Which Vanguard index fund is best for UK first-time investors?
Hello there,
I've been reading up on index funds lately and keep seeing Vanguard recommended everywhere, but I'm getting a bit overwhelmed by all the different options they offer.
I want to start investing about £200 monthly for the long term (thinking 10+ years). I've got my emergency fund sorted and want to take the next step into investing, but I'm confused about which fund to pick.
I see the FTSE Global All Cap, but there's also LifeStrategy and very popular among Youtube investing channels S&P 500 fund. Should I just pick one of these? And is it better to go for accumulation or income versions?
Thanks in advance!
1 Answer
Thanks for the question. I think here are some Vanguard funds in the UK to consider if you want to have 100% equities, these 3:
● FTSE Developed World UCITS ETF ACC, gives you exposure to 2,096 companies from developed countries, very low ongoing charge of 0.12%.
● FTSE All-World High Dividend Yield UCITS ETF ACC, gives you exposure to 2,192 companies from a bit more diversified countries, ongoing charge is higher 0.29%.
● FTSE All-World UCITS ETF ACC, global exposure to 3,834 holdings (65.3% in North America), ongoing charge is 0.22%.
I also like and hold FTSE Developed World ex-U.K. Equity Index Fund - Accumulation as it was quite stable and still achieved positive returns in 2021/2022 when some of the previous funds dipped a bit.
● LifeStrategy 80 or 100: Good if you want a ready-made portfolio. The 100 version is 100% stocks (higher risk/return), while 80 has 20% bonds (slightly lower risk). Note: Has UK home bias, ongoing charge is 0.22%.
● S&P 500 UCITS ETF is popular not without reason, having great historical returns but only US large companies. Good option, but lacks international diversification. Ongoing charge is very low 0.07%.
Accumulation vs Income
Choose Accumulation version when starting out. It automatically reinvests dividends, maximizing compounding and keeping things simple (no manual reinvestment needed).
You can switch to income version later in life if you ever need the dividend payments as income.
Good luck with your investing journey!