#11
The problem with thinly traded ETFs is that (a) it could be difficult to deal in massive volumes relative to what everyone else is doing and (b) there might be a spread between buy and sell price.



On the latter, the published bid and offer price is about 2268 to 2275. So, a trade of normal market size shouldn't cost more than the higher number or get less than the lower number when selling ; those numbers are only about 0.15% either side of mid price, and you may find your order gets filled somewhere between the two anyway. The spread is bigger than buying a popular FTSE company with billions of pounds of shares in issue, but not really a big deal when buying and holding for the long term.



A low trading volume can be accounted for by it being more of a niche product than the highly popular FTSE tracker ETFs. It is not a massive fund and it might be that there are just a few cornerstone investors who want tens of millions of pounds worth of it and have no reason to buy or sell their holdings on any given day, so there isn't much on free float for everyone else to buy and sell their scraps to each other.



As mentioned earlier, if it was only a $10m fund with low trading volumes and a wide spread, it's probably a recipe for it closing down at some point. However, it's part of iShares range of global "factor" ETFs (MSCI size factor, value factor etc) and my guess is that they will be happy to keep it running for years to come, especially with the general increase in popularity of passive funds generally and "smart beta" passive funds particularly.



Or maybe it will go the way of 3D telly with it starting off looking like something interesting and innovative but in the end there just isn't enough consumer interest so they give up and move on to the next big thing.



I have it myself, not that it should be a recommendation for anyone else as my portfolio has lots of "interesting" things in it that most investors shouldn't bother with.

#12
Thanks bowlhead99



I wouldn't initially be investing a huge amount - max £20k and it would be a long term hold.



Can I ask what happens if iShares did decide it was no longer worth running?



My searching skills may be inadequate, but I can't see many funds (OEICs or ETFs) which specifically cover the Mid Cap sector. Is there a search term I should be using?

#13



Can I ask what happens if iShares did decide it was no longer worth running?
Originally posted by badger09


They would announce a date by which they were going to stop trading it, and you could sell out before it de-listed (they may choose to delist it from the stock exchanges on which it is less popular, first).



If they liquidated it they would sell off the assets and return capital to the shareholders (i.e. you).



If you have concerns about how ETFs (or other fund types) work in practice you could always send them an email and see what they say (and if you don't like the answer or don't get an answer, choose not to invest). At the end of the day it is a UCITS fund listed in London, Germany, Switzerland and Italy by a credible fund manager so I don't have much of an issue with it, but caveat emptor etc.



As for how to filter to mid cap equity funds I guess that depends on the filtering options you have on investment focus and style. You may just need to look at global equity and start looking at them. Individual regional mid cap can sometimes easily be identified by name, e.g. just like FTSE250 is the mid tier in UK.

#14
i have done something similar:



isa provider 1:

I have two VLS - 100 &80





isa provider two

VLS 60

VLS 80 inc

VLS 80 acc

Small Cap

V US Equity



I'm assuming this is a crazy and tarded allocation strategy??

#15



i have done something similar:



isa provider 1:

I have two VLS - 100 &80
Originally posted by hutman


Does this particular isa holding require some hyper specific allocation somewhere between 90 & 100% equities? How did you determine that?






isa provider two

VLS 60

VLS 80 inc

VLS 80 acc


So despite wanting some highly specific allocation between 80-100% equities on ISA1, now you want to produce a split of equity/bond trackers at some arbitrary level between 60 and 80% equity on this ISA2. That's not inconsistent at all, honest




VLS 80 inc

VLS 80 acc


My assumption for this one is that you need to pay annual platform fees of about 0.3% so you've decided to put a fifth of your ISA into a fund that delivers a little over 1.5% dividend yield to generate cash to do that, while leaving the rest in Acc funds?



Or maybe you are indeed retarded like you suggest and think it will help your fscs protection or risk profile to hold a bit of INC and a bit of ACC instead of just picking one




Small Cap


Finally, a fund that doesn't do the exact same thing as the vls100, vls80, vls 60, vls80acc, vls80inc which you'd already got.




V US Equity


Ah, I see, because although USA equity is the largest component of your aforementioned vls100, vls80, vls 60, vls80acc, vls80inc and vanguard small cap, you just don't feel that's enough and you feel that US equity exposure is the bit you're mostly missing.




I'm assuming this is a crazy and tarded allocation strategy??


No not at all. Other than, y'know, the seven funds you bought unnecessarily across two separate pots when one would probably have been an elegant sufficiency.

#16



Thanks guys, as always its interesting to read your thoughts even if I feel almost as confused after doing so
Originally posted by badger09


i guess my comments were less useful than sometimes in this thread. i thought i'd post because i'm thinking of doing something a bit similar to you. but then i'm quite not sure myself what i want to do with this, so i'm not too surprised if it doesn't make it clearer for you






Yes, the smallcap one is small cap. While IWFS is bigger than small cap because it's mid cap. Which is in turn smaller than large cap.
Originally posted by bowlhead99


fair enough. i was thinking that average market caps of $7bn and $2bn are really quite similar (what $5bn between friends? ). some people might call both of them mid-cap, and think of small-cap as < $1bn, or even lower.






If you're trying to use a passive approach to get a fund that's really focussed on smalls, and looking for something interesting about them such as 'value' - you would struggle, because the few passive products that exist in the small company space are really just trying to do it cheaply through cap-weighted indexes (which, as mentioned here from time to time, seems a bit funny trying to put most of your money into the biggest companies of those small companies because you like small companies). There aren't really any alternately-weighted passive index products that limit themselves to the smallco space - if you want something other than cap weighting (like perceived value or whatever) you have to use active funds, ITs etc.


well, i like a challenge. and you're right: i may end up using some active ITs here.



(i don't agree with the theory that it's "a bit funny" to put most of your money in bigger small caps. if it does that job, what's funny about it? but if ITs do the job better, then that's also OK.)

#17



i guess my comments were less useful than sometimes in this thread. i thought i'd post because i'm thinking of doing something a bit similar to you. but then i'm quite not sure myself what i want to do with this, so i'm not too surprised if it doesn't make it clearer for you



Originally posted by grey gym sock


Not at all



I've just reread your post and the waters are clearing.



My £20k is just sitting @ IWeb, losing interest of £190 a year (+ inflation). Not much really as I could lose much more by making the wrong decision based on flawed understanding



I do need to make a decision though as I have another chunk of cash ISA earning the same 0.95%

#18



Does this particular isa holding require some hyper specific allocation somewhere between 90 & 100% equities? How did you determine that?





So despite wanting some highly specific allocation between 80-100% equities on ISA1, now you want to produce a split of equity/bond trackers at some arbitrary level between 60 and 80% equity on this ISA2. That's not inconsistent at all, honest



My assumption for this one is that you need to pay annual platform fees of about 0.3% so you've decided to put a fifth of your ISA into a fund that delivers a little over 1.5% dividend yield to generate cash to do that, while leaving the rest in Acc funds?



Or maybe you are indeed retarded like you suggest and think it will help your fscs protection or risk profile to hold a bit of INC and a bit of ACC instead of just picking one



Finally, a fund that doesn't do the exact same thing as the vls100, vls80, vls 60, vls80acc, vls80inc which you'd already got.



Ah, I see, because although USA equity is the largest component of your aforementioned vls100, vls80, vls 60, vls80acc, vls80inc and vanguard small cap, you just don't feel that's enough and you feel that US equity exposure is the bit you're mostly missing.



No not at all. Other than, y'know, the seven funds you bought unnecessarily across two separate pots when one would probably have been an elegant sufficiency.
Originally posted by bowlhead99


Haha thanks bowlhead, indeed arbitrary and inconsistent seem to sum up my holdings quite well. My only defense is that my investment journey began only a few months ago and despite seeing standard diversified portfolios - I wanted to see if this was all real. As crazy as that sounds, I wanted to pick index funds checking their performance and validating daily to see if this was realised or phony. As time has passed, I have been pleased with these index funds on performance but gradually realised that my allocation was far from optimal or risk proof.



Essentially the questions in my head were - I'll but VLS80 & US equity and monitor them closely for a couple of months. I see the latter has produced higher returns so if it all looks kosher after a year.. I'll pick the ones I trust. Ridic i know! But I guess it reflects the mindset of many novice investors. You want to taste the juice for yourself - not just rely on the commentary of experts & charts. To compound my misery further I have learnt through trial & error not to buy the hottest index funds. For example one fund Smith & Williamson Gold gave me losses greater than 20% in a week. Thus the onset of panic and realization of my true risk profile.

#19
Apologies for resurrecting this but a letter from IWEB today about my uninvested ISA cash has prodded me into action.



I've decided to add some Global Mid Cap, using IWFS.



My small SIPP is with HL and has reached the size where their 0.45% on funds is starting to grate. So, I'm proposing to sell my VEM & VGSC on HL and use the proceeds to buy IWFS.



At the same time, I'll buy VEM & VGSC in my ISA on IWEB using my uninvested cash which is a slightly smaller sum, and use the opportunity to rebalance.



That way, I won't effectively be out of the market, but will reduce (HL's) ongoing costs.



Does this make sense, or have I missed something really obvious?

#20
Seems fine (obviously the exact fund choices are up to you).



FWIW, for the people who have not been following what you are doing and don't know the ins and outs, it might make sense to give the proper names for the investments rather than homemade abbreviations, and a rationale, if you want comments.



For example, I'm guessing by the fact you are moaning about the high fees of 0.45% from Hargreaves Lansdown in the SIPP (which you get on funds but not on exchange-traded stuff after the first £44k or so - £200 py)... and you're thinking of selling "VEM", and rebuying it at IWeb who I know to have a fixed fee structure for both funds and ETFs, it's probably an open ended fund, which means Vanguard Emerging Markets Stock Index Fund ; as opposed to Vanguard's FTSE Emerging Markets ETF which goes by ticker VFEM.



Value-for-money wise it makes sense to use HL for a pretty small funds-based SIPP, but if you get to £45-50k or so (when you'd be paying at least £200 of platform fees for either funds or ETFs at HL) you are probably better off at IWeb because their SIPP is only £45 a quarter if your total SIPP is over £50k, and half that if it isn't. However if you're actually drawing the pension down, IWeb have greater fees for that stuff.



Still, if the idea is to stop holding funds at HL (because it's comparatively cheaper to hold exchange traded stuff there instead) and move the funds to IWeb (where funds are no more expensive to hold than ETFs / ITs) then that can make sense. Really for maximum rebalance-ability you would ideally have a balanced portfolio in both your ISA on one hand and your SIPP on the other so that when you sell one asset class and want to buy another, you don't have to work out the logistics of moving money from one scheme into the other. A problem can be that because ISA and SIPP both have periodic limits on contributions and tax implications of taking money out, they can get in the way of your plans.



Over the long term, it might be reasonable to expect developed smallcap and emerging to outperform developed midcap. As such, given the choice, it would make sense to have the former in the ISA and the latter in the SIPP. The rationale being, you want to grow the total size of the ISA as large as possible so that at some point you can use it as a vehicle to deliver tax free income for the rest of your life. Whereas assets in a SIPP are (probably at least partially) taxable and so growing them as large as possible gets a larger income tax bill. So even without the platform fee differential, it's probably not a bad plan.

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