I am rebalancing my portfolio….as I am learning more and more.
Initially I went with Invesco FTSE ALL WORLD due to lower TER. However, using co-pilot (don’t hate me!) it says V3AB even though higher TER would produce around £6400 extra with a £13,000 deposit (currently in FWRG) over the next 7years until I decide to relook again for retirement.
Question is 2 fold?
Should I trust AI and pay higher TER but gain £6400 approx in the process
The most efficient way to sell FWRG and convert this straight into V3AB.
Q2 is easy - you would edit your portfolio and add the new ETF setting the weight to the same weight as the current ETF. You would then set the current ETF to weight 0% and remove it from your portfolio.
After saving the changes you would then rebalance your portfolio - all necessary sales/purchases will then be actioned automatically.
Q1 - These 2 ETF’s are not tracking the same index. FWRG tracks FTSE All-World index and V3AB tracks FTSE Global All Cap Choice index. The resulting list of holdings for V3AB is also filtered by ESG criteria.
As for Co-Pilots recommendation of V3AB over FWRG… how did it make this decision? What was the prompt used for the query?
The key to investing is that you must do your own research (DYR). Ultimately only you can make the decision as to what risks you are comfortable with.
A good (free) website for you to use to compare ETFs is justetf.com. I have compared all 3 ETFS (FWRG, IITU and SPXL). You need to be aware that 4 of the top 10 shares are in all 3 ETFs. That is fine but do be aware that a good proportion of your investment is in Nvidia, Microsoft, Apple and Broadcom.
An All-World ETF is essentially a more diversified version of the S&P 500. Indeed 9 of the top 10 shares in FRWG and SPXL are the same (but not the same proportions). So I would argue that you should either go for FRWG or SPXL depending as to whether you wish to be diversified across the World or concentrate on the USA economy. That, ultimately, will depend on whether you think that Trump’s policies will result in USA increasing or decreasing its economy until 2029 compared to the rest of the World.
Regarding the comparison between FWRG and V3AB they are more or less identical both in holdings and in past performance. There is a cost in moving due to the bid-offer spread and there are probably some internal taxes that the ETFs have to pay which just result in slightly difference prices. So I certainly would not bother moving to V3AB.
If you are looking for a new All World/All Country type ETF then you might consider PACW (if you want distribution) or ACWI (if you want accumulation). They have a TER or 0.07% and 0.12% which is less than 0.15 for FWRG or 0.24% for V3AB but all 4 have more or less identical holdings and performance.
These are only my thoughts, not advice, except I would advise you to DYR and use justetf.com to help your decision making.
However, using co-pilot (don’t hate me!) it says V3AB even though higher TER would produce around £6400 extra with a £13,000 deposit (currently in FWRG) over the next 7years until I decide to relook again for retirement.
Can co-pilot predict market movements in the future now?
There is absolutely no way to predict the returns of those ETFs but I would point out that they are quite different. V3AB follows an ESG index so there is no energy stocks in there or stocks that are deemed unethical. Whilst this is a nice thing, there is a lot of confusion about what actually constitutes as ESG and it differs wildly depending on provider. So, whilst V3AB holds more stocks (and includes small caps which FWRG doesn’t), it is probably not as diversified as FWRG so if you are just wanting to cover as much as the ‘market’ as possible then FWRG is probably a better bet.
Their returns will be very similar though and I’d be staggered if there was a £6400 difference on an initial £13,000 investment over 6years. Personally (not FA!), I would go for PACW as it’s the cheapest Global tracker available for UK investors in one easy fund.
What’s the saying - past performance is not a prediction of future performance.
On the 2 funds. One based on All Cap may do better as it could have small companies that may become tomorrow’s Google / Meta etc
Whether it is worth the higher TER, who knows. There are mid and small cap funds too, so it could be an option to include that with your existing and get the same effect for a smaller overall cost.
I would be asking AI what the assumptions are to justify the different performance and then I’d verify if those assumptions are sound, e.g., if using past performance data is that data actually correct. Do you agree with the assumptions made?
To all that have replied thank you for reviewing my portfolio and giving me your thoughts - really appreciated.
It goes to further advance my knowledge and understanding so I want to top my my pension I have already or go more risk to really top it up.
I think I will go more globally diversified but I love Tech so will keep (but reduce slightly) to 30%. Giving me 70% for FWRG and another.
Thanks for the advice, long-steady is the way for me to top up my pension I have received this year so I can retire fully in 7yrs at 60. Fingers crossed.
. I was thinking the same.