This is my yearly thread reviewing the best vanguard funds UK 2023. Last year, I carried out a comparison across different funds here.
Selecting stocks and shares to invest in is a completely personal decision. There are different funds that suit different people and purposes, and ultimately nobody could know if any of the below funds will go up or down in value. As per every investment, the value of these funds could go either up or down.
Having said this, in my opinion, these are the Top 4 best Vanguard funds UK 2023.
Table of Contents
Selection Criteria
There are a number of different factors that I will use to determine which fund to invest in. These are
- Past performance. Whilst past performance is not a guarantee for future performance if a fund has been underperforming for the last five years, I think it’s a bad sign.
- Environmental credentials. This is an often overlooked consideration, but personally, I think it’s incredibly important. If the fund is heavily vested in unsustainable companies, I feel that it will do poorly long term whilst harming the environment.
- Ratio of stocks to bonds. This can be particularly important for determining how risky an investment you want. Funds with higher levels of bonds tend to fluctuate in value less. Given I intend to keep my shares for the long run, I’m happy to be relatively risky with a stocks and shares ISA at this stage.
- Geographical diversification. Having funds across multiple countries helps protect against sudden issues that may be localised to one of them (e..g. Brexit).
Following these considerations, I’ve settled on the following five best vanguard funds UK.
ESG Developed World All Cap Equity Index Fund – Accumulation
This passive fund is an ESG fund ( environmental, social, and corporate governance) that looks to accumulate more value as shares go up. This tracker fund aims to match the performance of 4,476 stocks. FTSE Russel, an independent party, screens the companies to exclude any that perform poorly on ESG ratings. In particular, this means that companies that hold high reserves of non-sustainable fossil fuels (read oil) will not be included. Accumulation denotes that as dividends are earnt on shares, they’re automatically re-invested into buying shares.
Amazingly this fund has not had an interest rate of less than 6.66% over the last five years. Impressively, if you’d invested £10,000 five years ago, it’d now be worth a staggering £15,103.
The last time I carried out this review, the five-year rate would have increased to £18,309. This decrease in the five-year comparison is because we’ve dropped a “good” rate of return year, and added a poor performing year in 2022 – 2023. This poor performance is largely due to the decrease in the value of tech stocks following the pandemic boom. This does effectively mean the shares are on sale though, and personally, I think technology is likely to continue growing as it is used more and more in society.
You can read more about this fund here.
LifeStrategy 80% Equity Fund – Accumulation
This Fund takes a slightly different approach, with a 20% proportion of the funds being held as bonds. You can see from the graph above, that over the last five years, this fund has typically underperformed compared to pure stock funds. Realistically, that only tells half the story. Over time you’ll see the value of this fund fluctuate significantly less, with less dramatic drops and rises. This fund is a more steadfast approach. The Lifestrategy aspect of the fund is Vanguard’s way of saying they’ll sell shares (or bonds) to continuously keep the 80/20 split. This fund is rather skewed towards UK shares though, making it more susceptible to UK localised events affecting its overall value.
If you had invested £10,000 five years ago, this would currently be valued at £13,345. This is around £2000 lower than the ” ESG Developed World All Cap Equity Index Fund – Accumulation ” fund at the time of writing, but that’s part of having a lower-risk fund. Interestingly bonds have fluctuated in the last twelve months, triggered by government policy rocking confidence in the UK’s financial prospects.
You can read about this here.
FTSE Global All Cap Index Fund Accumulation
This fund is often considered the “default” for most people getting into FIRE. It comprises 7,163 stocks globally giving it a very diverse portfolio of shares. Investing £10,000 in this vanguard fund would have netted you £14,918 if you’d invested five years ago. Once again this is largely swayed towards North America with roughly 60% of the funds based there. This is common because a lot of the big companies are based in North America and are often pulled into these funds.
The fund has no ESG selection criteria, which detracts from it, but this is one of the most diversified funds in this list because of it. This year this fund has faired significantly better than ESG funds because oil and fossil fuel companies have had huge profits following the invasion of Ukraine. Longer run, I don’t think this can be sustainable. As the world stabilises and adapts to the reduction in supply, I suspect these prices will reduce as a correction.
You can read more about this fund: here
Summary of vanguard funds UK 2023
Each of these Vanguard funds has a slightly different take on establishing a passive fund and each of them will inevitably perform differently over the coming years. When considering a fund please note that:
Past performance is not a reliable indicator of future results.
The value of investments, and the income from them, may fall or rise and investors may get back less than they invested.
Ultimately, there are no perfect or guaranteed funds. But this list comprises what I think personally, are my Top 3 best Vanguard funds UK 2023. Vanguard funds have shown reduced growth this year due to global slowdown in the economy. But I think that ETF stocks and shares could really increase in value across the next few years.
Overall this page is identifying the best vanguard funds for retirement, if you have a more specific short-term goal, you may well be better off investing in a less risky solution. Whilst vanguard ETFs are a powerful tool, they’ll always be inherently riskier than something like premium bonds.
Do you have any other funds you prefer? I’d love to know, if you do please drop a message in the chat.
