Diversfication / Asset allocation [UK]

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Topic Author
Andreakob
Posts: 2
Joined: Sat Jun 19, 2021 10:03 am

Diversfication / Asset allocation [UK]

Post by Andreakob »

HI,

I live in the UK and my broker does not really offer any good small/mid US cap index fund.

Would investing in European index fund compensate ? Bearing in mind I plan to invest every month in a s&p 500 index about 55%, 20% in a vanguard us government and the rest in European index.

Many thanks
Valuethinker
Posts: 42765
Joined: Fri May 11, 2007 11:07 am

Re: Diversfication / Asset allocation [UK]

Post by Valuethinker »

Andreakob wrote: Sat Jun 19, 2021 10:08 am HI,

I live in the UK and my broker does not really offer any good small/mid US cap index fund.

Would investing in European index fund compensate ? Bearing in mind I plan to invest every month in a s&p 500 index about 55%, 20% in a vanguard us government and the rest in European index.

Many thanks
What about an ETF?

Why are you ignoring Asia? Japan Taiwan South Korea China Australia.
Topic Author
Andreakob
Posts: 2
Joined: Sat Jun 19, 2021 10:03 am

Re: Diversfication / Asset allocation [UK]

Post by Andreakob »

The dealing charges of my broker for ETF are too important considering the monthly investment for the different allocations, also the ongoing charge are higher.

I guess I could buy 2 index funds to cover both Europe and Asia. Strangely I can only find European index funds excluding Uk and Asian index funds excluding Japan.

What do you think ?
Valuethinker
Posts: 42765
Joined: Fri May 11, 2007 11:07 am

Re: Diversfication / Asset allocation [UK]

Post by Valuethinker »

Andreakob wrote: Sat Jun 19, 2021 1:04 pm The dealing charges of my broker for ETF are too important considering the monthly investment for the different allocations, also the ongoing charge are higher.

I guess I could buy 2 index funds to cover both Europe and Asia. Strangely I can only find European index funds excluding Uk and Asian index funds excluding Japan.

What do you think ?
And there's no possibility of buying a global index fund?

Usually they split between Emerging Markets and Developed Markets, but in fact VG offers a FTSE All-World which includes both. That is the one I use. Slightly higher expense ratio but it frees me from the hassle of having to rebalance between 2 funds (and the risk I won't do it - the best strategy to combat human nature is precommitment).

If you hold the global index, it won't make a big difference whether you do/ do not hold the UK. The UK has underperformed for a long while but perhaps its very old economy mix of companies (oil & gas, pharmaceuticals, tobacco, mining) is due a bit of outperformance at long last?
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