Anyone know of an ETF that tracks teh whole world except UK?

For investors outside the US. Personal investments, personal finance, investing news and theory.
Sister forums: Canada, Spain (en español)
---------------
Post Reply
Topic Author
ukbogler
Posts: 68
Joined: Mon Sep 30, 2019 4:38 am

Anyone know of an ETF that tracks teh whole world except UK?

Post by ukbogler » Fri Oct 04, 2019 4:05 am

Just wondering if anyone can recommend an ETF that tracks the entire world excluding the UK. I'm currently using a Legal & General fund, but I'd rather use an ETF... long shot I know, because I can't find one anywhere...

actuallyxy
Posts: 35
Joined: Wed May 24, 2017 6:25 am

Re: Anyone know of an ETF that tracks teh whole world except UK?

Post by actuallyxy » Fri Oct 04, 2019 4:39 am

Xtrackers FTSE All-World ex UK UCITS ETF

It has fees of 0.4%, so a bit more expensive than the fund you currently hold.

Topic Author
ukbogler
Posts: 68
Joined: Mon Sep 30, 2019 4:38 am

Re: Anyone know of an ETF that tracks teh whole world except UK?

Post by ukbogler » Fri Oct 04, 2019 5:37 am

Thanks, as you say, the fees seem high.

Topic Author
ukbogler
Posts: 68
Joined: Mon Sep 30, 2019 4:38 am

Re: Anyone know of an ETF that tracks teh whole world except UK?

Post by ukbogler » Fri Oct 04, 2019 5:39 am

actually, it seems to me that you might as well just go with VWRL or HMWO, which includes about 5% of FTSE in it. So if, for example, you had it split 40 domestic /20 world, you'd actually be holding 41 domestic or thereabouts, hardly enough difference to matter. Or just scale back the world by 1%.

so... Anyone holding VWRL? Or HMWO?

actuallyxy
Posts: 35
Joined: Wed May 24, 2017 6:25 am

Re: Anyone know of an ETF that tracks teh whole world except UK?

Post by actuallyxy » Fri Oct 04, 2019 7:31 am

ukbogler wrote:
Fri Oct 04, 2019 5:39 am
actually, it seems to me that you might as well just go with VWRL or HMWO, which includes about 5% of FTSE in it. So if, for example, you had it split 40 domestic /20 world, you'd actually be holding 41 domestic or thereabouts, hardly enough difference to matter. Or just scale back the world by 1%.

so... Anyone holding VWRL? Or HMWO?
That's what I do.

actuallyxy
Posts: 35
Joined: Wed May 24, 2017 6:25 am

Re: Anyone know of an ETF that tracks teh whole world except UK?

Post by actuallyxy » Fri Oct 04, 2019 7:36 am

Are you holding 40 UK / 20 World?

That's a lot of home bias.

Valuethinker
Posts: 38981
Joined: Fri May 11, 2007 11:07 am

Re: Anyone know of an ETF that tracks teh whole world except UK?

Post by Valuethinker » Fri Oct 04, 2019 7:44 am

ukbogler wrote:
Fri Oct 04, 2019 4:05 am
Just wondering if anyone can recommend an ETF that tracks the entire world excluding the UK. I'm currently using a Legal & General fund, but I'd rather use an ETF... long shot I know, because I can't find one anywhere...
UK is about 6% of world index.

So say you are 70% world incl UK/ 30% UK. Then you are about 34.2% UK weighted.

To me, it's just another argument to world weight the UK using a global fund, and not to be overweight or underweight.

Topic Author
ukbogler
Posts: 68
Joined: Mon Sep 30, 2019 4:38 am

Re: Anyone know of an ETF that tracks teh whole world except UK?

Post by ukbogler » Fri Oct 04, 2019 7:45 am

actuallyxy wrote:
Fri Oct 04, 2019 7:36 am
Are you holding 40 UK / 20 World?

That's a lot of home bias.
not yet - still have a big warchest - it's the current plan though. I have faith in the UK, like the yanks have faith in the SP. Over longer term, back down the percentage, I guess to the point where international diversification no longer helps (if memory serves, that's at around 40% in International?)

Do you hold VWRL? HMWO? They seem to track slightly different things, and the costs are different too...

Valuethinker
Posts: 38981
Joined: Fri May 11, 2007 11:07 am

Re: Anyone know of an ETF that tracks teh whole world except UK?

Post by Valuethinker » Fri Oct 04, 2019 7:56 am

ukbogler wrote:
Fri Oct 04, 2019 7:45 am
actuallyxy wrote:
Fri Oct 04, 2019 7:36 am
Are you holding 40 UK / 20 World?

That's a lot of home bias.
not yet - still have a big warchest - it's the current plan though. I have faith in the UK, like the yanks have faith in the SP. Over longer term, back down the percentage, I guess to the point where international diversification no longer helps (if memory serves, that's at around 40% in International?)

Do you hold VWRL? HMWO? They seem to track slightly different things, and the costs are different too...
It is a very bad idea to let your emotions or your personal experiences shape your investment policy.

"I have faith in the UK" is a classic example of what Thaler, Kahneman & Tversky call "representativeness bias". It's well known that humans overgeneralize from personal experience. Sometimes that works, but often it leads you astray.

It's OK to argue the UK market is undervalued due to Brexit fears or whatever. Look at the PE ratio and say it is "cheap" compared to other markets. However in efficient markets we believe the market is the best guide to the value of a market - it knows the correct PE of any stock or sector or market better than any individual investor.

The FTSE100 (c 84% of the All-Share) earns c. 70% of its profits outside the UK - mostly in USD (but not all).

It is also sectorally heavily tilted. Roughly speaking, by putting 20% in the UK you have put 3% into Royal Dutch Shell & BP. Of your total portfolio. Because they are over 15% of that index, last time I looked.

In essence you are taking a tilt towards: mining, oil & gas, tobacco, pharmaceuticals, financials and generally away from industrials & technology (the UK index has almost no tech stocks).

Or put it another way, why overweight Unilever but not Nestle? What do you know about Unilever v Nestle that the market has not divined? Would you buy Diageo shares just because you like Johnny Walker?

Now is THAT what you mean by confidence in the UK? That iron ore prices are going to be higher in the future than the market currently expects (BHP Billiton & Rio Tinto)? That oil & gas prices are going to be higher?* That tobacco consumption will continue to rise (fall less steeply) by more than the market currently expects?

(the US "faith in the US" is also an error, but with US stocks being 55% of world index, it's just a less problematic error - evidence says in the long run it evens out, for a US investor - periods of outperformance by foreign stocks are followed by periods of outperformance by domestic stocks).

* there is an argument, and it's the same one for London property. The fall in GBP (which looks likely to continue given the politics) means London flats, and UK-listed companies, look a lot cheaper in USD terms than they did say at the beginning of 2016. So there will be more corporate M&A, which will be good for investors. On the other hand political changes could put the deep chill on that.

actuallyxy
Posts: 35
Joined: Wed May 24, 2017 6:25 am

Re: Anyone know of an ETF that tracks teh whole world except UK?

Post by actuallyxy » Fri Oct 04, 2019 8:09 am

ukbogler wrote:
Fri Oct 04, 2019 7:45 am
actuallyxy wrote:
Fri Oct 04, 2019 7:36 am
Are you holding 40 UK / 20 World?

That's a lot of home bias.
not yet - still have a big warchest - it's the current plan though. I have faith in the UK, like the yanks have faith in the SP. Over longer term, back down the percentage, I guess to the point where international diversification no longer helps (if memory serves, that's at around 40% in International?)

Do you hold VWRL? HMWO? They seem to track slightly different things, and the costs are different too...
It looks like the main difference between those two is that HMWO excludes emerging markets.

Personally I use the Vanguard Developed Markets, Vanguard Emerging Markets and Vanguard FTSE 100 ETFs.

I have a slight home bias but nowhere near what you plan. The UK may be undervalued, but for me it's not a bet worth taking.

Topic Author
ukbogler
Posts: 68
Joined: Mon Sep 30, 2019 4:38 am

Re: Anyone know of an ETF that tracks teh whole world except UK?

Post by ukbogler » Fri Oct 04, 2019 8:20 am

actuallyxy wrote:
Fri Oct 04, 2019 8:09 am

It looks like the main difference between those two is that HMWO excludes emerging markets.

Personally I use the Vanguard Developed Markets, Vanguard Emerging Markets and Vanguard FTSE 100 ETFs.

I have a slight home bias but nowhere near what you plan. The UK may be undervalued, but for me it's not a bet worth taking.
Thanks, man. Just looked it up on Morningstar too - yeah, looks like HMWO is developed markets only.

As for home bias - correct me if I'm wrong, but the typical boglefolio for (eg) a US investor is pretty damn heavily weighted towards the S&P, especially when you consider that world indexes are also about 50% US stocks too... so if you had a 20% US 40% World 40% bonds boglefolio, it would actually be 40% US.

Topic Author
ukbogler
Posts: 68
Joined: Mon Sep 30, 2019 4:38 am

Re: Anyone know of an ETF that tracks teh whole world except UK?

Post by ukbogler » Fri Oct 04, 2019 8:24 am

Valuethinker wrote:
Fri Oct 04, 2019 7:56 am

"I have faith in the UK"
In the sense that I live here, and if the FTSE goes to hell in a handcart and never comes back, I'll have bigger problems than worrying about CAGRs. As I explained, I need income, and the FTSE churns out almost 5%. That has been its only saving grace since about 2000 in fact.

As for sector bias, who's to say what will 'win' over the coming decades. Raw materials, financial intermediation and drugs look like fairly good bets to me. But hey, what do I know.

actuallyxy
Posts: 35
Joined: Wed May 24, 2017 6:25 am

Re: Anyone know of an ETF that tracks teh whole world except UK?

Post by actuallyxy » Fri Oct 04, 2019 8:41 am

ukbogler wrote:
Fri Oct 04, 2019 8:20 am
actuallyxy wrote:
Fri Oct 04, 2019 8:09 am

It looks like the main difference between those two is that HMWO excludes emerging markets.

Personally I use the Vanguard Developed Markets, Vanguard Emerging Markets and Vanguard FTSE 100 ETFs.

I have a slight home bias but nowhere near what you plan. The UK may be undervalued, but for me it's not a bet worth taking.
Thanks, man. Just looked it up on Morningstar too - yeah, looks like HMWO is developed markets only.

As for home bias - correct me if I'm wrong, but the typical boglefolio for (eg) a US investor is pretty damn heavily weighted towards the S&P, especially when you consider that world indexes are also about 50% US stocks too... so if you had a 20% US 40% World 40% bonds boglefolio, it would actually be 40% US.
The US is 55% of the world. Even if you overweigh it and you end up with 70 US / 30 rest of the world in your portfolio, it's still quite close to market cap weights.

The UK is 7% of the world. If your portfolio is 70 UK / 30 rest of the world, you are making a big bet. Your results may be very different than those of a globally diversified portfolio.

Valuethinker
Posts: 38981
Joined: Fri May 11, 2007 11:07 am

Re: Anyone know of an ETF that tracks teh whole world except UK?

Post by Valuethinker » Fri Oct 04, 2019 9:16 am

ukbogler wrote:
Fri Oct 04, 2019 8:24 am
Valuethinker wrote:
Fri Oct 04, 2019 7:56 am

"I have faith in the UK"
In the sense that I live here, and if the FTSE goes to hell in a handcart and never comes back, I'll have bigger problems than worrying about CAGRs. As I explained, I need income, and the FTSE churns out almost 5%. That has been its only saving grace since about 2000 in fact.

As for sector bias, who's to say what will 'win' over the coming decades. Raw materials, financial intermediation and drugs look like fairly good bets to me. But hey, what do I know.
The question is not what you know, but what do you know that the market as a whole does not? Amazon may be terribly overvalued (it looks so to me) but how do I know something about Amazon that the market does not? Why cut my diversification by underweighting the Amazon home stock market?

The fact that I live in the UK makes me *more* cautious about UK overweighting, not less. My job/ labour income, my home equity, any final salary pension I might receive, my state pension are all in GBP. Making me less willing to tie my financial fates to the vicissitudes of the UK economy. In the 1970s Britain was the "sick man of Europe" with the highest inflation rate in the G7 after Italy. Conditions are very different now but there are still quite a few routes to heck and hell.

(state pension is currently de facto indexed to RPI + 2.5%, the so-called "triple lock". I don't expect that to change but I do expect some more forms of "claw back" from pensioners with higher incomes. However the basic state pension is to some extent hedged by that against falls in GBP, as are (currently) final salary pension schemes).

The UK actually has the "honour" of having the worst equity return in peacetime of any country that did not undergo a revolution or other political chaos. in 1973-75 the UK managed a minus 80% or so real return (because inflation was over 20%, the nominal return looked a bit better) on equities. The stock market crash of all time outside of war & political collapse (some countries that endured hyperinflation above, say, 1000% pa we could argue the toss - Argentina, Israel, Turkey etc.).

When I first began investing there were still people around who remembered those times as recent memory. When your portfolio dropped 5, 10% every month, and then did it again, and again. London in the 1970s was a very shabby, beaten sort of place*. It could happen again.

This is not to argue that the UK will experience this, again, but to argue for global diversification.

And delisting. You can imagine a situation where companies delist out of the London Stock Exchange because the UK proves to be an uncomfortable place for big corporations and their executives and their investors (I am skirting politics, not going any further).

I missed the line where you said "I need income". Sorry.

Setting aside capital gains v. dividend taxation, here, for a moment, the Boglehead position, backed by empirical research and academic theory, is that the investor should be indifferent as to the source of the spending money. i.e. focus on total return, not source of return. Otherwise one risks making behavioural errors like tilting towards "safe" dividend stocks and thus missing out on market performance.

Berkshire Hathaway, the Warren Buffett company, has never paid a dividend. Buffett explains in detail in a letter to his investors why he does not pay a dividend (instead, they buy back stock, offering the investor the opportunity either to participate or to have the same size holding as a greater percentage of BH). Because of double taxation, dividends are quite tax inefficient.

Conversely when it hits the fan with companies, they can, and do, cut dividends aka "rebasing". By value, 40%+ of all dividends paid by the FTSE100 are paid by Royal Dutch Shell - I believe. BP alone paid nearly 25% of all FTSE dividends, and then .... Deepwater Horizon. Banks were major sources of income from F100 until 2008/9.

Exceptions re Total Return rule:

- if dividends and capital gains have different taxation rates there may be an arbitrage there (although at least some evidence suggests that market values also correct for this - see Australia which grants a tax credit for corporation tax already paid). This would go even more so for interest income. UK for example exempts £2k of dividend income.

- there's a school of behavioural investing which says it's better "not to spend capital" even though that is, in effect, money illusion. Shrug. As long as one does not confuse dividends with say interest from bonds. And of course inflation is eating your capital.

- there's a form of value investing which uses high dividend yield as a proxy for "cheap". That does not stand up, empirically, as well as some of the other measures like price-to-book, PE10 (Shiller - trailing 10 years earnings) etc.

* progress. The first shock I remember was how everyone seemed to smoke, and particularly on public transport, at Heathrow etc. The whole city had this foul odour of stale cigarette smoke which infected clothes, food everything. My father lived here during the Great Fog (of air pollution) of 1952, when in broad daylight buses would proceed with men with electric torches in front of them to light the way. And the Cabinet of the time thought that it was a problem that could not affordably be solved - except that public opinion came to demand that it be solved (the immediate death toll was estimated at c. 4,000 I think but subsequent revisions suggest it may have been over 15,000). That we can be reminded of such achievements sets a bar for what we, too, can achieve.

I used to walk to work past the plaque for the Kings X Fire. 32 dead including one individual never identified. Suddenly it became entirely possible to ban smoking on the London Underground. We progress tragedy by tragedy, sometimes, it seems.

ohai
Posts: 1055
Joined: Wed Dec 27, 2017 2:10 pm

Re: Anyone know of an ETF that tracks teh whole world except UK?

Post by ohai » Fri Oct 04, 2019 9:25 am

OP, if you can't find such a fund that excludes UK, which I suspect will be the case, then you could just contruct a portfolio with things other than the UK, or underweight countries that are correlated to the UK.

For example, you can approximate a world equity portfolio through something like 60% SPY, 30% EFA, 10% EEM (I am just estimating the weights). If EFA is more correlated with UK then SPY or EEM, you can get more or less the same risk weighting as excluding UK by doing something like 63% SPY, 24% EFA, 13% EEM.

Topic Author
ukbogler
Posts: 68
Joined: Mon Sep 30, 2019 4:38 am

Re: Anyone know of an ETF that tracks teh whole world except UK?

Post by ukbogler » Fri Oct 04, 2019 9:52 am

Cheers - I suspect I'll just keep it simple, with VWRL for the international bit, even if the fees are relatively high.

Other poster, thanks for the tip re bogle philosophy on source of income. While I broadly agree, I disagree with your musings on markets. True, markets are very good at setting prices. They aren't so good at determining value. The two aren't the same, as LYFT 'investors' will shortly be finding out, and by almost any valuation metric, the FTSE now is great VALUE, even if the current 'price' is by definition 'correct'. It's effectively a large-cap international index that pays 5%.

I'm not really interested in discussing Armageddon, or total world economic collapse, or giant meteors or Dalek invasion; that kind of schnizz makes all of the discussion on here irrelevant anyway, so no need to factor it in IMHO. My investing decisions are fundamentally based on what I've witnessed since the middle of last century - problems arise, humans solve them.

Have a nice weekend!

Valuethinker
Posts: 38981
Joined: Fri May 11, 2007 11:07 am

Re: Anyone know of an ETF that tracks teh whole world except UK?

Post by Valuethinker » Fri Oct 04, 2019 11:27 am

ukbogler wrote:
Fri Oct 04, 2019 9:52 am
Cheers - I suspect I'll just keep it simple, with VWRL for the international bit, even if the fees are relatively high.

Other poster, thanks for the tip re bogle philosophy on source of income. While I broadly agree, I disagree with your musings on markets. True, markets are very good at setting prices. They aren't so good at determining value. The two aren't the same, as LYFT 'investors' will shortly be finding out, and by almost any valuation metric, the FTSE now is great VALUE, even if the current 'price' is by definition 'correct'. It's effectively a large-cap international index that pays 5%.
No but Royal Dutch Shell cutting the dividend would crush the UK dividend yield - if RDS halved the dividend it would reduce F100 yield by 1%. The dividends are paid by F100 by a very few stocks it's not as cheap as it looks.

Do you remember a few years ago when the dividend yield of the non US index seemed to shoot up by something like 1%? That was one company (Vodafone) paying the largest dividend in corporate history from the proceeds of the sale of 49% of Verizon wireless.

(granted RDS slashing its dividend is apocalyptic. But, then, we used to think that about BP .... ).

Europe looks quite cheap, too. But you have the ongoing slow mo Eurozone crisis, (Italian banks edition). And you have all those fantastic industrial companies that are heavily exposed to China and to a stagnant Eurozone economy.

You are familiar with the notion of a "value trap"? The financial stocks were cheap, dirt cheap, in early 2008. RBS. Freddie & Fannie. AIG. But of course they were not really cheap - they were actually incredibly expensive. As we found out 9 months later.

Value traps are unpleasant if you happen to "catch the falling knife".
I'm not really interested in discussing Armageddon, or total world economic collapse, or giant meteors or Dalek invasion; that kind of schnizz makes all of the discussion on here irrelevant anyway, so no need to factor it in IMHO. My investing decisions are fundamentally based on what I've witnessed since the middle of last century - problems arise, humans solve them.

Have a nice weekend!
That was the point about 1973. It wasn't apocalyptic - no Dalek invasion. No revolutions. No coups. A major economy just went really awry.

It's an argument for global diversification and not trying to anticipate the market.

Japan, arguably, has done rather well for a country that has not grown its GDP in 30 years (in nominal terms, deflation has meant in real terms the picture is a bit better, and because population has fallen, in real per capita GDP terms growth has been quite close on that metric to the rest of the developed world).

But Japanese stocks? You've lost roughly 2/3rds of your money since 1990 (mostly in the 1990s, and stagnation since).

Now Japanese stocks truly are cheap. As cheap as they were in the 1970s. Whether that means anything is something very different.

Emerging Markets ex China also look quite cheap. As cheap as they have been this century, other than for a period around 2008-09.

Topic Author
ukbogler
Posts: 68
Joined: Mon Sep 30, 2019 4:38 am

Re: Anyone know of an ETF that tracks teh whole world except UK?

Post by ukbogler » Sat Oct 05, 2019 1:34 am

Valuethinker wrote:
Fri Oct 04, 2019 11:27 am

It's an argument for global diversification and not trying to anticipate the market.
which is the point of this thread.

Valuethinker
Posts: 38981
Joined: Fri May 11, 2007 11:07 am

Re: Anyone know of an ETF that tracks teh whole world except UK?

Post by Valuethinker » Sat Oct 05, 2019 8:28 am

ukbogler wrote:
Sat Oct 05, 2019 1:34 am
Valuethinker wrote:
Fri Oct 04, 2019 11:27 am

It's an argument for global diversification and not trying to anticipate the market.
which is the point of this thread.
So why then overweight the UK index?

The "cheapness" of it is mostly a sectoral phenomenon rather than the result of UK stocks being too cheap for country specific reasons.

Topic Author
ukbogler
Posts: 68
Joined: Mon Sep 30, 2019 4:38 am

Re: Anyone know of an ETF that tracks teh whole world except UK?

Post by ukbogler » Sun Oct 06, 2019 4:08 am

Valuethinker wrote:
Sat Oct 05, 2019 8:28 am
So why then overweight the UK index?
Because that seems to be the boglehead philosophy. Or that's how it looks in the getting started' section. Feel free to enlighten us.

Schlabba
Posts: 153
Joined: Sat May 11, 2019 9:14 am

Re: Anyone know of an ETF that tracks teh whole world except UK?

Post by Schlabba » Sun Oct 06, 2019 4:15 am

ukbogler wrote:
Sun Oct 06, 2019 4:08 am
Valuethinker wrote:
Sat Oct 05, 2019 8:28 am
So why then overweight the UK index?
Because that seems to be the boglehead philosophy. Or that's how it looks in the getting started' section. Feel free to enlighten us.
I couldn't find that in the philosophy: https://www.bogleheads.org/wiki/Boglehe ... philosophy
Also if you read something about what bogleheads do make sure you are in the non-us section because if you live in a country with a huge market weight things might be different. I live in The Netherlands and adding home country bias in a 1.1% market cap country would be rather silly.
IWDA: MSCI World | EMIM: MSCI Emerging Markets | AGGH: Global Aggregate Bond Hedged to €

User avatar
Cheez-It Guy
Posts: 246
Joined: Sun Mar 03, 2019 4:20 pm

Re: Anyone know of an ETF that tracks teh whole world except UK?

Post by Cheez-It Guy » Sun Oct 06, 2019 7:18 am

Not a popular opinion here, I'm sure, and I'm not evangelizing for it, but rather just stating my own reasons. I would say I am mostly a very rational investor, but I don't see a big problem with home country bias if one recognizes the potential risks and still chooses it. As an employee of a US manufacturer, I have an interest in supporting particularly the US economy. We compete against a lot of foreign firms. As an investor, while it's difficult to say where your money is going and specifically what it's doing (even if you invest in individual stocks), I prefer to support US companies and place some faith in the systems and regulations established to keep them on track. While I like profiting, I prefer not to profit at the expense of environmental degradation, anti-democratic political subjugation, and religious extremism to name a few global social ills. This is certainly not to say that the US or the companies that trade here are free of all such concerns, and indeed certain smaller countries around the world would score better on these measures than the US, but the combination is what wins. Currency fluctuation, taxation, and convenience factor in. Intellectually, I understand that not investing internationally leaves me less than optimally diversified, and that I may miss out on some of the gains from the expected Asian Century, but I also may not, and in any case, at this point, I don't care.

So, if the OP wants to back Britain for similar reasons, I certainly understand, and it's not the worst informed decision someone could make.

Valuethinker
Posts: 38981
Joined: Fri May 11, 2007 11:07 am

Re: Anyone know of an ETF that tracks teh whole world except UK?

Post by Valuethinker » Sun Oct 06, 2019 10:05 am

ukbogler wrote:
Sun Oct 06, 2019 4:08 am
Valuethinker wrote:
Sat Oct 05, 2019 8:28 am
So why then overweight the UK index?
Because that seems to be the boglehead philosophy. Or that's how it looks in the getting started' section. Feel free to enlighten us.
I don't think that is true for any investor outside USA. Certainly one would not tell an Italian to overweight their home market!

US John Bogle felt that investors should stick w US companies. You can read the threads here and make your own call on that. For a US investor the loss of diversification is not likely to be critical (given US is 55% of world index say).

The arguments about US governance, if accepted, would be just as true for a UK investor as an American one. Ie UK investors should overweight US companies. And hedge the currency exposure back into GBP.

Vanguard has a paper about optimal exposure for non US investors. Optimal home country bias.

But I thought your argument was that it was because UK stock market is undervalued?
Last edited by Valuethinker on Sun Oct 06, 2019 10:10 am, edited 1 time in total.

Valuethinker
Posts: 38981
Joined: Fri May 11, 2007 11:07 am

Re: Anyone know of an ETF that tracks teh whole world except UK?

Post by Valuethinker » Sun Oct 06, 2019 10:09 am

Cheez-It Guy wrote:
Sun Oct 06, 2019 7:18 am
Not a popular opinion here, I'm sure, and I'm not evangelizing for it, but rather just stating my own reasons. I would say I am mostly a very rational investor, but I don't see a big problem with home country bias if one recognizes the potential risks and still chooses it. As an employee of a US manufacturer, I have an interest in supporting particularly the US economy. We compete against a lot of foreign firms. As an investor, while it's difficult to say where your money is going and specifically what it's doing (even if you invest in individual stocks), I prefer to support US companies and place some faith in the systems and regulations established to keep them on track. While I like profiting, I prefer not to profit at the expense of environmental degradation, anti-democratic political subjugation, and religious extremism to name a few global social ills. This is certainly not to say that the US or the companies that trade here are free of all such concerns, and indeed certain smaller countries around the world would score better on these measures than the US, but the combination is what wins. Currency fluctuation, taxation, and convenience factor in. Intellectually, I understand that not investing internationally leaves me less than optimally diversified, and that I may miss out on some of the gains from the expected Asian Century, but I also may not, and in any case, at this point, I don't care.

So, if the OP wants to back Britain for similar reasons, I certainly understand, and it's not the worst informed decision someone could make.
FTSE 100 index is not in any way representative of UK economy. Largest retailer Marks and Spencer is not in it any longer for example.

In fact most of the companies probably do more business in USA than UK or at least in USD. British American Tobacco for example. BP and Shell (15% of the index between them). Glaxo Smithkline etc.

That's c 85 per cent of All Share index. FTSE 250 about 12 per cent has more domestic exposure.

andrew99999
Posts: 516
Joined: Fri Jul 13, 2018 8:14 pm

Re: Anyone know of an ETF that tracks teh whole world except UK?

Post by andrew99999 » Sun Oct 06, 2019 7:55 pm

Cheez-It Guy wrote:
Sun Oct 06, 2019 7:18 am
I don't see a big problem with home country bias if one recognizes the potential risks and still chooses it.
I agree with this.
Cheez-It Guy wrote:
Sun Oct 06, 2019 7:18 am
As an employee of a US manufacturer, I have an interest in supporting particularly the US economy. We compete against a lot of foreign firms. As an investor, while it's difficult to say where your money is going and specifically what it's doing (even if you invest in individual stocks), I prefer to support US companies and place some faith in the systems and regulations established to keep them on track. While I like profiting, I prefer not to profit at the expense of environmental degradation, anti-democratic political subjugation, and religious extremism to name a few global social ills. This is certainly not to say that the US or the companies that trade here are free of all such concerns, and indeed certain smaller countries around the world would score better on these measures than the US, but the combination is what wins. Currency fluctuation, taxation, and convenience factor in. Intellectually, I understand that not investing internationally leaves me less than optimally diversified, and that I may miss out on some of the gains from the expected Asian Century, but I also may not, and in any case, at this point, I don't care.

So, if the OP wants to back Britain for similar reasons, I certainly understand, and it's not the worst informed decision someone could make.
I disagree with pretty much all of this. I've never seen so many fallacies in a single post before.

As an investor in a company, you are not making the company richer or more successful - that is done by people purchasing the products and services of the company. As a result, by investing in stocks in your home country, you are not "supporting it".

On knowing where your money is going - as an investor, particularly with broad market funds, it is no different from knowing where your money is going whether it is a US company or a UK, Canadian, Australian, or Japanese company. So again, a red herring.

Profiting by investing in a company company contributing to environmental degradation is not going to make a difference. As stated above, not buying their products and services will serve that purpose - not whether you invest in it or not.

How many of the 23 developed countries are anti-democratic?
Japan, United Kingdom, France, Canada, Switzerland, Germany, Netherlands, Hong Kong, Spain, Sweden, Italy, Denmark, Singapore, Belgium, Finland, Ireland, Israel, Norway, Austria, New Zealand

Currency concerns - having most or all of your investments in currencies other than your home currency opens you up to currency risk, but since there are actually 2 currency risks - upside and downside currency risk - a small amount in the neighbourhood of 25% actually helps.

As I stated above, I don't think overweighting home country equities is necessarily bad if you have valid reasons and understand the risk and rewards, but your reasons are pretty much all baseless and invalid.
PassiveInvestingAustralia.com

User avatar
Cheez-It Guy
Posts: 246
Joined: Sun Mar 03, 2019 4:20 pm

Re: Anyone know of an ETF that tracks teh whole world except UK?

Post by Cheez-It Guy » Sun Oct 06, 2019 8:30 pm

Ouch! Pretty scathing. The most fallacies in a single post that you've ever seen? Certainly not a distinction I was gunning for when I wrote that, but OK.

I understand that investing in a company and buying the products produced by a company are not the same thing, and don't have the same effect.

However, isn't a logical (slippery slope) conclusion of your stance that both historical domestic and foreign investment in the US stock market and the companies traded therein has had no material impact on the relative strength of the economy? If investing in companies doesn't support them in some way, that should be true. Isn't another logical conclusion that if there was a massive bout of selling stock in a particular public company (for whatever reason), it would have no material impact on the financial strength of said company? What is the point then of ESG funds and of both endowments and sovereign wealth funds seeking to decarbonize their holdings? This has no adverse impact on the companies that are sold? If there is even a small negative impact on the cashflow of companies in such a sale event, then the converse should also be true. That is, by buying stock in a company either actively or passively, there is some benefit to the company and its perceived health, and you might say an at least implicit support of their business model and management (unless someone is intending to be an counterbalancing activist investor, for example). Why do companies even sell stock if there is no benefit to them when investors invest? Initially it is to raise cash. The more people are willing to buy and hold their stock, the more stock they can (if they choose) float on the market for further fundraising and growth. I'm not so deluded as to think that my piddly investments or lack thereof make a material difference to giant corporations, and the impacts of investing or not may be both small and indirect, but the big picture impact is nonzero.

Purposely listing only developed countries in response to my post is being intentionally misleading. I'm referring to investing in total world or total international ex-US indices as is often advocated here, not to restricting to developed markets ex-US. China would have been an obvious inclusion in that. China looks set for continued success, but I prefer not to invest there, and also to minimize my purchases of their products (which is admittedly often difficult in the current environment). I truly will and do pay more for a quality US-made product when one is available.

Do what you want, as I'm sure you already do and will. If all profits are the same to you and know no nationality, that's fine. As I said in my previous post, I'm not advocating for others to adopt my position. Having read your response several times, I don't feel I'm as wrong as what you suggest. You clearly disagree, and I fully expected my opinion to be unpopular. US equity works for me. If that sub-optimizes my long term returns, I can live with it, and I've dug my own grave.

Also, sorry OP. Didn't mean to hijack your thread.

Topic Author
ukbogler
Posts: 68
Joined: Mon Sep 30, 2019 4:38 am

Re: Anyone know of an ETF that tracks teh whole world except UK?

Post by ukbogler » Mon Oct 07, 2019 4:09 am

Schlabba wrote:
Sun Oct 06, 2019 4:15 am

I couldn't find that in the philosophy: https://www.bogleheads.org/wiki/Boglehe ... philosophy

How to set up a 3 ufnd portfolio. "These typically consist of three equal parts of bonds (total bond market or TIPS), total US market and total international market." If that's only for US investors, they should make that clear.

https://www.bogleheads.org/wiki/Lazy_po ... portfolios

Given that the information seems (to me, at least) rather ambiguous for non-US investors, the best I can come up with is 40/30/30 for domestic int, int bonds. The int section is effectively 50% US, of course. So to all intents and purposes, that's 15% US in the portfolio, and probably the same bond-centric percentage too. Open to suggestions, natch.

Schlabba
Posts: 153
Joined: Sat May 11, 2019 9:14 am

Re: Anyone know of an ETF that tracks teh whole world except UK?

Post by Schlabba » Mon Oct 07, 2019 5:21 am

ukbogler wrote:
Mon Oct 07, 2019 4:09 am
Schlabba wrote:
Sun Oct 06, 2019 4:15 am

I couldn't find that in the philosophy: https://www.bogleheads.org/wiki/Boglehe ... philosophy

How to set up a 3 ufnd portfolio. "These typically consist of three equal parts of bonds (total bond market or TIPS), total US market and total international market." If that's only for US investors, they should make that clear.

https://www.bogleheads.org/wiki/Lazy_po ... portfolios

Given that the information seems (to me, at least) rather ambiguous for non-US investors, the best I can come up with is 40/30/30 for domestic int, int bonds. The int section is effectively 50% US, of course. So to all intents and purposes, that's 15% US in the portfolio, and probably the same bond-centric percentage too. Open to suggestions, natch.
Top of page of your wiki link: This page contains details specific to United States (US) investors, and does not apply to non-US investors. Non-US investors can find related information at Simple non-US portfolios and Canadian versions of lazy portfolios.
IWDA: MSCI World | EMIM: MSCI Emerging Markets | AGGH: Global Aggregate Bond Hedged to €

Topic Author
ukbogler
Posts: 68
Joined: Mon Sep 30, 2019 4:38 am

Re: Anyone know of an ETF that tracks teh whole world except UK?

Post by ukbogler » Mon Oct 07, 2019 5:33 am

Schlabba wrote:
Mon Oct 07, 2019 5:21 am

Top of page of your wiki link: This page contains details specific to United States (US) investors, and does not apply to non-US investors. Non-US investors can find related information at Simple non-US portfolios and Canadian versions of lazy portfolios.

are you talking about THIS page? https://www.bogleheads.org/wiki/Category:United_Kingdom


or did you mean this 3 part series https://finpage.blog/2017/03/18/investi ... ld-part-1/

andrew99999
Posts: 516
Joined: Fri Jul 13, 2018 8:14 pm

Re: Anyone know of an ETF that tracks teh whole world except UK?

Post by andrew99999 » Mon Oct 07, 2019 8:42 am

Cheez-It Guy wrote:
Sun Oct 06, 2019 8:30 pm
Ouch! Pretty scathing. The most fallacies in a single post that you've ever seen? Certainly not a distinction I was gunning for when I wrote that, but OK.

I understand that investing in a company and buying the products produced by a company are not the same thing, and don't have the same effect.

However, isn't a logical (slippery slope) conclusion of your stance that both historical domestic and foreign investment in the US stock market and the companies traded therein has had no material impact on the relative strength of the economy? If investing in companies doesn't support them in some way, that should be true. Isn't another logical conclusion that if there was a massive bout of selling stock in a particular public company (for whatever reason), it would have no material impact on the financial strength of said company? What is the point then of ESG funds and of both endowments and sovereign wealth funds seeking to decarbonize their holdings? This has no adverse impact on the companies that are sold? If there is even a small negative impact on the cashflow of companies in such a sale event, then the converse should also be true. That is, by buying stock in a company either actively or passively, there is some benefit to the company and its perceived health, and you might say an at least implicit support of their business model and management (unless someone is intending to be an counterbalancing activist investor, for example). Why do companies even sell stock if there is no benefit to them when investors invest? Initially it is to raise cash. The more people are willing to buy and hold their stock, the more stock they can (if they choose) float on the market for further fundraising and growth. I'm not so deluded as to think that my piddly investments or lack thereof make a material difference to giant corporations, and the impacts of investing or not may be both small and indirect, but the big picture impact is nonzero.

Purposely listing only developed countries in response to my post is being intentionally misleading. I'm referring to investing in total world or total international ex-US indices as is often advocated here, not to restricting to developed markets ex-US. China would have been an obvious inclusion in that. China looks set for continued success, but I prefer not to invest there, and also to minimize my purchases of their products (which is admittedly often difficult in the current environment). I truly will and do pay more for a quality US-made product when one is available.

Do what you want, as I'm sure you already do and will. If all profits are the same to you and know no nationality, that's fine. As I said in my previous post, I'm not advocating for others to adopt my position. Having read your response several times, I don't feel I'm as wrong as what you suggest. You clearly disagree, and I fully expected my opinion to be unpopular. US equity works for me. If that sub-optimizes my long term returns, I can live with it, and I've dug my own grave.

Also, sorry OP. Didn't mean to hijack your thread.
How does buying shares improve the business? It doesn't change their earnings, cash flow, book value, etc.
It sounds like you are saying a company's profitability goes up due to the share price and not the other way around.

"What is the point then of ESG funds"
They are meeting the markets buyers demand, just as Vanguard Australia is now releasing actively managed funds trying to get a share of the market. That they exist doesn't mean any more than that.

"Why do companies even sell stock"
To raise capital to grow the business and because money makes money, so the more they can grow, the more their portion grows. I think you are making more out of things than are really there.

"Purposely listing only developed countries in response to my post is being intentionally misleading."
It is not misleading. You made the case for home bias based on all the terrible things going on such as anti-democratic government and I pointed out that 90% of the world by market cap is not anti-democratic and therefore is not a legitimate reason for home bias.
PassiveInvestingAustralia.com

User avatar
Cheez-It Guy
Posts: 246
Joined: Sun Mar 03, 2019 4:20 pm

Re: Anyone know of an ETF that tracks teh whole world except UK?

Post by Cheez-It Guy » Mon Oct 07, 2019 8:56 am

TIL 90% = 100%

I'm suggesting there is SOME interconnectedness between the willingness of investors to invest in a public company and that company's financial health and future prospects. If no one wants to hold shares and the stock price craters, then there can be leadership changes, the stock can be delisted, the company can be taken private, or all of the above. I'm not suggesting perfect 1:1 correlation. Also, these are obviously rather extreme outcomes which would never be driven by any individual retail investor's behavior or decisions.

I think you may be reading more into my initial post than was intended. Call it economic nationalism or whatever you like. I don't mind placing outsized bets on the future success of my own country. Being in the US may put me in a unique position in that regard, given current global market cap, but nearly everyone expects that to continue to shift toward Asia in the coming decades.

The original intention of my post was simply to express understanding of someone in any geography that knowingly chooses to create a home country bias for reasons that may not be purely financial / mathematical.

TedSwippet
Posts: 2501
Joined: Mon Jun 04, 2007 4:19 pm
Location: UK

Re: Anyone know of an ETF that tracks teh whole world except UK?

Post by TedSwippet » Mon Oct 07, 2019 10:35 am

ukbogler wrote:
Mon Oct 07, 2019 5:33 am
Schlabba wrote:
Mon Oct 07, 2019 5:21 am
Top of page of your wiki link: This page contains details specific to United States (US) investors, and does not apply to non-US investors. Non-US investors can find related information at Simple non-US portfolios and Canadian versions of lazy portfolios.
are you talking about THIS page? https://www.bogleheads.org/wiki/Category:United_Kingdom

or did you mean this 3 part series https://finpage.blog/2017/03/18/investi ... ld-part-1/
There is a prominent warning banner at the top of the page you linked (Lazy portfolios). It is prefixed with a US flag, warns that the information in the page is US specific, and provides links to non-US equivalent pages:
This page contains details specific to United States (US) investors, and does not apply to non-US investors. Non-US investors can find related information at Simple non-US portfolios and Canadian versions of lazy portfolios.
For convenience, these links are:
Simple non-US portfolios - Bogleheads
Canadian versions of lazy portfolios - Bogleheads

Most non-US pages end with a set of links to other non-US specific pages: Template:Non-US domiciles - Bogleheads

You can also get an outline of the non-US wiki here, linked directly from both the forum's index page and the wiki main page:
Outline of Non-US domiciles - Bogleheads

This page covers UK investing specifically: UK investing - Bogleheads. A couple of other UK focused pages also exist, and you can find links to those in the main UK investing page and also the outline of Non-US domiciles.

andrew99999
Posts: 516
Joined: Fri Jul 13, 2018 8:14 pm

Re: Anyone know of an ETF that tracks teh whole world except UK?

Post by andrew99999 » Mon Oct 07, 2019 11:37 am

Cheez-It Guy wrote:
Mon Oct 07, 2019 8:56 am
I'm suggesting there is SOME interconnectedness between the willingness of investors to invest in a public company and that company's financial health and future prospects. If no one wants to hold shares and the stock price craters, then there can be leadership changes, the stock can be delisted, the company can be taken private, or all of the above. I'm not suggesting perfect 1:1 correlation. Also, these are obviously rather extreme outcomes which would never be driven by any individual retail investor's behavior or decisions.
But we can come back again to causality.
If the company is prosperous, then buyers will not abandon it.
So it makes sense to me that demand and consequent price is a result of the business, not the other way around. Maybe I have something wrong but it makes no sense to me the way you propose it to.
Cheez-It Guy wrote:
Mon Oct 07, 2019 8:56 am
The original intention of my post was simply to express understanding of someone in any geography that knowingly chooses to create a home country bias for reasons that may not be purely financial / mathematical.
I think legitimate reasons for home bias include the favourable tax treatment as a tailwind for returns, and for reducing downside currency risk. Both of these have a trade off by losing diversification. I just can not find other legitimate reasons for home bias. There are a lot of reasons, but I just don't see any that stand up under criticism.
PassiveInvestingAustralia.com

Topic Author
ukbogler
Posts: 68
Joined: Mon Sep 30, 2019 4:38 am

Re: Anyone know of an ETF that tracks teh whole world except UK?

Post by ukbogler » Mon Oct 07, 2019 11:45 am

TedSwippet wrote:
Mon Oct 07, 2019 10:35 am
For convenience, these links are:
Simple non-US portfolios - Bogleheads
Canadian versions of lazy portfolios - Bogleheads

Most non-US pages end with a set of links to other non-US specific pages: Template:Non-US domiciles - Bogleheads

You can also get an outline of the non-US wiki here, linked directly from both the forum's index page and the wiki main page:
Outline of Non-US domiciles - Bogleheads

This page covers UK investing specifically: UK investing - Bogleheads. A couple of other UK focused pages also exist, and you can find links to those in the main UK investing page and also the outline of Non-US domiciles.
Many thanks!

Valuethinker
Posts: 38981
Joined: Fri May 11, 2007 11:07 am

Re: Anyone know of an ETF that tracks teh whole world except UK?

Post by Valuethinker » Tue Oct 08, 2019 5:40 am

TedSwippet wrote:
Mon Oct 07, 2019 10:35 am
ukbogler wrote:
Mon Oct 07, 2019 5:33 am
This page covers UK investing specifically: UK investing - Bogleheads. A couple of other UK focused pages also exist, and you can find links to those in the main UK investing page and also the outline of Non-US domiciles.
The key thing there I think is that even the "Home Country Bias" portfolios don't have over 20% UK.

The UK is c 6% of world markets. Even 20% is a 3x overweight (in terms of performance & volatility, it is more important to note that it is a 14% overweight).

There is just no reason to overweight that, from an Efficient Markets perspective.

If one has a "value" view of the world, it's better to have a global value fund. The Vanguard UK one pretty closely tracks world country weightings - so buying the cheapest stocks in each market, but 60% of it is in the USA.

https://www.vanguardinvestor.co.uk/inve ... _fund_link

The ishares one allows for country skew. So it is c 30 in% Japan, for example. That, to me, is closer to an "international value" stance. It interests me that it has a pretty low weighting in the UK - UK stocks are not, on the whole, on value screens, "cheap" -- about 9% weighting.

https://www.ishares.com/uk/individual/e ... -en-gb.pdf

I hold the Vanguard ETF with Vanguard, and the ishares one in my other account. The thing to watch is the 2008 syndrome, where in early 2008 all the "value" stocks were financial companies. Turns out the market was right and these things were cheap for a reason - because they were going to implode.

Overall the goal is to have about 25% of my equity exposure in value tilts. And thus something of a tilt away from USA (and the FAANG tech stocks in particular).

https://www.ishares.com/uk/individual/e ... -en-gb.pdf

Is my best approximation of an EM value fund, given that I can't seem to buy EMVL via my platform (not sure why). If you look at the country weightings it is far different from your usual EM fund (which is heavily China-weighted).

Post Reply