International Lifestyle: Very likely to remain a resident in the UK for the entire 30 year investment plan
Currency: GBP
Emergency funds: 1 year worth of expenses kept in easily accessible savings account
Debt: None
Age: 30
Desired Asset allocation: 70% Total US Stock Market / 20% Total Int Stock Market ex US / 10% Total International Bonds
Asset allocation justification: I'm aware that my bond allocation is quite low for my age but where this will be starting with a low amount of capitol and contributed to monthly there isn't really much capitol to protect at this early stage. The plan is to move to 20% bonds after a 1 or 2 years before finally moving to 30% after 10.
Due to being outside the US I am unable to directly purchase a Total International Stock market ex US Index through Vanguard. I'm eager to be able to keep control over the asset weighting between US and International and the 57% weighting included in the Global All Cap index fund is probably lower than I'd be happy with in the short to medium term. Equally the fees involved in the Global All Cap index (0.23%) is more than double that of the Total US Stock Market index (0.10%).
Questions:
- Due to 57.8% of the global index being US is it right that if I were to purchase both stock indexes in certain percentages I could match my target allocation? (I guess this would be the same as buying both VTI and VT as a US investor if VXUS didn't exist)
By my maths if I were to purchase the following amounts:
All cap US index: 42.5%
All cap Global index 47.5%
Bonds 10%
The net result would give me my target 70 / 20 / 10 allocation. I understand when I rebalance annually I would need to update the weighting used for this calculation as the weighting in the global index will likely move. This combination method of funds would reduce my portfolio average fees from 0.20% to 0.17% against just using the 2 fund approach of global index fund and bonds. - As a UK investor is there a better way to achieve this portfolio?
I tried to look into using a combination of various developed world, emerging markets type funds but all of them tended to carry higher fees like the global index and seemed to exclude small cap stocks.