Vanguard All-World UCITS ETF Review (VWRL/VWCE)

I like to write about ETFs as I have the majority of my stock portfolio in ETFs I find them a passive way to invest money and they don’t require much maintenance in terms of keeping track of stocks etc. In this article, we are looking at the Vanguard FTSE All-World UCITS ETF (VWRL) and my personal review related to this ETF.

An exchange-traded fund is represented as a stock in the stock market so by holding this specific stock you are holding a basket of stocks that correspond to an index (portfolio benchmark) that it is tracking.

This is a more growth-oriented ETF and its main goal is to track stocks from all over the world, however, at the time of writing is paying out a dividend yield of just above 1.5% which is not necessarily the highest and recently got boosted by the recent market conditions. However, this ETF is not focused on only providing income so a yield on its own won't tell us the full story therefore we need to look further into it.

The current benchmark/portfolio

The fund seeks to track the performance of the FTSE All-World Index. Generally, The index measures the market performance of large- and mid-capitalization stocks of companies located around the world. It would be good to investigate the benchmark in more detail and the methodology in more detail on their site.

The ETF currently holds about 3600 stocks which provides more than plenty of diversification. When it comes to geographical diversification, this ETF provides plenty of diversification with only about 60% coming from the United States, and the rest is distributed to various parts of the world such as Japan at 6% and the United Kingdom and China at 3% each. Overall, I find it quite diversified as the United States is normally big in terms of companies in the stock market, and in this case 60% some may even think that it is quite low compared to investing in, for example, an S&P500 ETF. In my opinion, I think it provides a nice diversity but with lower exposure to the United States than one may be used to. It all depends on one’s individual goals and expectations some other international ETFs may provide lower than 50% exposure to the United States. However, I like this allocation to the United States, I find it quite a nice middle ground in this case between having 100% in an S&P500 and being overly diversified across the world.

When looking at ETFs I find it crucial to have a look at the top 10 holdings to get a good feeling of the ETF and to see if it fits my profile and to see if these would be companies I would invest myself in individually. In this case, the top 10 holdings are representing 21% of the total holdings which does not necessarily give the best overview, however, this is to be expected with more than 3800 holdings.

The top 10 holdings:

1. Apple Inc. - 4%

2. NVIDIA Corp. - 4%

3. Microsoft Corp. - 4%

4. Amazon.com inc. - 2%

5. Meta Platforms - 2%

6. Alphabet Inc. Class A - 1%

7. Tesla Inc - 1%

8. Alphabet Inc. Class C - 1%

9. Taiwan Semiconductor Manufacturing Co. Ltd. - 1%

10. Broadcom Inc. - 1%

It is also important and interesting to look at sector diversification as it provides a good idea of how this fund is allocated through various sectors.

The top 5 sectors:

1. Technology -26%

2. Financials - 15%

3. Consumer discretionary- 11%

4. Industrials - 10%

5. Health Care - 9%

Conclusion

Overall we can see that the holdings are quite diversified with plenty of stocks invested. The same goes with geographical diversification, I find it a nice middle ground for an international ETF. When it comes to the individual holdings overall I like the exposure to these companies, however, they only represent 21% of the total holdings, so it definitely is worth having a further look. However, looking at the sector diversification gives a better overview of the total composition of the ETF. For my personal taste, overall there is a nice balance with a focus on technology and I find for my personal taste some lacking such as consumer staples as it stands at 6%. Personally, I wouldn’t mind seeing financials a bit lower. However, this is a personal preference and I find it quite balanced with some focus on technology.

Expense Ratio

When it comes to the expense ratio, the lower the better and I would generally like to see an expense ratio below 0.5%. Overall in Europe, I find the ETFs available a bit more expensive than what is available in the United States. In this case, the All-World ETF has an expense ratio of 0.22% Which for me is not very low but also not too high. One thing to keep in mind is that this is a world ETF diversified across the world with the largest allocation being the United States @ 61% Meaning it is nicely spread around the world and this may be one of the reasons why it may be this expensive bundled with the total amount of holdings. I would personally prefer to have fewer holdings for a lower expense ratio as this will affect the overall performance.

Performance

Since this is a more growth-oriented ETF I want to look at both the capital appreciation over the last couple of years. Purely looking at capital appreciation over the last 5 years this fund has increased by over 75%. However, looking at a longer period this fund has performed better than this.

Pros

• I find that there is quite some nice diversification in this fund in terms of country allocation and amount of stocks.

• Secondly, since it is an ETF I find it a good way to set and forget and is quite passive in nature.

• Thirdly, it has historically seen some decent growth in the past couple of years.

• Fourthly, the top holdings are companies that I know and would like to have as part of my portfolio overall, however, it is to be noted that they only account for less than 21% of the total fund due to their diversification.

Cons

• I find personally that the sector diversification doesn’t fully fit my taste due to the high exposure to Financials and lower exposure to for example consumer staples.

• Secondly, the top 10 holdings are only representing 21% of the fund which means it may be over-diversified in my opinion, as we can see that for example, the sector diversification in the top 10 does not represent the overall sector allocation of the fund.

• Thirdly, the starting yield is not high and the question is, is the dividend growth enough over time? again we also need to look at the capital appreciation over time. For me, it all has to do with how much time you have to let it compound.

• Fourthly, as with all funds, it is not possible to choose the individual holdings so basically whether you like a stock or not in a fund, you are holding that stock indirectly, with this I want to say that basically you are buying the winners and losers and try to achieve a market return based on the index.

Conclusion

I hold this ETF in my portfolio as I like to have a mix of growth and dividend growth, However, I don't solely hold this ETF due to the nature of this ETF and my time horizon. Basically, I have a strategic mix of ETFs and other stocks to make up my portfolio so that it fits my goals. I want to tap into my stocks or dividends in over 20 years or so.

Disclaimer: I am not a financial advisor, this blog is centered around my opinion and should not be viewed as legal, professional, or financial advice. For me, it's crucial to supplement my knowledge with resources like videos, articles, and books to deepen my understanding of investing principles and strategies.

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