“Buy the haystack”: This ETF gets you a slice of all the world’s equity markets

“Don’t look for the needle in the haystack. Just buy the haystack.” - Jack Bogle, Vanguard founder

Some people love markets and want to pick stocks. Others just want to be invested and forget about it. For the latter, this pretty much is what Jack Bogle, the Vanguard founder and investing sage, meant when he said to “buy the haystack”. Instead of trying to pick stocks, buy the index and move on with your life.

So, it seems right to flag up an Exchange Traded Fund (ETF) that’s about as close as it comes to buying the entire haystack. The Vanguard FTSE Global All-Cap UCITS ETF (VALL) was launched to UK investors in late August and is made up of around 6,400 different stocks - make that 6,429 to be precise as of today.

As ever it's hard for a global fund not to be dominated by US tech. Due to the strong US equity market performance – the bull market turned 4 this week (happy birthday bulls) – its regional breakdown is skewed 65% to North America (61.9% US), and just 14% Europe. The UK is just 3.2% of the fund, so it provides UK investors who show a natural home bias in their portfolio a global diversification pivot. Emerging markets make up 10% of the fund, while Japan and Korea are a bit more than 8% combined. The fund has a fee of 0.07%, making it one of the lower-cost options to investors with a long-term horizon.

With a fund this new, there is not much in the way of past performance data to go on. But the similar Vanguard Total World Stock Index ETF, which is not available to UK investors, has delivered 8.8% a year since inception in 2008.

Investors tempted by this fund should appreciate it is highly geared to the global economy and as such at risk of drawdowns, which means it’s probably not for the short-term investor or anyone who needs access to the funds in the next five years. This is a long-term play, betting that the global economy will continue to expand and companies will deliver better returns than parking money in cash savings accounts or money market funds.

To borrow another bit of wisdom from Bogle, “if you have trouble imagining a 20% loss in the stock market you shouldn’t be in stocks”. All 6,429 of them.