Vanguard ISA question

[Lauralonglegs2]

I see there is already a Vanguard thread but this is slightly different.

I have a Vanguard S&S ISA. It is split between 2 funds

FTSE Global All Cap
S&P 500

Do I need to spread this out and choose some more funds? If so what should I be looking at? I'm 48 and I anticipate needing the money in about 20 years. I am putting the full 20k in each year, but I have only had this ISA since getting divorced in May. My previous tracker fund with a different provider had to be cashed in for the divorce. I'm completely new to all this.

I'm no expert but I only hold the same S&P tracker and different all share world tracker. I did have a more mixed portfolio but have gradually sold them all as I'm more than happy with the performance of these two and I don't have to worry about them.

I only have the HSBC FTSE Global all cap.

Holding the S&P 500 is duplicating some of the holdings in the Global all cap and giving your portfolio a heavy US bias, thereby reducing diversity rather than increasing it.

Yes, I know there is some overlap with the 2 I have. I can't decide whether to choose another or just focus on one of the ones I have.

Why do you think you might need another fund?

Your FTSE Global All Cap has over 7000 stocks, weighted towards the US. I can't see the need for an additional holding of S&P500 nor holding any other funds.

Keep it as simple as possible and just invest in the FTSE one. I just invest in VWRL (just to see the dividends I receive).

If you like the FTSE Global All Cap then I would stick with just that. If you want something a bit lower cost, then I would look at FTSE Developed World ex UK.
Either way I would sell the S&P500, as it's overlapping a lot.

The Donegans have a comparison video about FTSE GAC vs FTSE DWxUK.
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Thank you all for your replies, which I have found very helpful. Like I say I am new to this! 😀

I'm no expert either but have read it's good to hold bonds in addition to stocks as these apparently cushion any downturns in market performance.

Investments should be weighted towards higher risk stocks when younger and then shifted towards lower risk bonds on approaching retirement.

That's a common view, but based on some rather old assumptions that may no longer hold true.

Bonds are less volatile than stocks. And on the whole have tended to move up when stocks go down, and vice versa.

But the lower volatility comes at the expense of considerably lower growth - often not beating inflation. And the opposite motion hasn't been holding true over the recent past. Closer control of interest rates, even in economic downturn, has meant low bond rates.

Derisking as you approach retirement was sensible when virtually everyone bought an annuity - it meant you had a good prediction of your pot size at the time of purchase, rather than needing to buy your annuity and finding the stock market had just fallen off a cliff. But annuities haven't been great recently. They had a bump the last couple of years from the high interest rates but are now falling again. So far more people are going for simple ongoing drawdown of pensions rather than annuity purchase. And in that scenario you want the pot to keep high returns, so a hefty proportion of stocks generally works better.

Agree with the above, bonds haven't done what they are supposed to do in the last few years. I'm in my sixties and have nothing in bonds. However I do have some savings in cash.