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Not sure if growth or value will thrive? This Vanguard fund has both
Having a blend of both investment styles looks wise in this unpredictable market
Fundsmith Equity (B41YBW7) charges (0.94%) for its portfolio of stocks from around the world.
Unlike many global equity funds, the Vanguard product is not dominated by big US tech firms. Yes, there are positions in Microsoft (MSFT:NASDAQ) and Alphabet (GOOG:NASDAQ), but they sit alongside names such as US health insurance provider Elevance Health (ELV:NYSE), aerospace group Airbus (AIR:EPA) and miner Rio Tinto (RIO).
Vanguard Global Equity Fund
Investors are right to be confused by the current direction of the market. The FTSE 100 hitting a record high and many stocks recording double-digit gains this year would suggest everything’s rosy. On the other hand, central banks haven’t finished pushing up interest rates, big companies are slashing jobs and plenty of consumers are still under financial pressure.
In this situation, it’s difficult to know exactly how to position your portfolio – do you go fullon growth again, or be more cautious and have value stocks which are providing jam today rather than jam tomorrow? The answer might be to do both and that’s exactly what you’re getting with Vanguard Global Equity Fund (BZ82ZT6).
While Vanguard is best known in the UK for its passive tracker funds, this global equity fund is actively managed by a panel of experts. Baillie Gifford looks after half the assets, and it has a growth investing style. The rest is managed by Wellington which is a value investor so you’re getting a blend of both styles.
The track record has been good, with the fund in the top quartile for performance over the past one and three years. Since launch in May 2016, the Vanguard fund has returned 140% versus 124% from the MSCI All-Countries World index in sterling, according to FE Fundinfo. The 0.48% ongoing charge is approximately half the amount
Construction group CRH (CRH) has been a key contributor to the portfolio with its share price hitting a new record high earlier this month. Other names picked by the fund include Spanish utility group Iberdrola (IBE:BME), drinks group Pernod Ricard (RI:EPA) and airline Ryanair (RYAAY:NASDAQ).
Investors are likely to get the bulk of their returns as capital gains rather than income as the dividend yield is a mere 1%.
It’s important not to confuse the fund with another Vanguard product of the same name which is marketed to US investors. That has a different manager line-up and a slightly different approach. [DC]
DISCLAIMER: The author owns units in Vanguard Global Equity and Fundsmith Equity referenced in this article.
