Reducing my portfolio to one ETF

My last post, reviewing 2020, observed that my performance is, superficially at least, very similar to Vanguard’s WoRLd equity tracker ETF VWRL. Despite my portfolio involving a helluva lot more complexity/faff. My post elicited this comment from Bob:

Thanks for sharing, intriguing as always. As someone who recently (18 months ago) simplified my portfolio into three holdings: 1 VWRL seven figures, 2 [single megacap tech stock] six figures, 3 Vanguard Global Bond six figures. I find myself reading about your complexity and not feeling jealous one bit. So the question is, why do you dislike VWRL (or similar global tracker) so much? You mention the comparison several times, what is stopping you making the change? That is after all what reviews should lead to e.g. insights, and change.

Bob, commenting on 2 January 2020

Bob’s challenge is a good one. Why wouldn’t I just swap out my entire portfolio for, say, holding only a single world equities tracking ETF like VWRL or its non-Vanguard equivalents (see Monevator’s updated list of alternatives here, or the SRI alternatives listed on my ETFs page)?

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Whither London?

I feel as if there is a crescendo of doom-mongering about London.

Some of the most expensive footfall in the world

Most notable for me was a piece a week or two ago by Simon Kuper in the FT. Kuper argues that three things threaten to diminish London, risking it following Vienna and Constantinople into decline:

  • Covid-19. Covid means lockdown. And lockdown means working from home. Kuper argues that “though working from home threatens all cities, it disproportionately threatens London”.
  • Brexit. The “UK-EU trade deal does little for London”. In the first week of the Brexit new world, apparently €6bn a day of stock trading moved from the UK into the eurozone, which alone could be worth has much as £20bn a year of lost revenues (a quarter of the UK’s services trade surplus). I hear rumours that Goldman Sachs is yet to move 2000 roles from the UK into the EU. That is a lot of tax that won’t be paid to HMRC, and fancy dinners no longer being enjoyed in the West End.
  • The role of English. Kuper argues that “a decade ago there was no obvious European substitute for London. Now, cities like Berlin, Copenhagen, Amsterdam have become quasi-bilingual business hubs.”

Kuper cites house price data as suggesting that “local rivals are eating into London’s supremacy”: London’s prices have fallen (in international terms) since 2016, whereas Parisian prices are up about 25%. More money is going into Paris’ office space than London’s in 2019, the year before the pandemic.

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Wealth tax would prove taxing for the Tories

A think tank of policy wonks and policy makers, the Wealth Tax Commission (WTC), has recently published its report/proposals into how the UK should implement a wealth tax – to fund the enormous sums HM Government has been spending to try to mitigate the covid-19 pandemic. This report has received a lot of well-deserved media comment. It is well written, fair minded, and full of useful research.

I’m sure most readers of my blog have seen some of the media stories, and you will certainly have views. As somebody who is close to the target’s bulls-eye, here are my views – as they stand in December 2020.

The key proposals are summarised in the table ES.1 below.

Table ES.1: Revenue estimates for one-off taxes, based on current wealth distribution

These data look a bit suspect to me. Apparently by 2030, one in four homes in London will be worth at least £1m; this is about 1m homes, so at the lower end of the table the figures look plausible. But at the top end, these figures look undercooked. The Sunday Times Rich List has 1000 people in it with assets of £120m+, and anecdotally it misses more people than it overestimates, so the idea that there are only 22,000 people with assets of £10m+ does not fit the power curve. My guess is that there are already at least 50k people in the UK worth £10m+. Whether they are all taxpayers or not is, I suppose, a question one should consider – but I am going to treat as off scope for this piece – as the idea that I should have assets confiscated so that other multimillionaires can avoid tax altogether feels absurd.

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