between VUSA and VEVE as they're the most appealing when I ran the numbers & checked fees vs VWRL for example.
As of 11 March 2024 cheapest S&P500 ETF for UK investors is SPDR S&P500 UCITS Unhedged (Accum) Ticker: SPXL with ongoing charge/TER of 0.03%. Launched November 2023. 🙂👍🏻
Thanks for the video. It is very helpful! Could you please let me know how to switch in between funds? I currently have 'Income' version of the fund but after watching this video, I would like to switch it to 'Accumulation'.
Brilliant video again. Quick Q, why have you not thought of adding the vanguard emerging market fund to your VHVG? Then you won’t have missed out on anything.
Great vid and fantastic choice of your sole holding in Vanguard. The ftse developed world is the one I’ll also be rotating into once I feel the time is right. For now I’m sticking with Vanguards sustainability 80/90 which I went all in 2022 and it held up with slight gains whilst markets crashed 20% or more so it’s more than proved it’s .48 fee. It hasn’t had much of a run this year as it contains a lot of defensive health care/undervalued stocks. To say it’s equity heavy it’s very safe as proven in 2022 as undervalued stock out of everything was the only asset that held up even over gold that year. It’s paying us a nice 2.2 dividend end December. But going forward after what I believe I might be wrong due a good correction from the magnificent 7 then I’ll rotate back into pure equity indexing using the ftse developed world with its low .12 fee and 1.89% dividend payed quarterly. The markets got way ahead of itself and the time for putting large amounts of capital in indexing right now way too risky I believe in this current climate.
Vanguard's VWRP is actually free, even slightly positive. According to trackingdifferences, 2022 had a tracking difference of 0 - it perfectly followed it's index. In fact since 2014 the tracking difference (for the income class) is -0.01, showing it actually returned slightly more than the index. Please, cover tracking difference & stop focusing on TER!
Fees, like TER, but also transaction costs, all contribute to the tracking difference. However, a fund can counteract this drag. They might negotiate better deals, use securities lending, more accurate measurements of market cap, and so on. The difficulty is that this is rarely advertised, and can only be reliably calculated after the fact. And it changes over time as fund managers improve, or slacken, standards. You need 3-5 years' data to see how a fund truly performs. TER is forward-looking, but it's only one aspect. It's marketing. Everyone piling into e.g. Invesco's "cheaper" world tracker could be making an expensive mistake. We won't know the true performance drag (or gain) for 3+ years.
interesting stuff thanks, In Investor are soon bringing out their own SIPP no platform fees and if you split your portfolio 90% VHVG & 10% VFEG you get ultra low fee (lower than VWRP) and world investment in a ACC fund
I notice your current Developed Markets Ex-Uk fund, Risk Rating is 5 out of 7. The new Developed Markets ETF Risk Rating is 6 out of 7. Why do you think this is? Would this factor in your decision to swap?
This video has made me realised how weighted I am towards equity (and the US for that matter!) Time for some bonds in a low cost fund! (better now than down the line!)
Exactly what I was wondering. I'm relatively new to investing and I assume that Vanguard charge for switching your investment from one fund to another - or is that included in their annual platform charges? If they charge, then presumably after a certain time the lower fees outweigh the fee for changing?
These Vanguard ETFs are based in the Republic of Ireland, so I believe that if they are held outside an ISA or SIPP the dividends are to be put on the 'foreign income' section of the UK tax return, which is an added complication compared to UK based mutual funds.
That's an interesting question. Often the "arrangements" (e.g. rights to work, health arrangements) between the UK and Ireland can be surprisingly cosy, even after Brexisuicide. I'd be interested to know the full details if someone has chapter and verse on this point. Also covering the question of whether **automatically re-invested** dividends from the held companies actually count as "foreign income": so whether it's preferable to buy ACC rather than INC varieties. Foreign income tax handling is usually absolutely disastrous of course. Plus some companies held in some ETFs generate more dividends (and less in the way of capital growth) than others. As you're probably aware such niceties are important outside a wrapper.
Hi Ramin, thanks for a great video as always. Sorry I’m not caught up recently, what are you doing to cover emerging markets in light of your change to the new fund not covering it? Do you have emerging funds elsewhere? Thanks!
Hi Ramin, thanks for another great video. Why do you chose these rather than Fidelity Index World Class P? From what I can see it has out performed VWRP over the past 5 years
But, am I right in thinking that you still cannot buy fractional shares in Vanguard's ETFs on its UK platform, therefore, you may have to rebalance AND reinvest if you hold multiple funds/ETFs - which is faffy?
Are you not tempted at this point to switch to, say, interactive investor? Sounds like you'd save on platform fees, and you'd be able to buy the HSBC all world fund for just 0.13%, to avoid excluding EM?
Ramin did you use the Switch option in the Vanguard interface to move from VVDVWE to VHVG. How long are you out of the market for using this approach? Thank you ... Andy
Excellent video! I was very interested in the graph that compared various bond / stock performance over time at 4:15. Clearly for the data set chosen, bonds didn't justify their inclusion, leading you to conclude that 100% bonds were preferable.seemed not to be able to compete or even. I'd be interested to know if you have looked at any other time periods, pls?
Great content like always, very educative and beneficial. Just a quick question, what do you think is a better choice for long term investment, LIfe Strategy 100 or Global All Cap Index ?? I have my money split between them but I would like to pick one for my future investment. I would really appreciate your opinion. Thanks.
I moved from lifestrat 80 to ftse dev world ex UK. It outperforms every year on record. (Also outperforms lifestrat 100) I know past results dont guarantee future returns, but you need some metrics to make a decision 🥰
Doesn't the Life Strategy 100 bought in the UK contain a UK companies bias (i.e. contains more than the 4% or so of UK shares that feature in a Global Fund) and therefore, because the UK has historically underperformed the US, the LF100 has underperformed Global funds?
Disappointed that it doesn't allow to buy fractional shares on this ETF whereas you can get fractional shares with their Global All Cap. Money sits uninvested when you make a direct debit as a result
Hi Ramin - Any chance of covering shorter term investments. I have retired and have a number of portfolios. I don't need the money for income, at the moment, but I don't have more than ten years in mind. Or, should I just follow the advice here? Thanks.
Thanks Ramin. The bulk of my portfolio is with Vanguard UK. Pity that there Sterling Money Market Fund is income which i utilise. I have to use HL to take advantage of an accumulation MMF. I will look at these “new” accumulation ETFs and de-risk some of my portfolio which has been on ice for 13 months whilst i looked to reinvest. Have tinkered with VJPN as i believe there is upside. Im 5 years from retirement, what would you suggest , bonds?
I'm sticking with the Developed world ex UK fund. The ETF version you have gone for while slightly cheaper on fees will likely return me less as cash will end up sitting in my account each month with only whole ETFs being purchased. So if you only invest a little each month you might be worse off.
So the ex UK (which I currently have) allows fractionals? And the new ETF must be an exact full share as such? I might stick with ex UK.if that's the case as my HMRC money appears at random and might not let me buy units if the above is the case
Hi @nigeltrivass4128 I've got an ISA with Interactive Investor where I hold my single gilts. But I'm 100% invested in that global equity fund in my Vanguard SIPP and Vanguard ISA. Thanks, Ramin.
You say you're 90% invested in Stocks... so does that take into account all other cash and cash equivalents? Or do you have say a cash reserve that you will always keep safe (say 6 - 12 months expenses) that you don't even include in your investment breakdown?
Great Video Ramin. I've only been invested in the OEIC Dev World Ex-UK. Before you switched to the ETF giving 2 bips away in charges, did you consider the spread on the ETF which currently is 1.5 bips and could be wider during the day. Given such can you expand on this a little either with a reply to my comment or a short video update.
Good video. Does it matter to the layman / passive investor that one you are moving from is an Index Fund & the one you are moving to is an ETF & what are the implications? Thanks.
Does this mean you’d get better returns in the accumulation fund over the income fund because all dividends are reinvested in the accumulation fund so the price rises higher, whereas in the income fund people may not always reinvest their dividends? I have income funds in my isa and always reinvest but just like to monitor how much I actually get in dividends. Just don’t want to miss out on more growth if the income fund gives better returns
What they still don't have, and is partly why I left Vanguard UK, is a Global Gov only Bond Fund. They have the UK Gov bond fund granted, but not global gov fund. If we see another financial crisis and wanted to shelter of gov only bonds (as corp bonds would also be crashing with equities), you would be relying on the UK GOV fund only rather than diversifying in different countries.
How about payment of fee's? With a an acc. Fund would Shares need to be sold periodically to cover fee's? With a Dist. Fund you naturally keep a cash balance which covers fee's so there is no need to sell shares
Hi @cheepchips my Vanguard platform fees are paid with a direct debit. You can also pay them with account cash but it seems a waste of tax-invisible money to spend it on fees. I'd rather have that money compounding. Fund fees are automatically subtracted from fund returns so you never have to manually pay them. Thanks, Ramin.
It is a shame that there is no mention of ESG in these kinds of videos. Surely investors should also think about what they're investing in, not just the returns?
Do you know how many funds Vanguard offers where the risk is 7? 0. That would be too risky; just make all the most risky ones 6/7, lol. Got to love the power of marketing.
Surely if you're in drawdown, you only declare in the SA return what you physically take as income out of the fund? If there is capital gain and income paid within the fund still in drawdown (or uncrystallised for that matter), that isn't declared in the SA return?
I struggle to find any additional allure of Vanguard funds compared to Ishares or Xtrackers, speaking from non UK, european investor perspective. Ishares seems much more liquid and less prone to fund closure. SWDA costs 0,2% and CSPX 0,07%, factor versions 0,2-0,3%.
Excellent analysis as usual...what are your thoughts on Robin Hood making its way to the UK? Will this take business away from the big brokers, especially if they eventually offer an ISA? I reckon it could be a game changer.
Hi @timetraveller3063 thanks. I think it's going to be tricky to undercut some of the low-fee platforms that we already have e.g. Trading 212, InvestEngine. Payment for order flow isn't allowed in the UK so that revenue model won't work so they will have difficulty a) building scale and b) being profitable. Thanks, Ramin.
I tend to go for the cheapest available developed world ETF + 10% in an emerging markets ETF, which tends to drop the cost considerably. Why ETF providers can't arrive at the same cost basis in the combined global fund, I don't know.
Hi Ramin. Great video as always. However, can you tell me if there is a charge if you switch from one Vanguard product to another by selling one and buying another?
No fee. You can use switch option that Vanguard offers. The switch will take some time, might be a bout the week. If during that week market is volotile then you might gai/or loose substantialy. I would still ignore this risk if you ahve a rational reason to switch funds, such as reducing fees.
I wasn't sure about this. I am currently moving out of the target retirement 2030 fund ( I understand more about funds selection now). I was under the impression a transaction charge was incurred.
Hi, I was wondering if you could help me here please. I have been investing in the S&P500 (income/distributing) for a while now but have never ever recieved any cash dividend. Not to my knowledge anyway. Any idea why? Also, can I just sell all my shares in my account and swap it to the Accumulation fund regardless of yearly allowances for ISA's? Thanks
Regarding your ISA allowance question: The assets are already in the S&S ISA account, so there is no effect on your annual ISA deposit allowances when selling/buying shares within the account. The remaining allowance is only ever decreased when funds enter the ISA from _outside_ the ISA. This is illustrated on the purchase page whenever you deposit cash into your account or make a purchase of shares in an ETF or the like that involves you making a payment on account via debit card rather than using cash already held in your account. In other words, yes, you can swap between funds offered by the ISA without affecting your remaining allowance for the tax year.
Hi Ramin - When selecting a fund is the TER as important as the historic tracking difference? If one fund exceeds the index but has a higher TER to another fund that falls short of the index is that not what’s most important? I have the vanguard ftse all world and am debating moving across to Invescos new offering.
Hi Ramin, happy new year, Thank u for sharing your words of financial wisdom with all of us. It really is a great help to planning one's financial future. I think u can get more money in a UK bank account than a money fund. I get 5.2% with Santandar instant access. NSI was doing 6% bond. As u have expressed u can get a Invesco SP500 for 0.05% And put up to 10% in a vanguard emerging Markets.This way the management fee is lower. Wishing u all the success in the future in your generous help in educating people in investment.
One can avoid the ERI problem of accumulation ETFs by selling and rebuyıng just before and after the date at which ERI accrues to the holder. This also ensures gains are taxed at capital gains tax rates, rather than dividend tax rates. This is often more than enough of a benefit to make up for the bid/offer spread loss when selling and repurchasing.
Sounds like a nightmare for reporting CGT gains? Some platforms, at least the main well known one I use, provides ERI information as part of its tax certificate and it also adjusts the base price of accumulation units so that future CGT reporting is correct. I just hope that HMRC are content with the tax certificate, which I believe is correct, as sufficient evidence of capital gains because it would be a nightmare to go back and try to evidence every individual reinvestment of accumulation unit dividends.
@@enigma1000 I have used Interactive Investor. It does not provide ERI information within the annual tax certificate. I always look it up on the websites of Vanguard and iShares. I expect many investors do not bother, especially for income ETFs, for which many wrongly assume there is never any ETF. An example is VERX, a Vanguard income ETF, which in some years reports ERI.
I thought that S&P500 had a new accumulating ETF. As I’m quite new to all this I thought maybe I just missed it! Would I simply click “Switch” to move it all? I’m worried about losing value etc? Any advice would be appreciated.
Use a compound return calculator... put in how much money you have invested and how long you plan on having it in there, and compare the 2 results showing a 0.02% difference to see if it's even worth the hassle, then compare it minus 0.5% at the start... If it's going to save you £5,000 over the next 20 years probably worth it, if it's saving you £5, probably not!
So do you sometimes sell your entire holding of a particular stock and replace it with your new favourite? Do you not get nervous during the period in limbo in case of a big price change?
How do you report your earnings from dividends in accumulating indexes. I read that you still need to do for the self assesment tax returns, regardless if you are below the tax free limit. Also since i presume the fund already pays dividend tax on their end, you should somehow refund that? That would be a good video :)
Hi @JonasSvedas I don't because I only invest in ISAs and SIPPs. But I'd definitely use an accountant if you want to be sure you've got it right. Vanguard's got a pretty good explanation of Excess Reportable Income here www.vanguardinvestor.co.uk/investing-explained/general-account-tax-information Thanks, Ramin.
Most platforms, such as AJ Bell, provide an annual tax certificate that includes reinvested dividends on accumulation funds and ETFs and they provide ERI information, for self assessment tax returns
Hi Ramin, great videos, thanks for your work! I am thinking of opening a vanguard account and would go for an accumulation fund. Were you saying in the video that these accumulation funds require self assessment in UK? Can I protect the need to do a self assessment if I open a Vanguard ISA account and choose the same accumulation fund? Thanks!
Interesting. You are overweight on overvallued markets. Small cap and emerging markets are closer to fair value meaning your long term returns may under perform as a result?
I'm in the process of switching over my pension portfolio from HL over to Vanguard. Although HL's platform is good their charges are very expensive and their wealth fund recommendations are atrocious. Totally biased imo and promoted stuff in favour of certain players. The only minuses with Vanguard is they're currently restricted to choosing funds from their own product range. It would be nice to have the option to invest with other fund providers too. Also the fund screening service is not very good, has very limited options to choose and filter funds.
Dear Ramin - my plan is to put a lump sum 60k ish into Vanguard SIPP using the last 3 years of tax relief entitlement. To recuce risk of fluctuations in the stock market (BWRP fund) I'm thinking it is best to add cash in multiple 10k chunks in a back dating/ carry forward capacity (last 3 years entitlement) From your awareness, is this possible? or as I am requesting backdated tax relief, do I have to put the whole lump sum in in one transaction (60k)Thank you in advance for your outstanding information sharing allowing for much better decision making.😊
