The Lemon Fool

@Dod

Interesting point thank you, I was not aware, but not relevant to its performance though, whether dividends are from capital or natural income does not change the overall balance when dividends are reinvested.

Hariseldon58 wrote:Interesting discussions, a quick comparison of total returns for Alliance Trust with VWRL showed the winner over 3 months, 6 months, 1 , 3 & 5 years is Alliance Trust. It may well be different next week, might well have been different last week...

I hold significant sums in various World Index funds, I am always a little nervous when "everyone " knows that alternative investment styles are doomed and only World Index funds are the prudent choice.

I have added a very diverse collection of other investments, broadly speaking on an equally weighted basis, a mixture of investment trusts and index funds that are not Global Market Cap trackers.

I still have a 60+% holding in Global market Cap trackers but reducing my dependency on a single approach with a heavy bias to US large cap stocks seems prudent.

Re your last paragraph (bolded by me), may I ask how you obtain (or propose to obtain) your "heavy bias to US large cap stocks"? By way of VUSA, or a number of other US heavy ETF's or IT's?

Re dividends from growth orientated IT's, I am quite happy to receive dividends from those (whether the dividends affect NAV or not), as I see it as a way of investing in more growth focused holdings, whilst still receiving dividend income.

richfool wrote:

Hariseldon58 wrote:Interesting discussions, a quick comparison of total returns for Alliance Trust with VWRL showed the winner over 3 months, 6 months, 1 , 3 & 5 years is Alliance Trust. It may well be different next week, might well have been different last week...

I hold significant sums in various World Index funds, I am always a little nervous when "everyone " knows that alternative investment styles are doomed and only World Index funds are the prudent choice.

I have added a very diverse collection of other investments, broadly speaking on an equally weighted basis, a mixture of investment trusts and index funds that are not Global Market Cap trackers.

I still have a 60+% holding in Global market Cap trackers but reducing my dependency on a single approach with a heavy bias to US large cap stocks seems prudent.

Re your last paragraph (bolded by me), may I ask how you obtain (or propose to obtain) your "heavy bias to US large cap stocks"? By way of VUSA, or a number of other US heavy ETF's or IT's?

Re dividends from growth orientated IT's, I am quite happy to receive dividends from those (whether the dividends affect NAV or not), as I see it as a way of investing in more growth focused holdings, whilst still receiving dividend income.

My main equity holdings are in various Developed World Index funds, It is not my intention to have a heavy large cap US equity bias but to reduce that bias that comes with a Developed World Index fund, my additional holdings are intended to dilute this bias.

The Vanguard Developed World Index Etf VEVE has these characteristics ( US exposure is approaching 70%)
The top 10 holdings are worth 20% of the total..
1% of the total number of holdings is worth 27% of the total.
10% of the holdings are worth 63% of the total.
20% of the holdings are worth 77% of the total.
50% of the holdings are worth 94% of the total

With reference to dividends I am happy to receive them or not, I reinvest all dividends in any case.

I hold a collection of Global Trusts on an equally weighted basis to provide some dispersion of approaches to a broad World Tracker, Alliance seems deserving to be one of those. ( I hold 10 in all)

Hariseldon58 wrote:My main equity holdings are in various Developed World Index funds, It is not my intention to have a heavy large cap US equity bias but to reduce that bias that comes with a Developed World Index fund, my additional holdings are intended to dilute this bias.

The Vanguard Developed World Index Etf VEVE has these characteristics ( US exposure is approaching 70%)
The top 10 holdings are worth 20% of the total..
1% of the total number of holdings is worth 27% of the total.
10% of the holdings are worth 63% of the total.
20% of the holdings are worth 77% of the total.
50% of the holdings are worth 94% of the total

An interesting use of the word "bias" there. I would normally take the view that a cap-weighted tracker has no bias. And that to try and skew or tilt that index in favour of (say) smallcaps or Japan is introducing bias.

As for the concentration you cite, that is true of many markets, and the breadth and depth of the US market actually ensures that no one share dominates in the way that can happen elsewhere. For instance Apple and MicroSoft, both with a market cap approaching $3 trillion, are maybe 7% each of the S&P 500. Under-weighting either at any previous point of time would have been a mistake. In fact both of them are seen as defensive holdings because of their strong cashflows and fortress balance sheets - for example Apple can afford to pay out $100 billion a year in dividends and buybacks.

Lootman wrote:

Hariseldon58 wrote:
An interesting use of the word "bias" there. I would normally take the view that a cap-weighted tracker has no bias. And that to try and skew or tilt that index in favour of (say) smallcaps or Japan is introducing bias.

As for the concentration you cite, that is true of many markets, and the breadth and depth of the US market actually ensures that no one share dominates in the way that can happen elsewhere. For instance Apple and MicroSoft, both with a market cap approaching $3 trillion, are maybe 7% each of the S&P 500. Under-weighting either at any previous point of time would have been a mistake. In fact both of them are seen as defensive holdings because of their strong cashflows and fortress balance sheets - for example Apple can afford to pay out $100 billion a year in dividends and buybacks.

US share of the developed world index is far higher than the past, valuations are generally much higher amongst US large caps, concentrated holdings are not unusual but the companies concerned often change frequently….

There are alternative views about how indexes are weighted , eg RAFI ( fundamental indexes weighting on various economic factored rather just price) these give a very different index.

The World market index was dominated in the late 80’s by Japanese equities to an extraordinary extent. Didn’t end well….

Underweighting the big winners of the recent era is a bad idea at present but that could change and my view is to take a long term view and add diversity.

I still have a decent 7 figure sum in market cap world indexes so I haven’t given up on them by any means.

I have some interesting data from the AIC that shows the performance of various Investment Trusts compared to the FTSE All World over various time periods 1,3,5 and 10 years , looking at a number of data points between 2007 and 2017, that cover many overlapping periods over 20 years you won’t find evidence that the World Tracker is the obvious choice.

We should consider the possibility that a World Index dominated by a small number of companies from one country might not be the only choice for satisfactory long term investment returns.

Apple may carry on doing very well. But then again it may not. Everyone thought Nokia was the bees knees at one point. It is dangerous being in a business where you keep having to innovate and you are only as good as this year's latest product.

Hariseldon58 wrote:

richfool wrote:
Re your last paragraph (bolded by me), may I ask how you obtain (or propose to obtain) your "heavy bias to US large cap stocks"? By way of VUSA, or a number of other US heavy ETF's or IT's?

Re dividends from growth orientated IT's, I am quite happy to receive dividends from those (whether the dividends affect NAV or not), as I see it as a way of investing in more growth focused holdings, whilst still receiving dividend income.

My main equity holdings are in various Developed World Index funds, It is not my intention to have a heavy large cap US equity bias but to reduce that bias that comes with a Developed World Index fund, my additional holdings are intended to dilute this bias.

The Vanguard Developed World Index Etf VEVE has these characteristics ( US exposure is approaching 70%)
The top 10 holdings are worth 20% of the total..
1% of the total number of holdings is worth 27% of the total.
10% of the holdings are worth 63% of the total.
20% of the holdings are worth 77% of the total.
50% of the holdings are worth 94% of the total

With reference to dividends I am happy to receive them or not, I reinvest all dividends in any case.

I hold a collection of Global Trusts on an equally weighted basis to provide some dispersion of approaches to a broad World Tracker, Alliance seems deserving to be one of those. ( I hold 10 in all)

Sorry, I appreciate, upon re-reading your posts that you are/were trying to reduce your US exposure, because of the relatively high exposure within the likes of VWRL, VEVE etc. You could adjust that by adding or increasing exposure to Europe and Asia, with the appropriate ETF's (perhaps: VERX or VAPX or whatever). I have a chunk of JEGI along with some AAIF which give those regions/geographies a boost.

richfool wrote:

Hariseldon58 wrote:

Sorry, I appreciate, upon re-reading your posts that you are/were trying to reduce your US exposure, because of the relatively high exposure within the likes of VWRL, VEVE etc. You could adjust that by adding or increasing exposure to Europe and Asia, with the appropriate ETF's (perhaps: VERX or VAPX or whatever). I have a chunk of JEGI along with some AAIF which give those regions/geographies a boost.

Yes that's the idea, hence the likes of Alliance Trust , Scottish American , Foreign and Colonial, Caledonian etc, at reasonable discounts presently, plus a chunk aimed at ETFs as you suggest to provide diversity.