The outlook for global trackers
Discussion
Like many people, I have most of my 'pot' in global trackers - mine is split between VWRP/VWRL and (mainly) HSBC All-World Index. Coming up to retirement, I'm wondering whether this isn't ideal and maybe it's time to bale out, although to where I'm not sure yet.
Looking at the graphs of the Vanguard trackers since their inception around 5 years ago, there has been a steady increase (up 60%), aside from the Covid dip in 2020. One might assume then that the overall trajectory will largely always be upwards. However, the HSBC tracker which I think is 'broadly' the same although hasn't done as well over the same time period, has been going over 30 years so there is a lot more data to go off and it's this that I've been focusing on. Over this 30 year period, the HSBC fund has also had periods of excellent growth but has also had some significant dips. Given I'm about to retire, a repeat of the dips and the time to recover would be too painful so risk reduction is on the cards.
I wondered what others' views on this subject were and thoughts on a possible outlook for 2025.
Edit: chart removed as not sure it was correct
Looking at the graphs of the Vanguard trackers since their inception around 5 years ago, there has been a steady increase (up 60%), aside from the Covid dip in 2020. One might assume then that the overall trajectory will largely always be upwards. However, the HSBC tracker which I think is 'broadly' the same although hasn't done as well over the same time period, has been going over 30 years so there is a lot more data to go off and it's this that I've been focusing on. Over this 30 year period, the HSBC fund has also had periods of excellent growth but has also had some significant dips. Given I'm about to retire, a repeat of the dips and the time to recover would be too painful so risk reduction is on the cards.
I wondered what others' views on this subject were and thoughts on a possible outlook for 2025.
Edit: chart removed as not sure it was correct
Edited by worldwidewebs on Tuesday 19th November 12:51
In my experience, there's no point trying to foresee which way the market will go. Markets are often affected by things that just can't be reasonably predicted.
If the market going pop will scupper your retirement plans then you need to reassess how you are invested.
Instead, to paraphrase an F1 saying, always be in the right allocation at the right time.
If the market going pop will scupper your retirement plans then you need to reassess how you are invested.
Instead, to paraphrase an F1 saying, always be in the right allocation at the right time.
Where do you get that data and what exactly is it showing? If I look at "HSBC FTSE All World Index C Acc" on something like trustnet it shows 197% growth over the last 10 years. Attempting to estimate from your graph it appears to show almost no growth from where I estimate November 2014 to be up to today and completely different performance over that period.
onomatopoeia said:
Where do you get that data and what exactly is it showing? If I look at "HSBC FTSE All World Index C Acc" on something like trustnet it shows 197% growth over the last 10 years. Attempting to estimate from your graph it appears to show almost no growth from where I estimate November 2014 to be up to today and completely different performance over that period.
It was a Google search. Maybe I got the wrong graph! (I hope so 
) worldwidewebs said:
I wondered what others' views on this subject were and thoughts on a possible outlook for 2025.
I'd suggest instead basing your assumptions/planning on ~120 years of market data and holding a portfolio in which you are as confident as you can be that you will stick with it during turbulent times (start with the 1970s). Ignore the Negative Events World Service and check your portfolio balance infrequently.Mr Pointy said:
Why?Mr Pointy said:
Thank you worldwidewebs said:
Derek Chevalier said:
...check your portfolio balance infrequently.
That is certainly one of my problems - I do check it waaaay too frequently 
If I had stuck with my original strategy of investing a little each month no matter what happens to the price I would be rich by now,
Instead I panic at the first drop
I’m in a similar position to the OP, but have just retired. I believe that with a potential retirement of 30 years ahead of me (I’m 55) there isn’t much option other than to remain invested in equities.
Noting the advice that you should hold 1-3years required income in cash, with 9 months to go to retirement I sold off ETFs (global trackers) to give me 18 months worth of income. I then made payments into my SIPP as usual, but rather than investing, held them as cash. With around 3 years of income now held as cash I can ride out any big dips and wait for a recovery before having to sell further equities.
Noting the advice that you should hold 1-3years required income in cash, with 9 months to go to retirement I sold off ETFs (global trackers) to give me 18 months worth of income. I then made payments into my SIPP as usual, but rather than investing, held them as cash. With around 3 years of income now held as cash I can ride out any big dips and wait for a recovery before having to sell further equities.
Cabbage Patch said:
I’m in a similar position to the OP, but have just retired. I believe that with a potential retirement of 30 years ahead of me (I’m 55) there isn’t much option other than to remain invested in equities.
The historical data would suggest otherwise.Cabbage Patch said:
With around 3 years of income now held as cash I can ride out any big dips and wait for a recovery before having to sell further equities.
See the 2000 downturn for why this might not be enough. Derek Chevalier said:
Cabbage Patch said:
I’m in a similar position to the OP, but have just retired. I believe that with a potential retirement of 30 years ahead of me (I’m 55) there isn’t much option other than to remain invested in equities.
The historical data would suggest otherwise.In what sense? The chance that I will live for more than 30 years, or there’s a better option than remaining heavily invested in global trackers?
Cabbage Patch said:
In what sense? The chance that I will live for more than 30 years, or there’s a better option than remaining heavily invested in global trackers?
For a 30 year horizon, 100% equities have typically given a worse "worst case" outcome when looking at historical data than a portfolio containing bond. FWIW, we start our longevity planning (in the context of creating a sustainable retirement income) assuming 10% chance of survival (assuming no underlying health issues).
Edited by Derek Chevalier on Wednesday 20th November 07:18
Derek Chevalier said:
For a 30 year horizon, 100% equities have typically given a worse "worst case" outcome when looking at historical data than a portfolio containing bond.
Based on what data?Edited by Derek Chevalier on Wednesday 20th November 07:18
https://ficalc.app/
Have a play with this site, you can change your allocation of bonds and equity, and it shows you hundreds of scenarios based on historical data.
100% equity hands down beats any portfolios with bonds statistically, but there are scenarios where having that volatility could land you in trouble.
Ultimately it comes down to your risk appetite. But stating 100% equities gives a worse outcome is factually incorrect.
Cabbage Patch said:
I’m in a similar position to the OP, but have just retired. I believe that with a potential retirement of 30 years ahead of me (I’m 55) there isn’t much option other than to remain invested in equities.
Noting the advice that you should hold 1-3years required income in cash, with 9 months to go to retirement I sold off ETFs (global trackers) to give me 18 months worth of income. I then made payments into my SIPP as usual, but rather than investing, held them as cash. With around 3 years of income now held as cash I can ride out any big dips and wait for a recovery before having to sell further equities.
I think your approach is reasonable. Noting the advice that you should hold 1-3years required income in cash, with 9 months to go to retirement I sold off ETFs (global trackers) to give me 18 months worth of income. I then made payments into my SIPP as usual, but rather than investing, held them as cash. With around 3 years of income now held as cash I can ride out any big dips and wait for a recovery before having to sell further equities.
Over 3 years in here, “portfolio” is worth more than when we started, starts to give some confidence in what is going on. Still keep access to some cash, certainly in the form of filled PBs (which should also average around 4% yield).
Derek is full of mystery. That was a thing that put me off a couple of FAs in the distant past: the suggestion that there are hidden secrets you can only discover if you cross their palms with a chunk of your silver! Maybe he could share a suggested approach to people, instead of dark suggested warnings.
In terms of global trackers: I think you will be very lucky to find ways to beat them consistently over the long term. The https://kroijer.com viewpoint, really.
For the short-to-medium term, my guess is as valid as anyone. I feel that the US is heading for a s
tstorm of bluster and bullsttery, but “the markets” might kind of like that. Who knows. When the tangerine tariff king is anointed, will things change? Maybe Deek could give some simple guidance.If the US sneezes, maybe the entire world catches a cold, & we all tighten our belts, but if it doesn’t, a world tracker might help a little.
IIRC, when we had the last little down bump, bonds and gilts also let people down, despite the idea that they would smooth those things out.
My view is also that whilst there is a rate of inflation, you can help shape your own.
As a retiree, I can afford to ‘waste’ half a day GoComparing (via TopCashBack, of course) car and house insurance. The last renewals were horrendous, and took me a couple of days to get down: in the end, one car actually reduced! About 2 hours badgering Virgin Media to stop them taking our package up to £97pcm, & instead down to £64 makes a nice difference to outgoings. Absolutely hate the process, but accept it is the annual-to-18-month dance. Clearly holidays can be off peak, etc, etc.
Jiebo said:
Based on what data?
Historical market data and research (myself and many, many third parties, Bengen being one example.)Jiebo said:
Have a play with this site
I use Timeline, which is more comprehensive and uses UK historical data. Jiebo said:
But stating 100% equities gives a worse outcome is factually incorrect
I am referring to "a worse "worst-case" outcome, which is at what point the money runs out in the worst-case scenario (or what withdrawal rate can be supported for a given time horizon). This is a different measure from median balance outcomes and % success rates.mikeiow said:
Over 3 years in here, “portfolio” is worth more than when we started, starts to give some confidence in what is going on.
Not sure if this is a serious comment, given how benign the markets have been over the last few years?mikeiow said:
Derek is full of mystery. That was a thing that put me off a couple of FAs in the distant past: the suggestion that there are hidden secrets you can only discover if you cross their palms with a chunk of your silver!
Absolute nonsense. It's becoming a common theme. Those who know me off the forum will know the thousands of hours I have spent attempting to help create better retirement outcomes. The vast, vast majority of whom aren't my clients and never will be. There are many financial planners doing the same.There is no mystery, it's just that retirement planning is a complex subject, and given time and space constraints, my replies are deliberately keep short, partly to encourage those asking the questions to do their own research.
mikeiow said:
Derek is full of mystery. That was a thing that put me off a couple of FAs in the distant past: the suggestion that there are hidden secrets you can only discover if you cross their palms with a chunk of your silver! Maybe he could share a suggested approach to people, instead of dark suggested warnings.
If the US sneezes, maybe the entire world catches a cold, & we all tighten our belts, but if it doesn’t, a world tracker might help a little.
IIRC, when we had the last little down bump, bonds and gilts also let people down, despite the idea that they would smooth those things out.
Once you understand DC you will realise how helpful he actually is. Certainly not full of "mystery" but you do have to do your own research - he's not going to hold your hand all the way. If all IFAs were like DC then the industry would be much better. The IFAs I have used in the past just haven't had the passion or knowledge. It's (IMO) very difficult to find a good one.If the US sneezes, maybe the entire world catches a cold, & we all tighten our belts, but if it doesn’t, a world tracker might help a little.
IIRC, when we had the last little down bump, bonds and gilts also let people down, despite the idea that they would smooth those things out.
mikeiow said:
when we had the last little down bump, bonds and gilts also let people down, despite the idea that they would smooth those things out.
It was a rare event. I'm certainly not qualified to make a case for bonds but (real) yields were negative so the near-term downside risk was high. Real yields are positive today.Jiebo said:
Derek Chevalier said:
For a 30 year horizon, 100% equities have typically given a worse "worst case" outcome when looking at historical data than a portfolio containing bond.
Based on what data?Edited by Derek Chevalier on Wednesday 20th November 07:18
https://ficalc.app/
Have a play with this site, you can change your allocation of bonds and equity, and it shows you hundreds of scenarios based on historical data.
100% equity hands down beats any portfolios with bonds statistically, but there are scenarios where having that volatility could land you in trouble.
Ultimately it comes down to your risk appetite. But stating 100% equities gives a worse outcome is factually incorrect.
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