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Low-cost index funds UK

Low-cost index funds will help you save money

This is our list of low-cost index funds and ETFs that’s kept updated to enable investors to find the cheapest index trackers available in the UK.

You can select from these funds to build a diversified portfolio that – as part of a passive investing strategy – will help you achieve your investing objectives.

We focus on value and cost in this list because crushing charges is a core component of wise investing. Every pound you save in fees is a pound that snowballs over the years and speeds you towards your financial goals.

Our piece on management fees explains how even small savings add up to a big difference.

The growing recognition of the importance of investment fees has driven explosive growth in low-cost index funds and Exchange Traded Funds (ETFs) over the past 20 years.

We believe these two types of index tracker are the best value investment vehicles available in the UK and the right choice for passive investors.

Low-cost index funds UK – the Total Cost of Ownership

Our cheapest tracker fund UK list is divided into the key sub-asset classes you may wish to invest in.

The picks per asset class are ranked by their Total Cost of Ownership (TCO).

The TCO is the sum of a fund’s transaction costs and its Ongoing Charge Figure (OCF).

Many outlets will only highlight a fund’s OCF (or Total Expense Ratio). But that misses out a significant chunk of cost embodied by its less well-publicised transaction cost figure.

Transaction costs are the fees and taxes that all investment funds inevitably incur when trading their underlying assets.

We think it’s important to include transaction costs when considering your shortlist. Such charges can rival the OCF in some of the sub-asset classes.

Note: fund costs are a complex and confusing area so we’ve got a few more notes about fees after the main list below.

Let’s go hunt for bargains!

Global equity – developed world and emerging markets (All-World)


  • HSBC FTSE All-World Index Fund C (GB00BMJJJF91) TCO 0.15% (OCF 0.13%, Transaction 0.o2%)

Next best

  • Invesco FTSE All-World UCITS ETF (FWRG) TCO 0.15% (OCF 0.15%, Transaction 0%)
  • SPDR MSCI ACWI IMI ETF (IMID) TCO 0.18% (OCF 0.17%, Transaction 0.01%)
  • iShares MSCI ACWI ETF (SSAC) TCO 0.20% (OCF 0.2%, Transaction 0%)
  • Fidelity Allocator World Fund W (GB00B9777B62) TCO 0.22% (OCF 0.2%, Transaction 0.02%)
  • Vanguard FTSE All-World ETF (VWRP) TCO 0.24% (OCF 0.22%, Transaction 0.02%)
  • Vanguard ESG Global All Cap ETF (V3AB) TCO 0.26% (OCF 0.24%, Transaction 0.02%)

Vanguard LifeStrategy and Fidelity Allocator invest in other index trackers. Fidelity invests in REITs and small caps.

World equity – developed world only


  • Amundi Prime Global ETF (PRWU) TCO 0.07% (OCF 0.04%, Transaction 0.03%)

Next best

  • L&G Global Equity ETF (LGGG) TCO 0.1% (OCF 0.1%, Transaction 0%)
  • iShares Developed World Index Fund D (IE00BD0NCL49) TCO 0.12% (OCF 0.12%, Transaction 0%)
  • SPDR MSCI World ETF (SWLD) TCO 0.13% (OCF 0.12%, Transaction 0.01%)
  • Fidelity Index World Fund P (GB00BJS8SJ34) TCO 0.13% (OCF 0.12%, Transaction 0.01%)
  • Vanguard FTSE Developed World ETF (VHVG) TCO 0.14% (OCF 0.12%, Transaction 0.02%)

The L&G ETF has an ESG remit.

World ex-UK equity


  • L&G International Index Trust I Fund (GB00B2Q6HW61) TCO 0.15% (OCF 0.13%, Transaction 0.02%)

Next best

  • Vanguard FTSE Dev World ex-UK Equity Index Fund (GB00B59G4Q73) TCO 0.15% (OCF 0.14%, Transaction 0.01%)
  • Aviva Investors International Index Tracking SC2 Fund (GB00B2NRNX53) TCO 0.25% (OCF 0.25%, Transaction 0%)

You can also pick ‘n’ mix using individual US, Europe ex-UK, Japan, and Pacific ex-Japan trackers.

World income equity


  • Vanguard FTSE All-World High Dividend Yield ETF (VHYG) TCO 0.35% (OCF 0.29%, Transaction 0.06%)

Next best

  • Fidelity Global Quality Income ETF (FGQD) TCO 0.43% (OCF 0.4%, Transaction 0.03%)
  • WisdomTree Global Quality Dividend Growth ETF (GGRG) TCO 0.43% (OCF 0.38%, Transaction 0.05%)
  • FlexShares Developed Markets High Dividend Climate ESG ETF (QDFD) TCO 0.45% (OCF 0.29%, Transaction 0.16%)

  • Vanguard Global Equity Income Fund (GB00BZ82ZW98) TCO 0.62% (OCF 0.48%, Transaction 0.14%)

The Vanguard fund is active but gives you a non-ETF option.

World small cap equity


  • HSBC MSCI World Small Cap ESG ETF (HWSS) TCO 0.26% (OCF 0.25%, Transaction 0.01%)

Next best

  • Vanguard Global Small-Cap Index Fund (IE00B3X1NT05) TCO 0.34% (OCF 0.3%, Transaction 0.04%)
  • UBS (Irl) ETF – MSCI World Small Cap Socially Responsible (WSCR) TCO 0.36% (OCF 0.23%, Transaction 0.13%)
  • iShares MSCI World Small Cap ETF (WLDS) TCO 0.39% (OCF 0.35%, Transaction 0.04%)
  • SPDR MSCI World Small Cap ETF (WOSC) TCO 0.47% (OCF 0.45%, Transaction 0.02%)

US large cap equity


  • SPDR S&P 500 ETF (SPY5) TCO 0.03% (OCF 0.03%, Transaction 0%)

Next best

  • Lyxor Core US Equity ETF (LCUS) TCO 0.04% (OCF 0.04%, Transaction 0%)
  • JPMorgan BetaBuilders US Equity ETF (BBSU) TCO 0.05% (OCF 0.04%, Transaction 0.01%)
  • Amundi Prime USA ETF (PRAU) TCO 0.06% (OCF 0.05%, Transaction 0.01%)
  • L&G US Equity ETF (LGUG) TCO 0.06% (OCF 0.05%, Transaction 0.01%)
  • Xtrackers S&P 500 ETF (XDPP) TCO 0.06% (OCF 0.06%, Transaction 0%)
  • iShares US Equity Index Fund D (GB00B5VRGY09) TCO 0.06% (OCF 0.05%, Transaction 0.01%)
  • HSBC American Index Fund C (GB00B80QG615) TCO 0.06% (OCF 0.06%, Transaction 0%)

UK large cap equity


  • iShares UK Equity Index Fund D (GB00B7C44X99) TCO 0.08% (OCF 0.05%, Transaction 0.03%)

Next best

  • Vanguard FTSE UK All Share Index Unit Trust (GB00B3X7QG63) TCO 0.09% (OCF 0.06%, Transaction 0.03%)
  • Fidelity Index UK Fund P (GB00BJS8SF95) TCO 0.09% (OCF 0.06%, Transaction 0.03%)
  • Lyxor Core UK Equity All Cap ETF (LCUK) TCO 0.1% (OCF 0.04%, Transaction 0.06%)
  • L&G UK Equity ETF (LGUK) TCO 0.12% (OCF 0.05%, Transaction 0.07%)

The L&G ETF has an ESG remit.

UK mid cap equity


  • Amundi Prime UK Mid and Small Cap ETF (PRUK) TCO 0.18% (OCF 0.05%, Transaction 0.13%)

Next best

  • Invesco FTSE 250 ETF (S250) TCO 0.22% (OCF 0.12%, Transaction 0.1%)
  • Vanguard FTSE 250 ETF (VMIG) TCO 0.25% (OCF 0.1%, Transaction 0.15%)
  • Xtrackers FTSE 250 ETF (XMCX) TCO 0.27% (OCF 0.15%, Transaction 0.12%)
  • iShares Mid Cap UK Equity Index Fund D (GB00B7VT0938) TCO 0.35% (OCF 0.16%, Transaction 0.19%)

UK equity income


  • Vanguard FTSE UK Equity Income Index Fund (GB00B59G4H82) TCO 0.28% (OCF 0.14%, Transaction 0.14%)

Next best

  • WisdomTree UK Equity Income ETF (WUKD) TCO 0.35% (OCF 0.29%, Transaction 0.06%)
  • SPDR S&P UK Dividend Aristocrats ETF (UKDV) TCO 0.47% (OCF 0.3%, Transaction 0.17%)
  • L&G Quality Equity Dividends ESG Exclusions UK ETF (LDUK) TCO 0.67% (OCF 0.25%, Transaction 0.42%

Emerging markets equity


  • Amundi Prime Emerging Markets ETF (PRAM) TCO 0.11% (OCF 0.08%, Transaction 0.03%)

Next best

  • Amundi MSCI Emerging Markets ETF (LEMA) TCO 0.14% (OCF 0.14%, Transaction 0%)
  • Northern Trust Emerging Markets Custom ESG Equity Index Fund (IE00BJ0X8418) TCO 0.22% (OCF 0.17%, Transaction 0.05%)
  • HSBC MSCI Emerging Markets ETF (HMEC) TCO 0.22% (OCF 0.15%, Transaction 0.07%)
  • Fidelity Index Emerging Markets Fund P (GB00BHZK8D21) TCO 0.23% (OCF 0.2%, Transaction 0.03%)
  • HSBC Emerging Market Sustainable Equity ETF (HSEF) TCO 0.24% (OCF 0.18%, Transaction 0.06%)

Property – UK


  • iShares UK Property ETF (IUKP) TCO 0.4% (OCF 0.4%, Transaction 0%)

Next best

  • iShares MSCI Target UK Real Estate ETF (UKRE) TCO 0.46% (OCF 0.4%, Transaction 0.06%)

No index fund alternative.

Property – global


  • VanEck Global Real Estate ETF (TREG) TCO 0.26% (OCF 0.25%, Transaction 0.01%)

Next best

  • Amundi ETF FTSE EPRA/NAREIT Global ETF (EPRA) TCO 0.27% (OCF 0.24%, Transaction 0.03%)
  • L&G Global Real Estate Dividend Index Fund I (GB00BYW7CN38) TCO 0.28% (OCF 0.22%, Transaction 0.06%)
  • iShares Environment & Low Carbon Tilt Real Estate Index Fund D (GB00B5BFJG71) TCO 0.41% (OCF 0.17%, Transaction 0.25%)
  • Northern Trust Developed Real Estate ESG Index Fund (NL00150003F8) TCO 0.42% (OCF 0.28%, Transaction 0.14%)

There’s an unusual 1% exit fee on the Northern Trust fund. It’s also Dutch domiciled so watch out for withholding tax.

Multi-factor – global


  • JPMorgan Global Equity Multi-Factor ETF (JPLG) TCO 0.21% (OCF 0.19%, Transaction 0.02%)

Next best

  • Invesco Global ex UK Enhanced Index Fund Y (GB00BZ8GWR50) TCO 0.28% (OCF 0.23%, Transaction 0.05%)
  • Franklin Global Equity SRI ETF (FLXG) TCO 0.37% (OCF 0.3%, Transaction 0.07%)
  • Invesco Quantitative Strategies ESG Global Equity Multi-Factor ETF (IQSA) TCO 0.41% (OCF 0.3%, Transaction 0.11%)
  • Amundi ETF Global Equity Multi Smart Allocation Scientific Beta ETF (SMRU) TCO 0.42% (OCF 0.4%, Transaction 0.02%)

All factor investing is effectively straying into active management territory. Essentially, you hope that your chosen subset of the market can outperform. The important thing is to choose products underpinned by sound financial theory, a verifiable set of rules, and a commitment to low costs.

Regional ETFs are available. But we’ve stuck to global multifactor low-cost index funds for broad diversification.

Money market – GBP


  • Lyxor Smart Overnight Return ETF (CSH2) TCO 0.07% (OCF 0.07%, Transaction 0%)

Next best

  • BlackRock ICS Sterling Liquidity Fund (IE00B43FT809) TCO 0.11% (OCF 0.1%, Transaction 0.01%)

  • JPM GBP Liquidity LVNAV (LU1747646468) TCO 0.11% (OCF 0.1%, Transaction 0.01%)

  • Royal London Short Term Money Market (GB00B8XYYQ86) TCO 0.12% (OCF 0.1%, Transaction 0.02%)

Money market funds are actively managed.

UK Government bonds – intermediate


  • Amundi UK Government Bond ETF (GILS) TCO 0.06% (OCF 0.05%, Transaction 0.01%)

Next best

  • Invesco UK Gilts ETF (GLTA) TCO 0.06% (OCF 0.06%, Transaction 0%)
  • iShares Core UK Gilts ETF (IGLT) TCO 0.08% (OCF 0.07%, Transaction 0.01%)
  • Fidelity Index UK Gilt Fund P (GB00BMQ57G79) TCO 0.11% (OCF 0.1%, Transaction 0.01%)
  • iShares GiltTrak Index Fund (IE00BD0NC250) TCO 0.1% (OCF 0.1%, Transaction 0%)
  • Vanguard UK Gilt ETF (VGVA) TCO 0.13% (OCF 0.07%, Transaction 0.06%)

UK Government bonds – long


  • Vanguard UK Long-Duration Gilt Index Fund (GB00B4M89245) TCO 0.16% (OCF 0.12%, Transaction 0.04%)

Next best

  • SPDR Bloomberg Barclays 15+ Year Gilt ETF (GLTL) TCO 0.18% (OCF 0.15%, Transaction 0.03%)
  • iShares Over 15 Years Gilts Index Fund (GB00BF338G29) TCO 0.19% (OCF 0.15%, Transaction 0.04%)

UK Government bonds – short


  • L&G UK Gilt 0-5 Year ETF (UKG5) TCO 0.06% (OCF 0.06%, Transaction 0%)

Next best

  • Invesco UK Gilt 1-5 Year ETF (GLT5) TCO 0.08% (OCF 0.06%, Transaction 0.02%)
  • Amundi UK Government Bond 0-5Y ETF (GIL5) TCO 0.09% (OCF 0.05%, Transaction 0.04%)
  • iShares UK Gilts 0-5 ETF (IGLS) TCO 0.12% (OCF 0.07%, Transaction 0.05%)
  • JPMorgan BetaBuilders UK Gilt 1-5 yr ETF (JG15) TCO 0.13% (OCF 0.07%, Transaction 0.06%)

UK Government bonds – index-linked


  • Amundi UK Government Inflation-Linked Bond ETF (GILI) TCO 0.08% (OCF 0.07%, Transaction 0.01%)

Next best

  • iShares £ Index-Linked Gilts ETF (INXG) TCO 0.1% (OCF 0.1%, Transaction 0%)
  • Vanguard UK Inflation Linked Gilt Index Fund (GB00B45Q9038) TCO 0.14% (OCF 0.12%, Transaction 0.02%)
  • L&G All Stocks Index Linked Gilt Index Trust I (GB00B84QXT94) TCO 0.17% (OCF 0.15%, Transaction 0.02%)

UK index-linked funds may not be suitable for your portfolio due to embedded real interest risk. We switched our Slow and Steady portfolio to a short duration global index-linked fund hedged to GBP. For those, see below.

Global inflation-linked bonds hedged to £ – short


  • abrdn Short Dated Global Inflation-Linked Bond Tracker Fund B (GB00BGMK1733) TCO 0.26% (OCF 0.12%, Transaction 0.14%)

Next best

  • Amundi Core Global Inflation-Linked 1-10Y Bond ETF (GISG) TCO 0.27% (OCF 0.2%, Transaction 0.05%)
  • Royal London Short Duration Global Index Linked Fund M (GB00BD050F05) TCO 0.27% (OCF 0.27%, Transaction 0%)

The Royal London fund is actively managed.

Global government bonds hedged to £


  • Amundi Index JP Morgan GBI Global Govies ETF (GOVG) TCO 0.18% (OCF 0.15%, Transaction 0.03%)

Next best

  • UBS JP Morgan Global Government ESG Liquid Bond ETF (EGOG) TCO 0.24% (OCF 0.2%, Transaction 0.04%)
  • iShares Global Government Bond ETF (IGLH) TCO 0.26% (OCF 0.25%, Transaction 0.01%)
  • Xtrackers ESG Global Government Bond ETF (XZWS) TCO 0.26% (OCF 0.25%, Transaction 0.01%)
  • abrdn Global Government Bond Tracker Fund B (GB00BK80KQ76) TCO 0.29% (OCF 0.14%, Transaction 0.15%)
  • Xtrackers Global Government Bond ETF (XGSG) TCO 0.29%(OCF 0.25%, Transaction 0.04%)



  • Amundi Physical Gold ETC (GLDA) TCO 0.12% (OCF 0.12%, Transaction 0%)
  • Invesco Physical Gold A ETC (SGLP) TCO 0.12% (OCF 0.12%, Transaction 0%)
  • WisdomTree Core Physical Gold ETC (GLDW) TCO 0.12% (OCF 0.12%, Transaction 0%)
  • Xtrackers IE Physical Gold ETC (XGDU) TCO 0.12% (OCF 0.12%, Transaction 0%)
  • iShares Physical Gold ETC (SGLN) TCO 0.12% (OCF 0.12%, Transaction 0%)

Gold trackers are Exchange Traded Commodities (ETCs). These are functionally index trackers like ETFs, only they’re focused on commodities investing.

Broad commodities


  • L&G All Commodities ETF (BCOM) TCO 0.17% (OCF 0.15%, Transaction 0.02%)

Next best

  • iShares Diversified Commodity Swap ETF (COMM) TCO 0.27% (OCF 0.19%, Transaction 0.08%)
  • WisdomTree Broad Commodities ETF (COMX) TCO 0.29% (OCF 0.19%, Transaction 0.1%)
  • Invesco Bloomberg Commodity ETF (CMOP) TCO 0.34% (OCF 0.19%, Transaction 0.15%)
  • L&G Longer Dated All Commodities ETF (CMFP) TCO 0.34% (OCF 0.3%, Transaction 0.04%)
  • iShares Bloomberg Enhanced Roll Yield Commodity Swap ETF (ROLL) TCO 0.37% (OCF 0.28%, Transaction 0.09%)

We’ve written a much more nuanced take on choosing a commodities ETF. Sometimes cheapest isn’t best.

Using our cheapest index funds UK list

You can precisely identify the low-cost index funds you want to research via the ISIN codes or ETF tickers shown in our list in brackets. (We’ve previously explained how fund names work.)

We’ve given the code for the GBP-priced accumulation fund flavour where available. Income distributing versions are also usually offered. Make sure you understand the ins and outs of accumulation vs income funds.

Also note:

  • We’ve included an Environmental, Social, and Governance (ESG) index tracker option for each sub asset-class where available.
  • Actively managed funds are featured when low-cost index funds are not available. Active funds are noted in the relevant sections.
  • We don’t show platform exclusive index trackers. They’re generally not a good deal overall.

Cheap index trackers and costs – extra detail

The bid-offer spread is an additional cost you may incur that isn’t captured by the TCO figure above.

This charge shouldn’t be significant for most passive investors anyway1 but you can gauge it by using the estimated spread published by Hargreaves Lansdown on its fund pages.

The final significant investing cost you’ll need to pay are broker fees. We track those on our broker comparison table.

Watch out for FX fees charged by brokers on certain funds. This is a stealth cost that’s quite avoidable.

Some providers of synthetic ETFs publish a ‘swap fee’ on top of the TER. Just add the swap fee to the TER to get the Ongoing Charge Figure. This is how we’ve treated swap fees in the listing above.

It’s worth knowing that a fund’s transaction costs can fluctuate quite a lot from period to period, especially if there’s excessive turnover in the fund’s index. So don’t feel like you instantly need to switch if your fund’s transaction costs suddenly spike.

Keep your fund and its main rivals under review for up to a year before coming to any definitive conclusions about its competitiveness.

Some index trackers register negative transaction costs, but I’ve disregarded that from the TCO calculations above. That’s because negative transaction costs amount to an accounting technique that’s not sustainable over time.

Low-cost index funds UK – fees you can ignore

Don’t pay any attention to a fund’s Annual Management Charge (AMC). The AMC is an old-fashioned fee metric that excludes important fund costs. This is why a fund’s AMC is typically lower than its OCF or TER.

Do not add the AMC to the OCF or TER.

The OCF and TER are interchangeable, however, so choose one of those costs (the highest) and add it to the fund’s transaction cost to calculate its TCO.

Treat negative transaction costs as zero.

Ignore entry and exit charges for index trackers where you see them mentioned in fund literature such as Key Investor Information Documents. Such fees do not apply to ordinary investors like you and me. They are levied on institutional participants dealing directly with the fund provider.

The same thing goes if you see an eye-watering minimum purchase figure (such as £100,000) to buy into a fund.

Be guided by your broker’s minimum purchase amount.

Final thoughts on low-cost index funds and ETFs

There’s often little to distinguish index trackers that are closely matched in price. However we have written a few pieces to help you resolve tie-breaker situations:

If you’re looking for the cheapest place to buy and hold your low-cost index funds then do take a gander at our broker comparison table.

Our article on designing your own asset allocation will help you construct your portfolio. If you want a quick shortcut, you could do a lot worse than checking out our best multi-asset fund picks for an instant portfolio solution.

We update this list periodically. Quoted TCOs may date, as fund groups fight their turf wars by undercutting each other (hurrah!) but this article should still prove an excellent starting point for your research.

If anyone comes across any better index tracker options then please shout in the comments below.

Take it steady,

The Accumulator

Note: Early comments below may refer to an older collection of low-cost index trackers. Scroll down for the latest thoughts.

  1. Wide spreads are more typically an issue with individual company shares. []
{ 915 comments… add one }
  • 799 Gizzard October 31, 2022, 1:21 pm

    You may have a typo: “Lyxor Core Morningstar UK ETF (LU1781541096) TCO 0.1%”
    If it’s an ETF, shouldn’t it have a four character designator (probably LCUK)?

  • 800 The Accumulator November 3, 2022, 12:30 am

    Nice one, Gizzard. It was the right ISIN number but I prefer to use tickers for ETFs. Well spotted, have updated – along with the new fund name it’s got too.

  • 801 D November 8, 2022, 3:36 pm

    I need some guidance on cash equivalent investments in a SIPP. I don’t want to invest a large cash holding all in one go (I really shouldn’t have read Paul Singer’s Elliott letter last night!) but my SIPP provider doesn’t pay interest. ETFs are preferable but funds will do, and I assume by their nature they will be actively managed. GBP money market funds come to mind but perhaps a US treasury GBP hedged fund will do? Specific fund suggestions welcome but perhaps more so is where do I start my own research? I can’t be the only one in this predicament. Thanks in advance.

  • 802 The Investor November 8, 2022, 3:51 pm

    @D — This is not personal advice, but for my part I am using the iShares ultrashort corporate bond ETF for that purpose.

    Ticker: ERNS (https://www.ishares.com/uk/individual/en/products/258120/ishares-ultrashort-bond-ucits-etf)

    Yield to maturity when I last looked was c. 3.75%.

    It’s not risk-free (corporate bonds, so some credit risk) but the duration is tiny (a couple of months) and it’s well-diversified.

    I wouldn’t put my net worth into it but personally I’m very happy with 2-5% invested here as needed.

    There may be better options around now with short gilts as I haven’t looked at this end of the curve for a few months, but when I last looked you’d need to take on much more duration than two months to get anything like that yield. Which is fine in an asset allocation but takes you far from ‘cash-like’.

  • 803 D November 9, 2022, 12:24 am

    @The Investor – Many thanks.

    A search of JustETF yields only two alternatives with under 6 months duration in GBP or GBP hedged (assuming we ignore the ESG flavour of ERNS).

    JPMorgan GBP Ultra-Short Income ETF, ticker JGST.
    YTM 3.48% and duration of 3.6 months according to the factsheet. I don’t fully understand what it invests in but it “may be concentrated in the banking industry”.

    Xtrackers Sterling Cash Swap ETF, ticker XSTR.
    A money market fund that tracks SONIA (I assume it returns a little below base rate?). However, it’s synthetic and domicilied in Luxembourg.

    ERNS YTM is 3.72% and duration of 2.3 months.

    It’s perhaps nugatory given my brokers search doesn’t return anything for JGST or XSTR.

  • 804 The Accumulator November 9, 2022, 9:01 am

    @D – there’s the Vanguard Sterling Short-Term Money Market Fund

  • 805 D November 9, 2022, 4:08 pm

    @The Accumulator – Thanks.

    Vanguard Sterling Short-Term Money Market Fund GBP Inc (GB00BGB6GZ57) OCF 0.12%
    I can’t trade it on iWeb/Halifax. Live chat said it’s because of the “nature of the fund, its a coded fund”. It’s on AJ Bell (but not for regular investment) and HL.

    There’s also the BlackRock Cash Fund Class D GBP Dist (GB00B42XLZ68) OCF 0.24% (brokers quote OCF 0.14%, iWeb quote typical transactions costs of 0.188%)
    It’s on iWeb/Halifax/AJ Bell (including regular investment)/HL.

    Using the AJ Bell method in your “Transaction costs” article:
    Vanguard – OCF/TER/AMC 0.12%, transaction fees 0.15% -> TCO 0.27%
    BlackRock – OCF 0.18%, AMC 0.25%, transaction fees 0.02% -> TCO 0.27% ?

  • 806 Evan December 2, 2022, 11:16 am

    I’m not sure if this is the best place for this question. But I’m wanting to add a little diversification to my held FTSE Global All Cap. I’m looking at adding Global Real Estate, as you’ve set out above and in the Slow and Steady. But when I look at, for example, the L&G Global Real Estate fund, all top 10 holdings are included in the Vanguard Global All Cap fund. So the crux of my question – does adding a real estate fund actually add diversity, or is it an active decision to bet more on real estate equities?

  • 807 Chris December 7, 2022, 11:58 pm

    The BlackRock, iShares, and Xtrackers funds mentioned hold different grades of credit:

    ERNS – credit rating at least BBB (lower medium grade). Holds corporate bonds from banks. Tracks “Markit iBoxx GBP Liquid Investment Grade Ultrashort Index”. Lends securities, up to 8.88% on loan in last year.

    XSTR – credit rating Aa3 (high grade). Appear to hold UK gilts and use swaps to return the daily gain of the index. Tracks SONIA. No lending.

    BlackRock Cash – credit rating at least A-1 (upper medium grade). Holds bank deposits and unsecured commercial paper from banks. Tracks SONIA.

    > It’s perhaps nugatory given my brokers search doesn’t return anything for JGST or XSTR.

    XSTR should be on iWeb.

    > Using the AJ Bell method in your “Transaction costs” article:

    Compare the tracking error (read the article “How to use tracking error to uncover the true cost of an index tracker”). In this case, BlackRock Cash and XSTR track SONIA very similarly (difference of 0.0125% a year on average). ERNS has historically returned about 0.5% more per year, but it’s tracking a different index (ultrashort bonds).

    iWeb also have ERND which is the iShares $ Ultrashort Bond ETF. At least BBB rated. Tracks “Markit iBoxx USD Liquid Investment Grade Ultrashort Index”. Might be worth considering as U.S. rates are higher (~5% YTM), but you’re exposed to currency fluctuations.

    Another interesting one is FEDG – Lyxor Fed Funds US Dollar Cash ETF. Should return 3.8% now (unhedged). It appears to be available on many UK brokers, but not iWeb.

  • 808 Chris December 8, 2022, 12:45 pm

    iWeb also have:

    – “L&G Cash Trust I Acc” fund which holds at least A rated bank deposits and short term bonds. It has an unusually large exposure to Japan (20% of holdings).

    – Lyxor Smart Overnight Return ETF (CSH2). Aims to track above SONIA, historically outperforms it by +0.1%. Min A2 (upper medium grade) banks deposits and corporate bonds with less than 6 months maturity.

    Average annual deviation from Sonia compounded index over last 5 years are:

    iShares $ ultrashort +1.2% (only 3 years data, USD returns as-is, does not include forex)
    iShares £ ultrashort +0.32%
    Lyxor Smart Overnight Return GBP +0.08%
    Vanguard Sterling short term 0% (only 2 years data)
    L&G Cash -0.08%
    BlackRock Cash -0.18%
    Xtrackers II GBP rate swap -0.18%

    So, iShares ultrashort has the highest return, and the lowest rated debt (BBB lower medium grade). At the other end there’s Xtrackers, with the lowest returns, but holding Aa3 high grade credit rated debt.

  • 809 The Accumulator December 8, 2022, 6:04 pm

    @ Evan – the answer is both! The amount of real estate you hold is an active decision. The idea is that it’s all in the aid of diversification as REITs are meant to behave a little differently from equity trackers.

    My own experience is that REIT trackers are highly correlated with standard equity index trackers though – they both tend to rise and fall together though returns will differ.

    The academic studies I’ve read on the topic bear this out – especially during a slump – so while there *may be* some diversification value to REITs, it’s likely to be limited.

    @ Chris – thank you for the extra detail and your thoughts. Re: ultrashort – makes sense that the riskier fund offers a little more return.

  • 810 D December 8, 2022, 9:59 pm

    @Chris – Thank you, that’s really useful info.

    My mistake, XSTR is on iWeb.

    I was aware of ERND (search ERNU on iWeb) but not FEDG. I’d like the option of a hedged $ cash-equivalent fund, and could even imagine switching between one and a £ fund depending on yield. Hedging makes more sense with higher yields, I assume?

    I’m averse to swaps, if only through ignorance.

    On iWeb I’m left with ERNS, BlackRock Cash or L&G Cash (not keen on the unusually large exposure to Japan). Essentially it’s higher risk/yield of ERNS v BlackRock/L&G Cash.

  • 811 Chris December 9, 2022, 12:37 am

    @D imho hedging would make sense if you have a large amount of money and want to convert it all to a USD fund at once. If you just want to average in over a long time then you may as well accept the currency risk.

    I had another look at iWeb, some other funds available are:

    – Pimco US Dollar Short Maturity Source ETF (IE00B67B7N93). This one looks good – currently 5.13% YTM and there’s a GBP hedged accumulating variant (IE00BK9YKZ79). Unfortunately iWeb have the unhedged variant, but don’t have the hedged variant. It’s a big fund too, $2461m AUM. Maybe iWeb will add it if you ask.

    – Royal London Short Term Money Market. Available in both income and accumulating variants. Tracks compounded SONIA almost perfectly. The biggest fund so far, £5244m AUM.

  • 812 Chris December 9, 2022, 1:23 am

    Also iWeb:

    – PIMCO Sterling Short Maturity ETF (QUID / IE00B622SG73). Current YTM 4.85%.

  • 813 James Wallace December 22, 2022, 5:06 am

    Hi Guys –

    Thanks so much – very helpful.

    Love the work you’re doing!

    Sidenote – I’d also point your readers to an interesting ESG Guide, including a comparison of the Vanguard ESG Global Fund with its non-ESG Version:



  • 814 The Accumulator January 3, 2023, 10:06 am

    @ James – hey, thank you for the comment and for the link. That’s as good a deep dive into ESG as I’ve seen anywhere

  • 815 Luke February 12, 2023, 2:43 pm

    Hi, thanks for another great article.

    I currently invest in the HSBC FTSE All World and would like to add small-cap exposure.

    I notice that all the listed world-small-cap funds/ETFs track the MSCI index.

    Does anyone know if there are any FTSE alternatives out there (my search has been fruitless)?

    If not, how big a deal would it be to “mix and match” the two index providers?

    Thanks so much for any advice.

  • 816 The Accumulator February 14, 2023, 10:37 am

    Hi Luke – it’s MSCI all the way from what I can see. I think it’s fine to mix the two index providers – there are differences but they’ll be marginal over time.

  • 817 Dan March 10, 2023, 8:00 am

    What tools are you using for fund/ETF analysis in the UK? I found very useful trustnet.com and morningstar.co.uk.

    Below is my table of money market instruments sorted by 6months performance.

    Rank Fund Yield YTD 1m 3m 6m 1y 3y 5y
    1 PREMIER MITON UK MONEY MARKET B INC GBP 4.39 0.7 0.2 0.9 1.7 2.2 2.2 3.4
    2 ABRDN STERLING MONEY MARKET I ACC 1.5 0.8 0.3 0.9 1.6 2.2 2.4 3.9
    3 ISHARES £ ULTRASHORT BOND UCITS ETF GBP n/a 0.6 0.2 0.8 1.6 2 2.7 4.7
    4 L&G CASH TRUST I ACC 2.3 0.7 0.3 0.9 1.6 2 2 3.3
    5 LF CANLIFE STERLING LIQUIDITY I ACC 2.65 0.7 0.3 0.9 1.6 2 2.2 3.7
    6 ROYAL LONDON SHORT TERM MONEY MARKET Y ACC 3.58 0.7 0.3 0.9 1.5 2.1 2.2 3.6
    7 FIDELITY CASH W ACC GBP 1.39 0.6 0.3 0.8 1.4 1.9 1.9 3.2
    8 BLACKROCK CASH D ACC 2.85 0.6 0.3 0.8 1.4 1.9 1.8 2.8
    9 INVESCO MONEY (UK) NO TRAIL ACC 3.52 0.6 0.2 0.8 1.4 1.7 1.4 2.2
    10 VANGUARD STERLING SHORT-TERM MONEY MARKET A INC GBP 0.08 0.6 0.3 0.8 1.4 1.8 1.9 n/a
    11 LGIM DHL LIQUIDITY n/a 0.7 0.3 0.8 1.4 1.9 2 n/a
    12 INSIGHT ILF GBP LIQUIDITY C4 3.96 0.7 0.3 0.8 1.4 1.8 1.8 2.9
    13 CT STERLING SHORT-TERM MONEY MARKET RET INC GBP 3.58 0.7 0.4 0.9 1.4 1.9 1.7 2.7
    14 JPM GBP LIQUIDITY LVNAV R DIS NAV 0.03 0.4 0.2 0.6 0.9 1.2 1.3 1.9

  • 818 Jam March 22, 2023, 12:12 pm

    Just to let you know that there is a new cheap world tracker fund that has recently started trading on the LSE. It is: ‘Xtrackers MSCI World UCITS ETF 1D’.
    It is a large fund with £1BN under management. What is interesting for the UK investor is that it is low charge 0.12% and since January this year it trades on the LSE price in £GBP, so no foreign exchange fees.
    It is also a distributing fund,instead of an accumulating one, so would be good to hold outside of and ISA or SIPP. (It compares directly with SWDA that you mention, but which is slightly higher charges at 0.20% and is accumulating.)
    The Ticker is XDWP. Maybe not available with many platforms yet, but Interactive Investor have added it to their platform for me.


    Maybe one to add to your list, when you do an update?

  • 819 Jon April 5, 2023, 11:43 am

    @TA – Just wondered if I am missing something but under your selection for
    “Global equity – developed world and emerging markets (All-World)” why is this fund below not included:

    Legal & General Global Equity Index Fund Unit Class I GBP Accumulation – (ISIN: GB00B83LW328)

    Seems fairly cheap but is there something wrong with it?

    I think it seems to be an “All-World” fund and tracks the FTSE All World index (unlike the L&G International Index Trust which excludes the UK which you have included in your ex-UK selection).

    Seems to have had fairly close performance over 5 years according to IWeb – 10.48% annualised return for Global Equity Fund and 10.94% for Int. Index Trust.

    Here is the KIID (from IWeb):


    and this shows the fund charges:

    but says ongoing charge is 0.13% but with a typical transaction cost of 0.188% ? – more than the OCF charge? Don’t really understand that being more than the OCF? That would make 0.318% overall? It does say underneath this: “*This is an indication based on the market average. The fund’s actual transaction cost will be shown before you place a trade.”

    These are exactly the same quoted charges (on IWeb anyway) as the L&G International Index Trust. (Oh, I’ve just seen that the transaction cost is exactly the same 0.188% for Vanguard Dev. World fund & Fidelity Index World P fund – so think Iweb probably use this inaccurate figure for most. )

  • 820 The Accumulator April 13, 2023, 6:30 pm

    Hi Jon,

    Last time I updated this piece I noted a TCO of 0.25% for the L&G Global Equity Index Fund – so it wasn’t quite cheap enough to make the cut vs the other non-ESG All-World choices. Seems like the transaction cost moves around quite a lot given its nearly 0.19% when you looked and around 0.12% last time I did.

    Here’s my criteria for choosing a global tracker fund which takes factors other than cost into account:


  • 821 Jon April 14, 2023, 1:45 pm

    Thanks TA.

    I was just looking at the fund factsheet dated 28 February 2023 for L&G Global Equity Index Fund here:


    and that gives an Ongoing Charge of 0.52% which seems high and normally doesn’t include transaction costs either – whereas Hargreaves and IWeb give the ongoing charge as 0.13% which is what I thought it was.
    Which would be correct – it’s a bit confusing? Where is it best to look to find the correct ongoing charges/transaction costs figures as even the fund factsheet doesn’t seem to give any transaction costs?

    I thought this fund and the L&G International Index Trust fund both had the same ongoing charges, according to most brokers of 0.13% for the class I fund (Hargreaves also do class C at a discount through them but that’s just through them I believe). You would have thought the Fund Factsheet would be correct though but then again you would think the brokers selling them would be also?

  • 822 The Accumulator April 14, 2023, 2:17 pm

    In this case, I’d go with the brokers. In my experience the L&G fund centre is hopelessly confusing. They feature multiple fund classes and channels (e.g. direct to consumer, advisor only, platform exclusive) but don’t organise it so an ordinary mortal can easily pick out which version of a fund they’re looking at, whether it’s available to them, and at what cost.

    So I’d trust the broker to supply the details for the version of the fund they stock.

    Sometimes you’ll come across a small discrepancy when a broker displays a slightly older version of a fund factsheet, so ordinarily I’d go to the fund manager for the most up to date details. But where L&G are concerned, go with the broker.

    Finally, a fund’s ISIN number is a good way to absolutely definitely pinpoint which version you’re looking at.

  • 823 Barney April 14, 2023, 2:28 pm
  • 824 Barney April 14, 2023, 2:35 pm

    The factsheet for Class I with 0.13% on the L&G site (it may help to fib and say you’re an investment professional to be able to search for it, though it’s titled ” for Investors and Investment Professionals” – https://fundcentres.lgim.com/srp/lit/mK9Al9/Fact-sheet_Legal-General-Global-Equity-Index-Fund_28-02-2023_Multi-Audience.pdf

  • 825 Jon April 14, 2023, 3:23 pm

    Thanks@ TA and @ Barney – for the info.

    Yes you’re right Barney, I didn’t spot it was R Class – need to pay Specsavers a visit soon – if I can find it! (I wondered why HL/IWeb said it was 0.13% ongoing charge.) I never looked on Charles Stanley (as I don’t have an account with them and tend to look at brokers I have accounts with (even though I know some broker websites you can still use their info even if you don’t have one). Charles Stanley seem to include the transaction costs as well (where they are able to it says) – so is useful as others don’t always seem to give transaction costs (and some that do don’t seem to be accurate).

    The only other way I could think of to pin down the actual transaction costs is due to what IWeb say on their website which is this: “*This is an indication based on the market average. The fund’s actual transaction cost will be shown before you place a trade.”

    So it’s a rigmarole but you could go through the process of placing a trade (and then subsequently cancel it) just to view the actual total cost. I never realised there could be quite so much in additional transaction costs – sometimes around as much as the OCF it seems.

    Many thanks TA & Barney.

  • 826 Kay June 20, 2023, 4:29 pm

    A lot of great info here. A question if I may @TA re:

    HSBC Emerging Market Sustainable Equity ETF (HSEF) TCO 0.29% (OCF 0.18%, Transaction 0.11%)

    Is this sustainable focused ETF really close enough to the rest on the list to justify being included under Emerging Markets equity? It’s the only one I seem to be able to find on offer @H&L unless I’m mistaken? Can any other H&L recommend a comparably low cost emerging markets ETF on offer?

  • 827 Simon June 22, 2023, 3:45 pm

    Thank you for collecting all this information so comprehensively it’s really a useful resource. One small correction, the ticker/symbol for the Goldman Sachs Access UK Gilts 1-10 Years ETF should be GBPG

  • 828 The Accumulator June 22, 2023, 4:59 pm

    @ Kay – I’m sorry, I don’t think I fully understand your question. Could you sketch out why you think the ETF shouldn’t sit in the emerging markets category?

    @ Simon – Thank you Simon. Much obliged for the correction, too. Great spot!

  • 829 Manish Shah September 8, 2023, 10:06 am

    I am in trouble!!
    I am looking after my sister’s SIPP. She recently transferred in £371,415.84
    So far I have only bought: Vanguard Life Strategy with book cost of £25,775.12
    Q – do I lump sum over time and on dips or contribute monthly
    Q – our local market is UK – how do I increase UK exposure -was thinking I need a equity income fund pref an index tracker with low low cost
    Q – can’t think an aggregate bond fund eg index tracker – should I bother?
    She is not looking to draw on the SIPP for at least 10 years (other income)
    Q -I’ve been told to add global -and go for HSBC FTSE ALL WORLD acc -there will be holding overlaps with the Vanguard I guess
    Q- Also I need to consider small cap value and small cap growth -but no idea whats best in class for those
    Any suggestions on the above would be appreciated
    My head is spinning with all these permutations and combinations -I just need a set it and forget it portfolio

  • 830 Jam September 8, 2023, 10:37 am

    Hi @Manish #829
    You might like this post: https://monevator.com/why-a-total-world-equity-index-tracker-is-the-only-index-fund-you-need/
    Your capital will be invested efficiently and simply, forget having a UK bias.

    With regards to when to invest, see this:

    10 years plus is a fair old time, so i personally would be heavy equities, light on bonds, but we know nothing more than what you have told us and nothing of your sisters non-ISA holdings, income job prospects, etc., so these can be at best pointers. Try reading Lars Kroijer’s book for a deeper dive.

    In practical terms, the HSBC FTSE All World index fund is a very good one, as is the Vanguard Ftse All World Tracker ETF that Lars Kroijer likes. (VWRL, VWRP). The is now also the Invesco FTSE All World Tracker that is a bit cheaper than the Vanguard one (FWRG, FTWG).
    You could go for just one of these, or build in some 1+1, or even 1+1+1 redundancy, if you really want to. They all do effectively the same job. Hope this helps.

  • 831 The Investor September 8, 2023, 12:14 pm

    @Manish — Welcome to the site, and please enjoy reading and learning from our articles. 🙂 However remember that nobody here knows your full situation and neither us or readers can give you financial advice.

    That is a chunky sum of money, and you seem from your post a little out of your depth. You may well want to seek out a good independent financial advisor. Ideally I’d suggest looking for one with good references who charges a flat fee (not some sort of commission) but again that’s not advice, please do your research.

  • 832 AS September 8, 2023, 9:29 pm

    Hi @Manish

    Have you read TA’s latest post – “Maximising FSCS protection for your investment portfolio” which you can find at this link:


    This very good piece lists most of the cheapest funds that have up to £85,000 FSCS protection (i.e. should anything untoward happen to either your broker or fund manager (eg. HSBC/Fidelity or whoever) your sister should be able to recover her money). So if you are worried about them going bust – like I do – then split monies to keep less than 85K (or not too much over) with:

    (a) any one broker – like IWeb for example (who incidentally are very cheap as no usual £100 joining fee with them at minute as they have offer till end of year and only £5 dealing charge for buying/selling)

    (b) any one fund manager – the cheapest fund managers for global/world funds are HSBC/Vanguard/Fidelity/Legal & General then after that Aviva (these funds are all in the article link above – under Global equity and Developed World equity funds)

    Vanguard Lifestrategy you mentioned is a good fund which many people hold and you could use one of their split asset ones for your bond allocation if you want them (like 60:40 or 80:20 equities/bonds). You could put some more into that as up to £85000 would be protected in Vanguard funds.

    The HSBC FTSE All World C fund is an excellent well diversified and lowest cost global tracker fund there is and many investors hold this including myself.

    As you say many of these funds will overlap with the same holdings so you don’t need to hold loads of different ones – just enough to protect the money if you want the FSCS protection to apply.

    Note that only FUNDS (known as unit trusts or OEICS) are protected by the FSCS and they must be UK domiciled (effectively means based in UK) so if you want this protection check that out on the fund factsheet/key investor informaton document (KIID). Nothing else is protected – not ETF’s/Investment Trusts/individual shares or anything so stay away from these if you want the protection.

    Try to read more articles from this site – it is the best resource on the internet for investors. You do not want to make mistakes with your sister’s SIPP – she won’t be pleased with you. Don’t rush into it – take your time to read and understand. There are posts for beginners as well as more experienced investors.

    Keep it simple – I do – and I’ve been investing for a few years. You don’t need to worry about the minutiae really like small cap value/growth – I don’t have them and my funds are doing okay for me. Most global or developed world funds are large/medium cap and most have thousands of companies to provide enough diversification and provide a reasonable return over time. But you must be prepared to tie that money up for some time – it won’t happen overnight as stock market is volatile but 10 years or more is a reasonable time frame which you need to look at to invest – not really too much less as anything can happen over a lesser time frame. In some cases the market can downturn for a longer period and you can need to sit it out and have some cash reserves to tide you over as you don’t want to be pulling your money out after a crash when the value has tumbled.

    If you just want a reasonable return on your investment global funds are the simplest “set it and forget it” ones to have that invest across the whole market. Why do you want to apportion more to your local market – the UK – is there a particular reason? You may just be over complicating things that you don’t necessarily need. I don’t hold any UK funds and I live in UK but you can choose to overweight to UK if you wish but then you are more reliant on UK market to provide the return rather than diversifying across the world i.e. spreading your risk more. But if you believe the UK is going to do better overall?

    This is from my experience – and I obviously can’t give you personal advice – but I would keep it simple as a beginner or you could get into a real mess and get too confused by it all.

    I’d also agree with @TI’s suggestion if you are really stuck to seek out a good financial advisor BUT word of warning – in the past I have been heavily ripped off by some with hidden fees that weren’t made clear to me on pensions and ISA’s. BE CAREFUL there are many charlatans who just want to take your money in high fees. (TI has even written an article about it somewhere on this site.) Make sure you get ALL the fees and charges in writing and as TI says only get one who charges a one off FLAT fee for any advice (not ongoing charges/commissions). But likely any decent one will only tell you what is written here on this site anyway.

    But personally all I have done is read much from the internet on passive investing in global funds – Monevator provides excellent information/guidance to point you in the right direction. Investing in passive tracker funds will cost less than actively managed ones and vast majority of the time will do better in performance terms – so any financial advisor that tells you otherwise I would not trust.

    Hope this helps you a bit as I know what it is like when you are starting out and you are a bit like a bewildered rabbit in the headlights!

    Good luck Manish, keep it simple – it’s much easier to manage that way and you pay less in dealing charges.

  • 833 Manish September 19, 2023, 12:28 pm

    Hello Jam / The Investor / As

    I’ve been really busy following all the suggestions on this forum. I’ve been learning a lot of things in all areas of investing. I’ve been scouring the web and also listening to pod casts as well as YouTube.
    Thanks to you all for giving me the motivation (monevator) – I really appreciate it.

    I’ve now come up with a portfolio and would be happy for any critiques you all may have / anyone has:

    Core port:
    HSBC FTSE All World Index Acc (OCF 0.13)
    Vanguard FTSE All World UCTIS ETF (OCF 0.22)

    Bolt ons:
    Vanguard FTSE Dev Europe UCTIS ETF (OCF 0.10) (VEUA)
    Vanguard Lifestrategy 60% Eq Acc (OCF 0.22)
    Vanguard Global Small Cap Index £ Acc (OCF 0.38)

    Rationale: Core funds to cover the whole world (although I believe US has bigger representation)
    Bolt ons:
    Europe fund to cover European sector
    Life Strategy 60/40 – get some bond exposure
    Global Small Cap index to get some small cap exposure -as this can add additional 1 or 1.5% growth

    Couldn’t find any great funds for small cap -if anyone has a suggestion I should look into -please feel free!

    I believe the above port with low OCF and global representation and some bond is diversified.
    I have not included any commodities / gold / tech / emerging markets specialist funds

    Tell me what you think!

  • 834 AS September 19, 2023, 3:20 pm

    Hi Manish,

    Although nobody is allowed to offer personal advice, I can give my opinion. There is nothing at all inherently wrong with that portfolio IMO – your core is made up of low cost global trackers and the other bolt ons are passives/well diversified and lower cost.

    When you are a beginner you certainly don’t want to be even thinking of dabbling in active funds (if ever really, IMO, unless you are very experienced or are a professional who works in the industry and even then you are more likely to do worse than holding a passive portfolio) so these choices look okay to me.

    What I would say is that there is also nothing wrong with having a tracker that covers developed European markets – but just be aware that you are overweighting your european exposure as obviously it is already covered/overlaps with your 2 core global trackers as they already cover europe themselves in the correct index weightings – so you are in a sense making an active bet that Europe is going to do better than other geographical areas in that you know better than the market. That’s fine if that’s what you want but be aware of what you are doing and why you are doing it and keep tabs on it to see if it does do what you want – i.e. perform better and if not re-think it.

    Similarly it is fine to hold a small cap index if you want, many do, and you think these may offer greater diversification/more return over the medium & large caps that mainly occupy the global tracker funds. Personally I don’t as it costs more for these funds, as in this case at 0.38% – okay not loads but still well above global/dev world trackers. Also they do well some years but not in others and on balance I choose to not bother and save on cost and not complicate my portfolio as I don’t really think it would make a great deal of difference in outperformance over the long term. It may do a bit better but it may not over the long term – there are no guarantees.

    The Lifestrategy fund (fund of funds) are good and I myself have a holding in them and 60:40 you mentioned is good to give some bond exposure but is this correlated to the overall weighting you, or rather your sister, would want in her portfolio based on her circumstances as you say the Lifestrategy would only represent a smaller part or bolt on to the core? I know you said she is maybe 10 years away from drawing from it – so a reasonable time but within a few years she might need to reconsider the % allocation to bonds to make sure there are enough if you want the downside risk protection they give (sequence of returns risk etc.) They also have a larger weighting to UK market than global funds do but I think you said previously you wanted some extra UK exposure anyway which I believe this fund provides around 20% more. I balance my LS funds somewhat by holding some world funds that exclude UK, so that for most part they just cancel each other out.

    I am currently reconsidering my own bond allocation as I don’t hold enough of them and worry about a large crash suddenly wiping out half my equities BUT I do at present hold more in cash savings & ISA’s just in case. I will bit by bit transfer some of it to bonds as I do think that’s sensible. I intend to keep it simple though with just a bond fund as I think that is key for me.

    I think keeping it simple is particularly important when near to/in retirement – for me anyway – I’ve never worked in the industry and am not an investing nerd (no offence though to anyone who is! – each to his own) so have no desire at all to spend my retirement poring over company accounts/spreadsheets and the like. I’d rather be off doing what I like, which unfortunately for my waistline, involves cake and coffee shops too much – as well as hobbies and travel! I think it also becomes a lot more important the older you get as you don’t want a complicated to manage portfolio when you having declining faculties – for instance my mother/father both developed alzheimers – my father only in his early 60’s when his memory declined markedly, so something to think about when you are getting a bit older. My partner wouldn’t have a clue how to manage a portfolio if I couldn’t.

    Also because of this I personally would probably not have any more than a 2 asset portfolio (equities/bonds) – well maybe 3 if you include cash savings/emergency accounts as well but I keep these outside of my investment portfolio/brokers accounts, so I agree with you on not having other things like commodities/gold/factors or even a tilt to tech you mentioned. These all may do well at times but then for a number of years may not and many have higher costs – so I choose to keep it simple as well as lower cost (as these add up over time and eat away your returns).

    So far my simple med/large cap global portfolio has done okay for me and I’ve no reason to think it won’t continue – just with the addition of some extra bonds and less cash.

    Also you said you don’t have any emerging markets but you do. The HSBC FTSE All World Index fund, which I also have, covers the globe and has emerging markets included. I’m not sure about your other global ETF fund – the Vanguard FTSE All World UCTIS ETF as I don’t have that myself but believe it’s a decent ETF and suggests by its name it is ALL WORLD and not just “Dev world” so maybe would cover emerging markets as well I would think – but maybe someone who actually has it can enlighten you (and me)?

    Just my observations and opinion, Manish, on your proposed portfolio, but hope it is of some help to you.

    All the best.

  • 835 Manish September 19, 2023, 3:54 pm

    AS, thanks for your feedback – I do value your opinions as I too want to have a retirement without looking at funds all the time. I want the set it and forget it approach, as like you I am a foodie and also lately started on the cruising bug!

    I have noticed that all the small cap funds are high in OCF -so maybe I will forego those.
    As for bond funds I thought best to get some exposure -but wary of the recent performance so opted for the 60/40.
    I am looking into aggregate global bond funds and also short bond funds -will post what I find -this may help in balancing the overall risk.
    I will try and find out the weighting of European shares in the 2 core funds -and if high enough I can potentially ditch the European funds.

    I do like the keep it simple approach -as I am a rookie but lucky enough to have comments and opinions from all you peeps here.
    I will dig some more and come up with my final port -just sharing as a thank you to everyone!
    BTW I use Interactive Investor as its fixed fee and I like their service.

  • 836 Manish September 19, 2023, 5:44 pm

    Here is some of the breakdown:
    Vanguard FTSE All World UCITS ETF (OCF 0.22)
    North America: 63.29%
    UK: 3.66%
    Europe Dev: 12.34%
    Japan: 6.33%

    HSBC FTSE All World Index Fund (OCF 0.13%)
    North America: 63.59%
    UK: 3.67%
    Europe Dev: 12.41%
    Japan: 6.28%

    Pretty much the same percentage!
    Performance for 5 years annual is: 8.6% and 8.82%
    10 yr for Vanguard is: 10.65%

    So, best to have only one of these funds not both!

  • 837 Jam September 19, 2023, 11:13 pm

    Hi Manish,

    As I said before, we know nothing more than what you have told us and nothing of your sister’s non-ISA or non-SIPP holdings, income job prospects, etc., so these can be at best pointers and not advice, so please do your own research, or as The Investor suggested, find a good IFA.

    Both the HSBC FTSE All World Index Fund and the Vanguard FTSE All World Tracker are IMHO excellent and I have holdings in both of them myself.

    With regards to the developed Europe Fund you have found, you must remember that stock markets are broadly efficient. If investors thought the Developed Europe Market would outperform, they would buy into it, forcing prices to rise until such times as future prospective returns from it fell to the same level as other markets/stocks. So there is no reason to think holding this would add any extra value compared to holding a world tracker fund. (Unless you have some unique and special insight into why it would outperform, i.e an investing ‘edge’. Wisdom is realising that you don’t have such an edge acting accordingly.)

    Similarly, I would not be too worried about smaller companies for similar reasons.

    Both these funds track the FTSE All World Index, so will have the same underlying assets. The reason they appear slightly out is I believe due to the date the snapshot of their assets were taken. If you were going to invest in only one of these funds, instead of both, I personally would go for the HSBC one, because it is slightly cheaper is the main reason.

    Your idea on buying the life strategy 60/40 to get bond exposure is a strange way of doing it. The equities part is global, but with a UK bias that, in my opinion, you do not need. Yes, it has bonds in it, but it seems to me much simpler to just buy a bond fund instead.

    Bond fund returns have been poor, as you noted in your later post, but that means bonds now are cheaper, so going forward look to offer better returns in the future.

    Another thing we do not know about you or your sister is how much risk you can stomach. The generally accepted wisdom is to add enough bonds into your portfolio so you can sleep soundly at night.

    Again, will you or your sister be buying an annuity in 10 years? This suggest buying long duration bonds. The movement in annuity rates is related to long bond yields, giving you some protection against adverse movements in annuity yields.

    If not buying an annuity, you could look at a general bond fund, there are plenty listed on this site, or a shorter duration one, such as IGLS which I personally quite like. YMMV.
    Again, speaking personally, I might be inclined to buy a 10 year Gilt and hold it to maturity rather than a fund. However, this all depends on what your plans are for drawing the pension.
    Have a think about this some more and do more research here is my recommendation.

    Anyway, those were my thoughts on your plans. Good luck with what you decide.

  • 838 Manish September 20, 2023, 10:02 am

    Thanks Jam.
    For context:
    My sister has a stable job in admin -nothing exciting and her plan is to retire in 10 years time but not draw on the SIPP. She will have access to state pension and her cash ISAs and savings that will cover her for at least 10-15 years in retirement before dipping into the SIPP.
    So, I guess she will be invested in the SIPP for a min of 20 years at the lower end!
    With this in mind I wanted to create a set it and forget it port. Her risk level right now is moderate due to the number of years before drawing on the SIPP via drawdown (inheritance options) and not looking at annuity which dies with the owner.

    I will look into a IFA on hourly fee who can recommend a passive port.
    All the questions on this forum by me are not for financial advice but more about learning which funds are available and what I need to consider when trying to build a passive port from scratch.

    I’m looking at diversification with different asset classes and low OCFs to create a passive port that will deliver in a 20 year horizon -given that the SIPP would be the last wrapper to touch after cash savings and cash ISAs.

  • 839 AS September 20, 2023, 10:09 am

    Hi Manish,

    If you are looking at bond funds then have you seen the latest Monevator update from TA on the best bond funds – it’s an excellent and really useful post listing all the best/cheapest bond funds available and discussing them – note the first lot are UK Govt bonds (known as Gilts) and the second lot are Global Govt bonds (most think hedged to GBP currency is better)- both types are fine but you do not necessarily need both – one or the other will do.

    The Global Govt bonds are more diversified across the world (so not just relying on UK Govt to repay them) but also cost a fair bit more as well. You can find this post here:


    You mentioned Interactive Investor as a broker – I use them as one of my broker accounts (I use quite a few) and I have found them to be good to deal with and their online account also good (although haven’t done any transfers with them yet and some aren’t so good at those I have found.) Remember though that FSCS protection is up to 85K only with any one broker if you worry about them failing – which is why I have quite a few of the cheapest decent ones to spread the risk – helps keep me off tranquillisers that way.

    Yes global index tracker funds aim to track the global market and so will all be about the same percentages/weightings so you are just duplicating them – so best to go for the cheapest and best one which in this case I think is the HSBC fund as it also has FSCS protection. I do hold a few global/Dev world funds but this is just to spread risk for the FSCS again as each fund only has up to 85K protection as well (in unlikely event that fund manager fails you should get 85K returned) but I mainly choose the cheapest FUNDS (as ETF’s aren’t covered by FSCS) and they must be UK domiciled funds.

    Personally I don’t stick religiously to 85K limit as there are not enough decent cheaper funds around but I spread the risk between a few of the best/cheapest. I have decided I will soon also have some smaller amounts in ETF’s rather than have to use more expensive, and some worse IMO, funds, but with the larger and so possibly safer ETF providers, but again between 2 or 3 providers just to spread risk – I think better than having it all in one and losing the lot but this depends if you want to just keep your portfolio simple – some do. Some people just decide on just one global tracker fund and one bond fund to do the job.

    Re: European funds – as I said before, and others have said – holding additional european funds is not necessary if you just want to invest passively. In simple terms if you want to hold more euro funds as say you have some expertise that this market will outperform the rest then go for it but most professionals can’t even determine this so you have to ask yourself why do you? They may outperform one year but then lag another year. As you found out over 12% of the global trackers you chose for your core holdings are made up of euro funds – they will all be about the same as these index funds are designed to track the world markets and provide a return based on that – based on the best guess of the whole market. There is nothing to stop you investing more in any particular geographical area if that’s what you want – it’s your choice, however it’s making an “active” decision to do that and is not then entirely following a passive approach. However if it’s a smaller additional “bolt on” as you say to your core global holdings then it’s not really going to make a significant difference/deviation in all likelihood anyway.

    If you are a beginner, and for most even if you are not, passive investing is the best/simplest way forward. If I were you I would read some articles from Monevator archives on passive investing that have been written and why it is better than active investments for the vast majority before you make these decisions. At least then you will be fully informed.

    I found this to be true myself as when I started out a few years back and didn’t know better, I bought a number of tracker funds and one active fund which cost a bit more. I still have them and currently all the tracker funds are in profit whilst the active Baillie Gifford fund is still today showing around a 25% loss – luckily I only invested a small amount (10K) but it’s never gone anywhere and taught me a lesson. May just sell it out soon and put in a tracker – that would be the sensible thing.

    My honest advice when you are starting out would be to do your research Manish, before you commit, and read all the articles you can find on passive v active investing so that you do not make the mistakes many of us made including myself at the outset.

    All the best.

  • 840 Manish September 20, 2023, 10:39 am

    Thanks As.
    I am relaxed about the FCS or 85k limit as I believe II are stable. I have transferred in 2 of my sister’s pensions into her SIPP. The delays were from the original pension provider and II kept us informed of progress.

    I’ll continue to research and see if I can find a hedged bond fund that I like.

    Thanks for your patience and suggestions -really appreciate the folks here!

  • 841 Jam September 21, 2023, 1:26 pm

    Hi Manish,

    in light of your recent updates I might just go for a Gilts fund, back in the day I used to have a holding in L&G All Stocks Index, which suited me at the time. Something similar to that would not be a bad choice for you, as it is uncorrelated to equities. UK bond/gilt funds are all fairly similar when they track the same or similar index. (Just look for low costs and low tracking error ones).

    That gives you a 2 fund portfolio with HSBC FTSE World Tracker and your bond fund, so just chose what proportion of bonds: equities you feel suits your level of risk. 60% equities to 40% bonds is traditional, but with your time horizon of 10-20 years it may make more sense to be heavier equities as they do most of the heavy lifting in generating wealth.

    You may end up feeling you have to few gilts if there is a major crash, or you could be fairly nonchalant about it and feel you could live with less and have more equities. You will not know this until there is a major crash, so just stick your initial allocation until you have a much better feel for the risks/rewards involved.

    After that just leave it well alone. Don’t interrupt your portfolio while it is busy compounding as someone once said.

  • 842 Manish September 21, 2023, 3:13 pm

    Thanks Jam -you make perfect sense.
    The hardest part will be not to tinker when the markets are down -but then best not to look at the port anyways.

    As my sister has fairly large pot of cash I will lump sum invest 10K every month and if the markets go down -do some ad hoc lump sum investing too.
    In the mean time the cash will earn some interest -so not totally losing out.

    What I am still confused about is that they say the past is not guide to the future.
    I need some way of identify funds for behaviour during different market conditions -and thought to use the performance charts over 1,3,5 and 10 years.
    I think the annualised approach is better than discrete periods. And the best is the maximum since inception -as a guide to potential future performance.
    There is a lot of noise out there and its difficult to DYOR to pick the best performing funds -having said that -just pick a passive index tracker with low OCF and low tracking error and you will be OK for the foreseeable !

    I’ll hit the buy button and get my 2 fund port kicked off ….
    Thanks for your patience everyone!

  • 843 mat109 October 31, 2023, 12:01 pm

    Anywhere sell PRWU? I’ve got PRIW (the distributing version) in iweb, but PRWU seems hard to come by.

    It wouldn’t make me switch though – though I’m always curious what the “hidden” costs are in the dividend going to your broker and being reinvested rather than staying in the fund.

  • 844 Andrew Shovlin October 31, 2023, 12:21 pm

    Looks like LifeStrategy has fallen off the list, yet is mentioned in the footer within Global Equity. Is this a mistake?

  • 845 mrbatch October 31, 2023, 1:51 pm

    Great thread – thank you.
    Can you confirm 0.03% for US large cap SPY5 – ii says 0.09% and fx fees as poriced in USD and SPDR website says TER is 0.09%. Same on ii for SPX5 the GBP priced variant which says OCR is 0.09%

  • 846 TRS80 October 31, 2023, 2:02 pm

    For funds containing US content, I’ve read its better to hold Irish domiciled ETFs rather than Luxembourg domiciled ones, as Ireland has for ETFs 15% US holding tax vs 30% for Luxembourg. This would impact the dividends a significant amount.

    See https://www.etfstream.com/articles/ireland-extends-leading-position-over-luxembourg-in-european-etf-market

    which states
    “US equity ETFs domiciled in Ireland have a 15% withholding tax rate on dividends versus 30% for ETFs in Luxembourg and other jurisdictions.

    This is also the case for global equities where the US accounts for a significant portion – 68% of the MSCI World index – of the market.

    According to ETFbook, given the dividend yield on the S&P 500 is currently around 2%, choosing to domicile in Ireland will result in an annual 30 basis points of annual tax savings.”

    This includes Luxembourg domiciled funds Amundi Prime Global ETF (PRWU) TCO 0.07%, and Lyxor Core US Equity ETF (LCUS) TCO 0.04%.

  • 847 The Accumulator October 31, 2023, 3:32 pm

    @ mat109 – AJ Bell has PRAU

    @ Andrew – Once again Monevator’s resident sub proves as useless as a handbrake on a canoe. Thank you for the spot! Sackings to follow

    @ mrbatch – eek. Total typo that one. SPY5 doesn’t even make the list now I’ve updated. Thank you for mentioning. Can’t even blame the sub.

    @ TRS80 – that’s a good point. I should add that wrinkle to this piece. Finumus has shown how to do the calculation for your own situation:

    “PRIW has 63% of its exposure in the US. It’s domiciled in Luxembourg. It will be having 15% of distributions from North American companies withheld at source by the IRS in the US. The dividend yield on US equities is about 2% right now.

    2% * 63% * 15% * £1,000,000 [holding size] = £1,890
    This represents nearly 19bps of annual investment costs applied to our portfolio.”

  • 848 Kishore Kumar October 31, 2023, 5:11 pm

    @The Accumulator

    SPDR is reducing the TERs on its S&P 500 ETF
    New TER (bps) : 3
    From 1 November 2023, the TER on this fund will be reduced to 0.03%.


  • 849 Jam October 31, 2023, 5:48 pm

    @The Accumulator, thanks for keeping this up to date, it is very useful.

    @Mat109 That ETF tracks the the Solactive GBS Developed Markets Large & Mid Cap index. Nothing wrong with that, but if you look it up on justetf.com the base currency for the ETF is only in GBP for ‘PRIW’, which is distibuting, not accumulating. There is no Accumulating version in GBP, only Eur and USD, so you probably won’t want that unless you want to pay your platform’s foreign exchange charges?

    @The Accumulator, good to see Invesco FTSE All-World UCITS ETF on the list, which I own. It was that that made me notice that the correct ticker for the GBP version is FTWG (dist) and FRWG (acc). (again according to justetf.com and the platform I own it through.)

  • 850 Kishore Kumar October 31, 2023, 6:01 pm

    @The Accumulator

    SPDR is reducing the TERs on its S&P 500 ETF
    New TER (bps) : 3
    From 1 November 2023, the TER on this fund will be reduced to 0.03%.


  • 851 TRS80 October 31, 2023, 6:01 pm

    @the accumulator – the Finumus quote is incorrect – it’s 30pc witholding tax for ETFs for Luxembourg 15pc for Ireland ( see my post ).

    Chris on the comments in Finimus’ article makes the same point.

  • 852 The Accumulator October 31, 2023, 7:06 pm

    @ Kishore – [slaps forehead] That’s it! That’s the reason SPY5 was in at 0.3% OCF but I’d completely forgotten about the impending fee change when mrbatch queried why it wasn’t 0.9%. Thank you!

    @ TRS80 – The Finumus calculation shows how to calculate the differential between Lux and Ireland. Lux ETF levies WHT at 30% and Irish at 15%. Hence:

    US dividend yield x US asset allocation x 15% WHT differential = your saving if you choose the Irish ETF.

  • 853 Martin T October 31, 2023, 10:47 pm

    Disappointingly, FWRG seems hard to come by. I asked HL to add it (giving them the full Morning Star details), and they instead added the US listed First Watch Restaurant Group, then simply offered some lame excuse about being unable to place deals in it. So much for customer choice at £11.95 per deal!

  • 854 Time like infinity October 31, 2023, 11:15 pm

    Amazing work to keep this updated @TA.

    Thank you, and thanks also for including all the transaction costs’ data. Interesting to see how those transaction costs have made quite a difference to some ETFs’ overall cost of ownership- i.e. UKDV and LDUK.

    Just to pick up on your observation that “All factor investing is effectively straying into active management territory”. True, depending upon the choice of definition of active here. But it’s fair, I hope, to point out that whilst one or another factor will be under or out performing market beta at any point in time, across a range of factors in a broadly based multifactor ETF it’s highly likely that at least one factor will be doing better than a pure market cap weight index.

    Moreover, for a multifactor ETF there may be a rebalancing bonus as the fund sells recent overperforming factors to buy into recently underperforming ones. This assumes mean reversion will continue to work of course.

  • 855 Jam October 31, 2023, 11:33 pm

    @Martin T #853.
    Hargreaves Lansdown added FTWG for me, so should be able to add FWRG too. I will send them a secure message, it might help if we gand up on them. 😉

  • 856 Martin T November 1, 2023, 3:35 am

    @ Jam #855. Thanks. I’ve been with HL for nearly 30 years, and the customer service has always been superb. Recently it’s gone off a bit, and this has really narked me. I switched my ISA to IWeb a few years ago, and am looking at AJ Bell and Fidelity for my SIPP. At the moment a combination of inertia and the relatively small cost saving are stopping me moving, but….

  • 857 Manish November 1, 2023, 8:31 am

    #Martin T
    Ouch nearly 30 years!
    I moved from HL because of percentage charging.
    I worked out that I had paid over 5k in fees in just over 4 years.
    I moved to Interactive Investor. Flat fee platform charging. They are really good for SIPP and stocks and shares ISAs. Check em out.

  • 858 Martin T November 1, 2023, 8:53 am

    Thanks Manish. I’ve circumvented the % charges by using ETFs, for which HL caps fees at £200pa in a SIPP.

    I really like the II model, as the free monthly trade lets you tinker, invest tax rebates etc, but Mrs T’s SIPP and ISA are with them, and I don’t want all our eggs in one basket!

  • 859 Manish November 1, 2023, 1:09 pm

    @Martin T #858
    For my wife I use the Vanguard Platform -as she only has Vanguard funds.
    For me and my sister -we both use II.
    I do like II for the choice provided -managed to get any fund I wanted.
    Good to ensure your eggs are not in one basket as you wisely have done 🙂

  • 860 Wodger November 1, 2023, 6:49 pm

    The above discussion of withholding tax got me thinking… do I need to worry about WHT if I only own the Vanguard FTSE Global All Cap Index Fund GBP Acc in a Vanguard ISA? I find the concept of WHT bewilderingly complex!

  • 861 TRS80 November 1, 2023, 8:12 pm

    @wodger funds are subject to us withholding tax at 30pc from what I’ve read. An article that deals with some of this is

  • 862 The Accumulator November 2, 2023, 9:47 am

    @ Wodger – no, withholding tax is not worth worrying about except for a few niche circumstances such as if you’re trading foreign shares, or own a fund not domiciled in the UK, Ireland, or Luxembourg. Then it’s worth getting into.

    Luxembourg’s double-taxation treaties tend to be worse than UK / Ireland equivalents. So there’s scope to reduce costs by 0.02% or so if you can choose a British or Irish based fund that’s otherwise just as good as a Lux domiciled counterpart. But… this is pretty marginal stuff and risks letting the tax tail wag the investment dog.

    US withholding tax on the dividends received by the underlying US stocks of the fund you’ve named will be 15% due to applicable UK/US double taxation treaty.

  • 863 Wodger November 2, 2023, 10:22 am

    @TA — Thanks! That clarifies the matter nicely.

  • 864 Onedrew November 2, 2023, 10:33 am

    I would be very interested to read a deep dive into the CSH2 unfunded swap money market ETF, along the lines of the splendid Moguls BHMG piece – which was worth the price of entry alone. CSH2 seems to tick a lot of boxes in the present environment, has been around for a while and barely shrugged its shoulders in March 2020.

  • 865 lawrence batchelor November 2, 2023, 12:38 pm

    Excuse my ignorance. What and where are the moguls and their piece in bhmg I hood that IT and analysis aside Kepler Partners would be interesting.

  • 866 Onedrew November 2, 2023, 2:06 pm

    @lawrence batchelor: All the details should be behind the membership button at the top right of the home page. I was a Maven for a while, but soon realised I was cheeseparing.

  • 867 The Investor November 2, 2023, 2:35 pm

    @Ondrew — Without derailing the thread, much thanks for your support and suggesting to others.

    Re: CSH2 we don’t really have the bandwidth to do requests unfortunately with our resources/schedule for the member posts. Also I’m not sure how much there is to say about it! That sort of thing typically works unless there’s some kind of killer black swan that is by definition unforeseeable. An extra risk here is I guess it’s a synthetic if one is worried about that sort of thing. In any event, downside should be limited.

    Real money market funds are systemically important when they ‘break the buck’ because of the sheer amount of money in them versus institutions that may be backing/relying on them etc. But getting 99% back instead of 100% isn’t a nightmare scenario for you or me, IMHO.

    So the big risk (on my very superficial read, which is as ever *not* advice) is more something funky and credit-risk related due to how it’s constructed.

  • 868 Onedrew November 2, 2023, 2:44 pm

    @TI: Understood. I had assumed that all swap-based ETFs must be synthetic and had read that there’s less of an dividend withholding issue with swaps. I am probably overthinking it, but pleased to see it shown as the cheapest entry to the MM. Thanks as always.

  • 869 The Accumulator November 2, 2023, 3:10 pm

    @ Onedrew – no withholding tax issues on GBP money market funds.

    You can chart money market fund returns on Trustnet.

    CSH2 is up there with any of them but there’s hardly any difference over 5 years. For example:

    5 year annualised return (longest I can get)
    1.3% Lyxor Smart Overnight Return UCITS ETF C GBP
    1.3% Royal London Short Term Money Market Y Acc
    1.3% abrdn Sterling Money Market I Acc
    1.2% L&G Cash Trust I Acc
    1.1% Xtrackers II GBP Overnight Rate Swap UCITS ETF 1D GBP

    Those are nominal returns.

  • 870 Genghis November 3, 2023, 2:58 pm

    WHT – IIRC for US withholding tax it’s 30% to Irish domiciled funds (not ETFs) (e.g. the Vanguard Global Small Cap fund) and 15% for ETFs (as is well known). For the UK domicile, no difference between funds (OEICS / unit trusts) and ETFs (in the treaty at least) at 15%.

  • 871 The Accumulator November 4, 2023, 11:09 am

    @ Genghis – that’s interesting on Irish domiciled funds as opposed to ETFs. Do you have a source? I’ve had a hunt around and can’t find anything to back up a different WHT regime for funds. Really don’t want to have to comb through the taxation treaty!

  • 872 Dret November 5, 2023, 3:54 pm

    Some guidance please.
    The Vanguard Lifestyle products are invested in a number of Vanguard products, all with varying charges.

    Does the quoted OCF for say the Lifestyle 80% equity fund include the fees of all the underlying products. If so, how can the 0.22% OCF quoted be stable when the mix of the underlying investments with varying fees changes on a daily basis ?

    Any help appreciated please

  • 873 TRS80 November 6, 2023, 5:46 am

    Re WHT this
    Suggests to be really sure what’s applied you need to check the funds reports

  • 874 The Accumulator November 6, 2023, 11:06 am

    @ Dret – Yes, the LifeStrategy OCF is inclusive of the underlying fund’s OCFs. You can’t guarantee the OCF will come in precisely at 0.22% – it’s a backward looking measure for all investment vehicles. However, Vanguard have held LifeStrategy’s OCF charge at 0.22% for years, so it’s about as stable as it gets.

    @ TRS80 & Genghis – TRS80, you’ve inspired me to go through annual reports for iShares and Vanguard Irish US equity OEICs. The evidence is inconclusive, overall. However, Vanguard’s reporting of dividends and tax approximately supports Genghis’ thesis that 30% US withholding tax is levied on the relevant Irish domiciled OEICs I checked.

    I’ve checked the US/Irish taxation treaty plus a couple of summaries but can’t get to the bottom of it that way either.

  • 875 Genghis November 6, 2023, 11:21 am

    I did a quick Google search when you asked the questions and couldn’t find anything to support what I was saying.

    However, delving into the financial statements of some Vanguard funds as a proxy:

    There’s the “Vanguard U.S 500 Stock Index Fund” (no idea where this is available) with financial statements at https://fund-docs.vanguard.com/AReportEN.pdf

    This is a Irish based “mutual fund” under UCITS: https://www.vanguard.co.uk/professional/product/fund/equity/9901/us-500-stock-index-fund-usd-acc

    In the footnotes on page 246, it notes, “Index returns are adjusted for 30% withholding tax on dividends paid by US securities”

    Looking at the numbers, $44m (page 1193) withholding tax was paid on $157m of dividends (page 257), so a rate of 28%.

    This of course contrasts to say to the an Irish based ETF, Vanguard S&P 500 UCITS ETF (https://fund-docs.vanguard.com/etf-annual-report.pdf) where it notes on p369, “The return of the S&P 500 UCITS ETF is adjusted by 15% for the withholding tax on dividends paid by US securities”

    Looking at the numbers, $83m (page 951) withholding tax was paid on $588m of dividends (page 377), so a rate of 14%.

    So there’s at least some prima facie evidence that there is a difference between Ireland domiciled funds and ETFs.

  • 876 The Investor November 6, 2023, 12:13 pm

    @Genghis — Sorry for the commenting problems, sometimes the over-zealous spam filter sends a comment into the manual spam pile, and after that adding more comments seems to make things worse (because it now thinks you really must be a spammer!)

    At some cost to my mental health probably (haha) I go through this spam mountain of 1000+ or so spams 3-4 times a day and catch most real comments (there’s usually only 1-2 per 1,000 so it’s a pretty lamentable job. Tiny violins).

    Anyway best thing to do is just to wait a few hours if a comment doesn’t show. And 90% of comments (after a poster’s first one) will get through with no problems anyway.

    Cheers for taking them time to comment (sorry it had to be three times!)

  • 877 Time like infinity November 6, 2023, 3:19 pm

    @TI #876: idea: spammers rely on email, texting, tweeting or posting comments not costing anything, or virtually nothing (i.e. bots sending out 1000s of pieces of spam per minute at a cost of pence per hour in electricity). If for non-Mavens and non-Moguls you were to levy a very nominal charge to post comments (say £5 p.a.) then the whole spammer business model should collapse. Spam would probably fall 99.9%.

  • 878 The Accumulator November 6, 2023, 5:46 pm

    @ Genghis – thank you for taking the time! We’ve followed a similar process, too.

    The footnotes may be throwing you (and me) somewhat.

    The index fund footnotes say: Index returns are adjusted for 30% withholding tax on dividends paid by US securities.

    The ETF footnotes say: The return of the S&P 500 Index is adjusted by 30% [for withholding tax].

    In both cases, they’re advising that it’s the index returns (as opposed to the fund returns) that are taxed at 30%.

    This is exactly what I’d expect. Most trackers benchmark themselves against net return versions of an index and then use items like withholding tax credits and security lending revenue to reduce tracking error.

    However, as you say, the ETF does specifically note: “The return of the S&P 500 UCITS ETF is adjusted by 15% for the withholding tax on dividends paid by US securities.”

    And, as you point out, the numbers are very close to what we’d expect if you’re right.

    iShares also manages Irish-based US equity index funds and ETFs. The numbers from the index fund annual report, well… they don’t make much sense at all. So that muddies the waters but, TBH, the iShares annual report is confusing and badly laid out.

    I checked VG’s Global Small Cap fund too. Again, the numbers are very close to what we’d expect if it’s paying 30% withholding tax on its US equities.

    So on balance, I think you are probably right that Irish OEICS can’t claim the 15% WHT credit. Happily, there are UK OEICs that can.

  • 879 Time like infinity November 6, 2023, 7:40 pm

    Thank you for working this out @TA #878 and @Genghis #875.

    Interesting that the (largely) Irish based ETF industry is likely subject to non-refundable US Dividend WHT @15% but the equivalent UK OEIC funds probably aren’t. For a global tracker with ~60% in the US (and with the S&P 500 dividend yield @1.65% presently) that’s 15 basis points of slippage annually for the Irish ETF v the UK equivalent OEIC.

  • 880 The Accumulator November 7, 2023, 9:16 am

    @ TLI – Irish based ETFs do get the 15% WHT credit. It looks like Irish based OEICs and other mutual fund types do not. So no difference between choosing an Irish ETF or UK OEIC/Unit Trust on this score. My apologies if I misread your comment.

  • 881 Time like infinity November 7, 2023, 9:44 am

    Apologies for my confusion @TA and thank you for clarifying. Having regard to the statement at p. 369 of the annual report of the Irish based Vanguard S&P 500 UCITS ETF (that, “The return of the S&P 500 UCITS ETF is adjusted by 15% for the withholding tax on dividends paid by US securities”), do you think the situation is that all Irish ETFs and any UK based ETFs and all UK based OEICs each pay 15% WHT on US dividends, but that Irish OEICs pay the US WHT at 30%?

  • 882 The Accumulator November 7, 2023, 1:06 pm

    Yes, that’s how it looks based on the numbers in Vanguard’s annual report. I’d like to see if the same is true based on other provider’s numbers.

    I’ve looked into iShares Irish funds but it’s not clear. Other provider’s funds are generally UK based.

    Having now read too many pdfs on Irish fund regulation, I don’t think there’s a simple answer. See:


    The question of treaty accessibility for Irish regulated investment funds has
    been a source of debate for the last 20 years and continues to be so.

    As the OECD Report and the 2010 Commentary provide, the determination of whether or not a CIV is a person begins with the legal structure of the CIV. As outlined above, Ireland has a number of legal structures; however, by far the most commonly used are corporates and unit trusts. While there is no doubt that a CIV established as a company is a person for the purposes of a tax treaty, in practice, to the authors’ knowledge, no countries have denied
    treaty benefits to Irish funds established in the form of trusts solely on the ground that the unit trust is not a person for treaty purposes. Indeed, in some cases, trusts are specifically included in the definition of a person (for example, the tax treaties with the United States and Canada).

    The interpretation of the “liable to tax” requirement appears to be prone to inconsistencies due to both the fact that there is little specific OECD guidance on this, as well as a tendency of some countries to interpret the “liable to tax” requirement as a “subject to tax” requirement.

    In practice, many Irish funds (including unit trusts) have been obtaining treaty benefits based on one or more of the following factors…

    Nevertheless, Irish funds do not always obtain tax treaty benefits despite the above factors, which should not come as a major surprise bearing in mind that Para. 8.7 of the 2010 Commentary specifically notes that some countries take the view that an entity that is exempt from tax is not “liable to tax” within the meaning of Art. 4.

    Practical experience with respect to the denial of treaty benefits to Irish funds confirms this view and, indeed, for the reasons outlined in the OECD Report, it would be the exception to the rule that an Irish fund, and particularly corporate funds, would be denied treaty benefits because the relevant source country has taken the position that the fund cannot be the beneficial owner of the income that it receives.

    Not surprisingly, the ability of Irish funds to benefit from Ireland’s network of tax treaties and/or to avail of an EU domestic exemption (for payments made between different Member States), so as to reduce or avoid foreign withholding taxes, is not free from doubt. However, there are good reasons why Irish funds (both corporate funds and unit trusts) should be able
    to access many of Ireland’s tax treaties.

    [N.B. Above dates from 2011.]

    The Irish tax authorities consider that Irish
    domiciled funds (other than ILPs and CCFs)
    are generally entitled to the benefits of
    Ireland’s extensive and expanding tax treaty
    network. However, the availability of treaty
    benefits in any particular case will ultimately
    depend on the relevant tax treaty and the
    approach of the tax authorities in the treaty
    country. Consequently, treaty access needs
    to be reviewed on a case-by-case basis.

  • 883 The Investor November 7, 2023, 1:48 pm

    @TLI — On spam, that’s an interesting idea to revisit. We did originally pencil three membership tiers, with an entry-level one below Mavens called Monevator Massive, which would enable commenting and also remove the ads (but no extra content).

    Having gone through 700 spam comments this morning (and pulled out just two ‘real’ comments from the wreckage) I am tempted I’ve got to admit.

    However it would be a big shift and we’d lose a lot of good input.

    Even in the most recent 20 or so comments above, we can see some useful input from non-members, and I think that sadly the reality is many of them would be deterred by even a nominal paywall (even just a free sign-up to be honest).

    I could live with losing the comments that are just questions. We get lots of questions on email, too, I’d guess only about 30% of people even reply to say thanks when we answer. Ho hum. But I am wary of turning away contributions, or making the site less useful more generally.

    Then again, I am not sure how sustainable this manual double-checking of the spam filter is in the long-term. It’s pretty dispiriting tbh, a daily exposure to the basest aspects of humanity (it’s always dodgy porn, sex aids, dodgy loans, AI scams etc).

    It’s a bit like that exposure scene in a Clockwork Orange. 😐

  • 884 Time like infinity November 7, 2023, 2:20 pm

    Haha. 🙂 Yes. The online world of spam content and emails/SMS does feel like something cooked up in a mad mash up collaboration between Anthony Burgess, Aldous Huxley & William Gibson, perhaps with a little bit of William Burroughs & Hunter S Thompson thrown in for good measure.

    I was going to suggest that maybe AI could help for the Monevator spam filter, but (aside from the fact that AI is neither intelligent nor artificial, as any attempt to use LLMs for serious, professional work demonstrates) I guess that spammers are already using ‘AI’ to generate the spam to begin with, hence the volume now getting through. It’s become an arms race where the offence/defence cancel out.

    I thought maybe a fiver a year (or possibly 50p a month) might work as a comment only tier because that’s broadly on par with what you’d pay (at least in these Northern rural parts, where Mrs TLI and I live) to, say, access village sports club facilities or for membership of a village association. Low enough that hopefully few are put off paying to comment, but certainly sufficient to blow the spammers out of the water.

  • 885 Time like infinity November 7, 2023, 2:43 pm

    @TA #882: thank you ever so much for going above and beyond the call of duty in getting to the bottom of this difficult and complicated issue. Ireland & Luxembourg seem to have more or less cornered the market in UCITS compliant ETFs, and with the US now at a 60 odd percent share of global equities this issue is of very widespread importance (NB: I’ve seen 42%, 57%, 63% and 68% quoted for the US share of global equities, depending upon both what exactly is included within the US – i.e. just the S&P 500 or every single company on every US exchange – and what precise measure of global equities the US market is then being compared to).

  • 886 BBBobbins November 28, 2023, 6:37 pm

    @TI #883

    I signed up not long after you introduced the tiers not for really the additional content but because I valued the general content and the dialogue in comments and wanted to keep the site viable.

    I think questions are still valid in the comments – how else does a newbie dip their toes in and become more confident and we all gain a bit more clarity in our thinking if we try to frame concise replies.

    Sometimes like immediately post budget I’m a bit frustrated that there isn’t actually a forum here to immediately kick around thoughts but I think this is just because I’m impatient to do a better analysis than is generally available in the media.

    But I accept that questions are one hit wonders fishing for advice can get a bit wearing. And you have my sympathy on the deluge of spam which is everywhere these days.

  • 887 Jam November 28, 2023, 10:28 pm

    @Martin T #853.

    Although Hargreaves Lansdown added FTWG for me, I have not been able to get a coherent answer out of them why they cannot add FWRG, the accumulation version of the fund. This is despite going back to them several times.

    Shame really, it tracks The FTSE All World Index, just like the Vanguard equivalent, which is VWRP/VWRL, but is 7 bps cheaper, which is a good saving that adds up over the years.

    Anyway, both accumulation and distribution versions of it (FTWG and FWRG) are available on Interactive Investor and X-O. (Plus probably available via other platforms that I do not use.) That makes it all the more baffling that HL can only add the distributing version of the ETF.

    Anyway, since HL cannot/won’t list it, I am investing in it through II.

  • 888 The Investor November 28, 2023, 11:24 pm

    @BBBobbins — Thanks again for signing up. Re: The comments, I hear you and it’s good to get the feedback. I agree comments on this site are very valuable, and even in the old days when I didn’t have to spend 30 minutes a day on spam that took a lot of work to be honest (careful moderation, steering, nips and tucks behind the scenes).

    A regular reader who found their comment hadn’t published (it was stuck in spam) emailed me the other day to say “are comments now being moderated?”

    They have always been moderated — I’ve read pretty much every one of the 60,000+ that are up on the site (I wrote 6,000+ of them 😉 ) and the several hundred non-spam but unworthy ones that I deleted.

    All that said, the one-shot questions I’m talking about really don’t add much to the site. The questions I’m talking about don’t add value — they are not subtle investigations, they are things like “Is HL a good broker please” with a few more words to stop me deleting it, and specifically to your point they don’t hang around and become more knowledgeable let alone contributors. Indeed I am struggling to think of even one beginner level investor and commenter who became a mid-level one (for want of a better word). I am there are hundreds lurking (I think our articles are fairly educational 😉 ) but I can’t think of many who’ve shared that journey in the comments.

    On the contrary, mostly these people are looking for shortcuts. They can’t be bothered to read the articles or learn. Fair enough for them, but they’re not a good fit for our comments or this site really. They are not the people you are thinking of.

    On balance no change for now. But if moderating spam starts to take more than 30 minutes a day — required because genuine quality reader comments are getting accidentally swept up by the overwhelmed filters every now and then, and those contributions are highly and gratefully valued by me — then we may have to try experimenting.

    Cheers, and thanks again for signing up. If only everyone else would I could hire some help for moderating the spam haha. 😉

  • 889 Nick December 11, 2023, 11:57 am

    Would welcome feedback on whether there is value in diversifying my index funds to mitigate risk of fund manager failure.
    I.e buy a different global tracker in my SIPP than my ISA to diversify further.
    Like the good Monevator disciple I am my global tracker is the largest single fund I own by some margin.

  • 890 Confuzed December 11, 2023, 3:15 pm

    You maybe won’t get too many answers to your question on here as many may see it as giving direct advice to you (except maybe a few more now after what I have to say about it undoubtedly!) but I will as personally I think you are being sensible asking this question and not enough attention is given to it by many (even though they’ll diversify their asset allocation to the n’th degree in all manner of weird and wonderful things). I think you definitely should, IMO.

    Just as you would diversify your asset allocation across many companies/regions/sectors and different asset classes etc., why would you not diversify across fund managers and also brokers/investment platforms?

    Don’t listen to all the hype – big companies do go bust and when they do people lose money. Neither do I subscribe to the view to just have two of each (i.e. 2 fund managers/2 brokers) – I mean how would you feel just with two, so approximately half your investments go pop and you lose out – would it rather not ruin your life/your security/your dreams of early retirement up in smoke as well as the missus maybe running off as you’re now a useless waste of space who has gambled the family finances away! To determine how many I should have, I calculate if I split mine between 3, 4, 5 (and more) and see where I would be comfortable at if I lost a third, quarter or a fifth/sixth or whatever of my assets and then split them accordingly. I certainly think more is better.

    Admittedly, if you have a lot of assets to cover then it does get harder to find the cheaper funds and brokers that will give some FSCS protection and those which are also reputable/decent ones but then if something does happen it probably won’t kill you in the scheme of things – just a bit less caviar/lobster perhaps and reigning in a few of the 7 star holidays in Dubai probably. I can live with that.

    Some pension funds have 100% FSCS protection but sadly not SIPPs so it’s good if you’ve got those. I don’t stick rigidly to 85K with all my investments, as it does get harder as you accumulate more but I let it drift over with some BUT I do consider carefully which ones I believe would be safer to do this with and by how much to go over that limit – and think about the consequences to me if they went bust in the worst scenario leaving me with exactly nothing. You also need to consider what you invest in as only funds, (as in UK domiciled unit trust/OEIC types have FSCS – ETF’s do not have any) so whilst I have amounts in ETF’s I mainly invest in relatively smaller amounts below the FSCS through a couple of platforms.

    I don’t buy into all that broker/fund manager self regulation/custody of assets/CASS regulations/nominees etc. nonsense either as they are not foolproof, I don’t trust self regulation by those same companies. There is always fraud around waiting to happen. I mean just lately look at what happened – I know this one is a bit off most passive investors’ beat – but with the so called FTX crypto king Bankman-Fried convicted in the US. There’s loads more like him out there if they get the opportunity.

    Okay so I’ve heard all the arguments against – it may take you slightly longer to manage your accounts but really how damn long does it take to log in to an account and print off a statement or whatever – few minutes. Maybe some are just too lazy to protect their assets? And I’m not an avid investor either – I don’t work in the industry/don’t like it – never wanted to – not really interested/can’t be bothered to take that much interest – just buy and hold trackers myself so I don’t love it or want to spend oodles of time gazing into screens of figures. But I have a fair few brokers/pension companies and fund managers. I just don’t see how it would be that safe with just 2 or 3 – the chances may be small but they are not zero.

    And the argument about chance and the more you have, the more likely you will be struck by lightening. Well that may be true but would you rather take slightly more risk, even though low, of one landing on you but only losing a comparitively small amount of your net worth or a smaller chance of something landing, but if it did effectively wiping you out as you had it all in just two fund managers/brokers. I know which I’m more comfortable with.

    Also the one about the high fees as well – you know the more brokers you have or fund managers (as many tend to start with the cheapest – all passives have HSBC FTSE All World C fund don’t they? and probably at least one or more of IWeb/ii/Vanguard etc.) and whilst they do get a bit higher with percentage charges rather than flat fee – would you rather pay a few more quid in charges each year and be sure your money is fairly safe (with a good proportion FSCS protected) or be “overly greedy” wanting all the return for yourself but when they go bang as they are existing on a shoestring profit – your money goes with them and you lose massive. Just say when you are on your death bed – are you more likely to be complaining about a few extra fees you’ve paid over your investing lifetime, which in effect didn’t make a considerable difference to your life – you still probably did okay from your investments, or to be complaining that if one of your brokers had gone bang – taking half your dosh in the process – that it ruined your life as you could never make up that much in any way, except via some foolish bank heist that would be doomed to failure.

    This is why I believe you should always diversify and not listen listen to other noise – including that from any IFA’s – just high fee robbers in my opinion. After all it’s for the good of your own wealth at the end of the day!

    Hope this helps you a bit with your decision, Nick. Good luck.

  • 891 The Accumulator December 12, 2023, 1:15 pm

    @ Nick – It can’t hurt, especially if it helps you sleep at night, and there are plenty of different global tracker options out there.

    If you want a fund that specifically has FSCS protection, as mentioned by Confuzed, then this post could help you narrow down your choice:

  • 892 Pikolo December 18, 2023, 1:08 pm

    One more vote for fixing the ticker for FWRA. Most people on Monevator will probably want FWRG instead, or FTWG if you want a distributing flavor, to avoid paying FX fees.

    Dist Isin IE0000QLH0G6
    Dist GBP ticker FTWG
    Dist USD ticker FTWD
    Acc ISIN IE000716YHJ7
    Acc GBP ticker FWRG
    Acc USD ticker FWRA

    I tried asking iWeb to add FTWG, but unsuccessfully so far. They do have FWRG.

  • 893 Manish December 18, 2023, 7:03 pm

    #892 Hello Pikolo
    I think if you are already in the HSBC all world fund it would not be worth going for FWRG in the sense you want to hold one or the other and not both.
    As they track the same companies albeit in different proportions.
    You don’t want to double up.
    It’s like having the Vanguard 100% equity fund and also getting some of the funds within it eg the Vanguard SP500 or FTSE as additional funds. You end up doubling up.
    Not sure if the overall gain would be more or less the same.

    Any thoughts?

  • 894 Nick December 18, 2023, 7:45 pm

    The diversification I’m pondering isn’t for a performance benefit, I’m thinking of holding a 2nd fund (hopefully with near identical performance / holdings) to mitigate the risk of the fund manager (hsbc etc) going bust. My global tracker is the significant holding in my portfolio, by some margin

  • 895 Manish December 19, 2023, 8:57 am

    Makes absolute sense to me now. Especially if you use another platform.
    TBH, I never thought of diversification we definitely should consider it.
    I will now have to revisit my whole approach too!
    Thx Nick.

  • 896 The Accumulator December 19, 2023, 10:04 am

    @ Pikolo – done! Many thanks for pointing this out.

  • 897 Jam December 19, 2023, 11:12 pm

    @Pikolo #892.
    I checked on Halifax Sharedealing today, since it they and iWeb are the same, just different brands. I could place deals in FWRG, but not FTWG, the same as your experience.
    I ended up asking them to add it too via a contact form, after ages in a call queue, before being cut off 🙁
    I will let you know if/when I hear anything back.

  • 898 Lady Beancounter February 1, 2024, 7:31 pm

    I have read all the comments about sticking to just the global tracker, rather than complicating your holdings by having separate trackers for different markets ( Europe, Japan etc).
    Does the outperformance of the ‘magnificent 7’ worry anyone else when adding new money to a global tracker?
    I am concerned that I am buying into the hype with the tech stocks and presumably at some point these stocks will revert to a more realistic valuation.
    For this reason I am thinking that I need to dilute my global tracker with other non US dominated ones.
    Any thoughts would be appreciated.

  • 899 Confuzed February 2, 2024, 8:55 pm

    @Lady Beancounter

    It depends what you want to do/how you want to invest. It is your own choice at the end of the day but from what I have read and understand you sound a bit like my name – confused (without the z).

    Yes I worry as well about your concerns all the time – that US is overvalued (again, apparently) and that those large stocks dominate the US market and that around 64% of global trackers is US dominated and that at some point that is going to revert and have a “correction.” Also how world events will affect the market i.e. wars, oil prices, the shipping problem around Yemen with the Houti’s etc. etc.- all having an effect on economies/our wealth. But something is always going to happen, that’s the way the world is. Also that emerging markets are going to have their day sometime soon they say (also yet again) – but this doesn’t seem to happen either. But don’t forget some people said this for years about bonds – and then it did happen as it is bound to at some point – we know that – but WHEN is the question.

    What can you really do about it – you may think you have superior knowledge (I don’t and not many do to be honest – even the experts who work in the industry and think they are “genius level” don’t seem that expert – they just think they are and mostly fail to beat index trackers).

    Ask yourself – what do you know that others don’t – can you say which markets are going to outperform this year – the UK, Asia, Europe, EM or commodities or gold perhaps – because I can’t. That’s why many decide on a strategy to invest passively i.e. with the markets best guess on what is going to happen.

    The market ebbs and flows in cycles all the time. That’s the volatility and risk we all take with investing. We may hit a bad bear market for years but what’s the alternative – to sit it out in just cash or bonds and make either next to nothing anyway (and maybe even lose after inflation) or risk investing at least some and aim to do better over a longer time frame, hopefully.

    If you believe in the passive investing strategy, which is the stated aim of this site, then you invest passively with the whole global market. If you start deviating from this, like you talk about, by diluting your tracker with non US ones, then you are not investing passively and are saying you have superior knowledge to the rest of the market. I am not a seasoned investor – but we all know the things you are talking about – it is common knowledge and nothing “new” and how the global tracker is weighted is the way the wider market has chosen to invest – so you either stick with this and take the “average” return minus costs – as we know over time it has generated reasonable returns – even after inflation – or you don’t and think you know better and take your chances – but know that you could be worse off that way. It may come off sometimes but often does not. As I said emerging markets have supposedly been going to have a good run for years but have we seen that much over the recent past – but who can say in the future? Nobody.

    That doesn’t mean you can’t do what you want as you can, but know that you are then investing actively and are not following a purely passive investing strategy. I currently don’t for instance invest purely passively, as although I hold a few global trackers because of diversifying for safety (i.e. splitting between different brokers & fund managers) it is difficult to find enough reasonably priced funds/ETF’s that are global, so I hold some developed world as well (which are generally cheaper as well) and don’t always bother with the faff of then getting separate EM trackers to balance to the correct global weighting (and then also have the rebalancing and extra broker charges suffered there). So I just accept that risk and from what I have seen over the recent past (by luck more than my judgement) Dev World has outstripped Global by a fair margin because emerging markets have not performed that well. So I am happy with this at the moment but this may turn around – who can say when EM will do well – it is more risky by it’s nature but could have some outperformance as these markets have shown rapid growth at times.

    So do what you like but understand what you are doing. Most of the time the markets decisions are about “confidence” investors have in those markets. Not so much about what you know is happening in world events – political/economic or whatever, will make much difference to your investment performance – such as buying in or out of any market at any time as by the time we investors know it, it has already been priced in anyway.

    Ones of the things that really made me think was seeing various Asset Allocation Quilt’s – Monevator have a good one which is updated and so do other investing sites. When you study those, you see how random it is and how anything can happen/outperform and that you rarely see it coming. If ever you have big doubts about not investing passively then study that from year to year and see if you can ever figure out what is likely to come near the top in any year – I can’t. Even saying this I know I’m not investing purely passively as I said, I try to as much as possible but accept what I am doing- simply for sake of safety (FSCS etc.)/diversification purposes and keeping things simple but it is an active decision on my part to do that. It’s not that I think that EM won’t do well in the next few years – it may do.

    Passive investing is about investing as the market does and following the market index – sitting and holding investments for perhaps decades and taking the average market return – accepting it is about getting richer slowly – as fast is not feasibly going to happen – nobody made a fortune overnight except by gambling/luck or unless you believe you are a Warren Buffett (not that I am a big fan as I don’t hero worship anyone). Even then I believe his main initial break/good fortune was when he was able to “charge” others for investing their money and not from just investing his own monies – rather like an advisor does and charges for the pleasure at a large fee (and who I wouldn’t touch with a bargepole after earlier experiences with them).

    Just my thoughts on your question – hope it helps!

  • 900 Joe March 1, 2024, 6:12 pm

    I have started investing monthly in a Vanguard ISA with the following distribution:
    FTSE All-World UCITS ETF – Accumulating (VWRP) – 83.33%
    Global Aggregate Bond UCITS ETF – Hedged Accumulating (VAGS) – 16.66%

    I am young and plan to keep these for a medium term of at least 5+ years. Since this is the start of my investment journey I want to make sure I have the correct monthly distribution so I can set it and forget it.

    I wanted majority equity as I don’t plan to use this money for 5+ years and a smaller amount of mostly government bonds (unfortunately Vanguard doesn’t do a fund of just Govt bonds) to help soften the blow in case of equity market crash, do let me know if my choice helps in that regard?

    I decided not to do an inflation hedge as I am young and can ride out high inflation so I didn’t buy an inflation-linked bond fund.

    To wrap up, are my choices correct for maximising growth, while providing some crash protection and is the ratio of equity to stock good or should I even go full equity?

  • 901 Jam March 1, 2024, 9:38 pm

    Your decision seems fundamentally sound to me.

    When you start out as an investor, you will not only accumulated wealth, but also improved self knowledge about you own risk tolerence.
    You will feel much more comfortable with your decison, or alternatively think it was either too risky, or not conservative enough, when you have exerienced bull and bear markets in the fullness of time.

    Make sure you have enough cash in a bank or building society account to cover enough months of living expenses as you need.

    A few extra thoughts: Can that cash be an alternative to your bond fund?
    Also consider HSBC FTSE All World Index Fund (Acc) with Halifax Sharedealing, if it is not too late. That is a cheaper fund (0.13% vs 0.22%) but tracks exactly the same index.
    Halifax also have free regular investing. Their charge id £36pa, vs Vanguards 0.15% capped at £275, which may work out cheaper in the long run, depending on how much you invest.
    You would also have a wider (i.e. not just Vanguard) choice of bond funds too.

    Anyway, I am just a random person on the internet, but wishing you good luck.

  • 902 Alex April 11, 2024, 1:58 pm

    Re: Luxembourg vs Ireland witholding taxes – Amundi has been moving several ETFs to Ireland to benefit from the lower witholding rate https://www.etfstream.com/articles/amundi-to-merge-us-equity-etf-into-irish-equivalent

    It’s also launching some new Ireland-domiciled ETFs, including Amundi Prime All Country World UCITS ETF DIST (ticker: WEBG), OCF of 0.07% – possibly the new cheapest all-world fund? However, it uses sampled replication (only ~1100 holdings right now, compared to >3000 and >7000 for HSBC and Vanguard equivalents) and only has distributing rather than accumulation units, as far as I can see.

  • 903 Barney April 11, 2024, 3:13 pm

    Amundi Prime All Country World UCITS ETF seems to have 1444 holdings at the moment, going by the downloaded spreadsheet from here: https://www.amundietf.co.uk/en/professional/products/equity/amundi-prime-all-country-world-ucits-etf-dist/ie0009hf1mk9 (I assume the ones listed as “0.00%”, eg Ocado, are less than 0.005% and have been rounded down).
    It says the full index it tracks is 3468 constituents. Total assets are $80 million; I guess it’s quite hard to get something like this going when the units that are created would each, ideally, hold all your constituents in the right proportion. Do they get to say to one participant “please create one including small stock X” and another “with small stock Y”?

  • 904 mrbatch April 11, 2024, 10:12 pm

    @barney #903
    @alex #902

    Thanks both – the webg or webk GBP share classs is only listed on xetra. I’m on ii and trading 212 and cant buy either as assume not on LSE exchange. Any idea if they are going to list gbp share class in london as well ?
    Also any idea if there developed world cheap etf PRIW is going to be merged or newly listed in ireland – it is in Lux at present

  • 905 William Baker April 15, 2024, 9:00 am

    Also SPDR £SPXL S&P500 ETF @ 0.03% TER. Interested in transaction cost breakdown.

  • 906 Todd May 22, 2024, 7:39 pm

    I’m new to investing and two financial advisors want to charge me 1% per annum and an upfront fee of 3%. I have no real interest in this stuff so “set and forget” is my ideal answer. Would a Vanguard LS 60 with the HSBC small cap. Something like 80-90% of my wealth in the VLS60 and the remaining 10-20% in the small cap. Thoughts?

  • 907 Barney May 22, 2024, 8:42 pm

    @Todd: Note that the HSBC MSCI World Small Cap ESG ETF (HWSS) mentioned in the article (I presume that’s the one you mean) may not be available on many platforms – it’s not on interactive investor, for instance. It’s denominated in dollars.

    20% in small cap would be ‘overweight’; you’d be “taking a view” that it’s worth the extra risk because you think it’ll outperform. 10% would be more careful (still more than many do)

  • 908 Todd May 23, 2024, 6:00 am

    Thanks for the comment.
    What about 10% and the 90% in VLS 60? Honestly, I don’t wish to get into rebalancing. I simply don’t have the passion. Set and forget for me.

  • 909 J May 23, 2024, 1:20 pm

    @Todd – there is nothing wrong with investing as you have said although I wouldn’t be paying 4% of anything to so called “financial advisors” anytime soon. In my experience they are a rip off – my investments & pensions have done far better in a few years since I moved them from managed pensions/investments to SIPPs and self managed investments as they are not extracting hidden fees by the back door. I wondered why my pensions/investments were rubbish for years. Best to read investing websites, such as this, and DIY. It’s easier in the end, costs you much less and will do better at the end of the day. You don’t really need a financial advisor to tell you to buy a cheap global tracker and they usually don’t push them anyway.

    There is nothing wrong with Lifestrategy if you want bonds without the rebalancing. It does overweight the UK but at the minute that would seem to be to your advantage anyway- how long it lasts…….? I don’t know how old you are but since you said you are new to investing I thought you might be quite young so not needing to live off your investments in the next 10 years. If you are many years off, LS60/40 is a fairly high allocation to bonds if you are accumulating (and not decumulating/near to retirement) and can be a drag on returns but depends on how paranoid you are when the market crashes. If you can’t stomach it then go with higher bonds if you wish but the global market has always recovered if you have time on your side.

    Personally I don’t hold any bonds and don’t work now, although have some income to cover bills. Just have equities/some cash savings -prefer to keep it simple without all the palaver/faff with rebalancing as this also costs in fees and tax if you have a large proportion in GIA accounts outside tax shelters, as I do, as would involve CGT in selling stuff out (with the miserly tax allowances we now get courtesy of this Govt.)

    Similarly nothing wrong with an allocation to small caps – who knows what will win out in any year – it may not be passive at the higher allocation but over a number of years probably will balance out and not make that much difference anyhow to your overall return at the end of the day. It all comes around/goes around – just look at the asset allocation quilts over a decade or two.

    You don’t have to be a “pure passive” if you don’t want to be. I’m not although I’m not an “active” investor as such either – I’m not interested in trading regularly or in company accounts or similar. I invest a fair proportion in global trackers, but have held some active funds and also am overweight US funds now even though every man and his dog have been saying is the wrong thing for about the last decade or so but is still working in 2024 anyway…………..for now?

    I would say keep it simple if you don’t want hassle and complexity – stick mainly with cheaper passive global funds to save costs and spread your risk but otherwise do what you feel is right for you – if you want a decent allocation to small caps, prefer to overweight the UK (maybe because you live and spend here) and need 40% in bonds to help you sleep then go for it. You will still likely do okay over time – I wouldn’t be too hung up about it – nobody knows what will win out over the next 20 to 30 years and you will still likely do better than investing via a financial robber ……….sorry meant “advisor”.

  • 910 Todd May 23, 2024, 2:17 pm

    I am based in the Middle East which means I am not a tax resident of the UK. You’ve presented quite a lot of information for a beginner like me (smile). Which low cost global trackers would you go with which are recommended here?
    -VLS 80/20 (90%) – 0.22%
    -HSBC small cap (5%) – 0.26%
    -iShares property (5%) – 0.4%

  • 911 Todd May 23, 2024, 2:21 pm

    I appreciate your comment but there’s a lot of information there for a beginner like me. I want to set and forget. How about this? I don’t really wish to rebalance.

    Initial investment: 7500 GBP
    VLS 80/20 (90% allocation) – 0.24%
    iShares property (5%) – 0.4%
    HSBC small cap (5%) – 0.26%

  • 912 Genghis May 23, 2024, 2:36 pm

    @Todd. I don’t wish to complicate things too much but as a non-UK resident I don’t think UK OEICs (ie not an ETF) such as the UK Vanguard Lifestrategy funds (like you can see on Vanguard Investor UK) are available to you.

    There are Ireland domiciled Lifestrategy ETFs available but I only think they’re available for purchase and sale in EUR.

  • 913 Todd May 23, 2024, 5:45 pm

    Hi there
    All of this just overwhelms me. Will go with a financial advisor who charges 0.5% and from there I’ll learn a few things to eventually go solo with a platform like Interactive Brokers.

  • 914 Williams June 7, 2024, 3:37 pm

    @Todd, keep us updated to what choices you make with your FA, interested to hear their opinion. As you add more funds and diversify it’s moves away from ‘set and forget’ and into quarterly management potentially, unless you have a longer-term strategy.

  • 915 Todd June 7, 2024, 6:44 pm

    I actually went against an IFA. I decided to go with a self investment platform (Interactive Brokers). No custodian fees. It’s costing me about 1 gbp to buy 1000gbp worth of shares in my chosen fund.

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