UK Vanguard Funds

[rahul.kothari.201]

Someone told me that I can use this section of the forum on UK specific investment conversations. So apologies if I heard cheated. Would love to know your ideas on this nevertheless:

I am about to graduate uni and work in London. I researched and decided on my vanguard portfolio: essentially a mix of S&P500, mid-cap, small-cap US stocks.
But it seems like I can't invest in those from the UK.
If you can - then how do you mitigate transaction costs, FX impact etc.

I found one vanguard s&p500 UCITS compliant etf - VUSA. But it has transaction costs + a near double expense ratio (0.07% vs 0.04% of the USA version). Do most people use this then? I couldn't find UCITS compliant ETFs for most indexes though (like small cap).

I spent a few hours but didn't really find any good news.
How do you guys reap the rewards of VTSAX or the KI$$ portfolio in the UK (https://www.keepinvestingsimplestupid.com/beating-vtsax-part-9-the-ultimate-ki-portfolio/)

What indexes/mutual fund providers do you all use? I think the scene is similar with Fidelity.

More generally what is your approach to passive investing and minimising stocks?

PS: I prefer US stocks over the UK ones because frankly, the US stocks have just been much much better than UK's FTSE.

 

[never give up]

Hi and welcome

Yes this is the correct board for all things UK related and not just tax. The nearest fund to VTSAX is the US Equity Index fund investing in approx 3500 companies as opposed to just the top 500 contained in a dedicated S&P500 fund. However the vast majority of UK people that invest passively invest in global funds where the US allocation is approximately 50-60%. I agree with not investing 100% in the FTSE but it’s worth having some exposure. Similarly it’s good to invest in Europe, Asia and emerging markets too.

These global funds are all contained on the Vanguard UK site and there are both mutual fund and ETF variations. I’d also recommend looking at Monevator for investing information from a UK perspective.

https://monevator.com/category/investing/passive-investing-investing/

[PhilB]

As NGU says, Global all the way for me.  I can make a coherent argument both for and against every market, sector and cap size so no way am I going down that rabbit hole!

[Playing with Fire UK]

I found one vanguard s&p500 UCITS compliant etf - VUSA. But it has transaction costs + a near double expense ratio (0.07% vs 0.04% of the USA version).

These are both tiny expense ratios. There's nothing to be scared of below about 0.2%. Be very afraid above 1%.

Monevator will help you find the ETFs you are looking for - they might not be exactly the same as the US funds but if you understand what you want you'll find something doing the same job.

[cerat0n1a]

I found one vanguard s&p500 UCITS compliant etf - VUSA. But it has transaction costs + a near double expense ratio (0.07% vs 0.04% of the USA version). Do most people use this then? I couldn't find UCITS compliant ETFs for most indexes though (like small cap).

I have some money in VUSA. 0.07% is a crazily low charge compared to how much we had to pay until very recently - really not worth worrying about. For the last few years, my money was going into VWRL - a world tracker, not just the US. IF you believe in the passive investing thesis, why choose to actively over-weight the US relative to the rest of the world?

It is possible to mitigate currency effects by buying currency hedged versions of some ETFs (HSBC offer this I think), but it's mostly not worth the extra expense. As it happens, monevator also did a nice piece about that recently too:
https://monevator.com/currency-risk-fund-denomination/
https://monevator.com/currency-hedged-etfs/

[rahul.kothari.201]

Great! Thank you so much, everyone. A list of ETFs that you all invest in is exactly what I wanted!
Will search them all!

Also heard some stuff about Vanguard's Lifestyle index fund.

[Chuck Ditallin]

We went:
USA VUSA 40%
UK VUKE, VMID and an all-share index unit trust 25%
Europe VERX 10%
Emerging markets VFEM 10%
Asia VAPX 10%
Japan VJPN 5%

The percentages have obviously become a little strained by differential growth in the different funds, but we're not rebalancing at present.

It's our own brand VWRL, we based it on approximate market cap of each index, then did a little hand-waving to make the numbers neat multiples of 5%.

[PropJoe]

Also heard some stuff about Vanguard's Lifestyle index fund.

I have a big chunk of my cash in LifeStrategy 80% & 100% Equity. Really simple and good diversity.
They do have a bit of a UK bias though so I counteract that with some FTSE Dev World excl. UK.