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    • switch76
    • By switch76 15th Oct 16, 12:10 PM
    • 107Posts
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    switch76
    FTSE 100 and other trackers
    • #1
    • 15th Oct 16, 12:10 PM
    FTSE 100 and other trackers 15th Oct 16 at 12:10 PM
    I'm interested in buying a FTSE 100 tracker and wondered if you could recommend one. I'm looking to get a better return than locking away money in a bank.

    What are the differences between a fund and an ETF? I would like the dividends reinvested so do I need an accumulation fund? What other things should I look out for?

    Is putting the money in over several months the best idea?

    Is the FTSE 100 expensive or cheap at the moment compared to it's usual P/E?

    Do you have ideas for other trackers that might be useful? I was thinking about tracking things like the S&P100 but thought that it wouldn't be a good idea because of the exchange rate and the chance that the pound will eventually strengthen against the dollar.
Page 1
    • jimjames
    • By jimjames 15th Oct 16, 12:43 PM
    • 10,847 Posts
    • 8,919 Thanks
    jimjames
    • #2
    • 15th Oct 16, 12:43 PM
    • #2
    • 15th Oct 16, 12:43 PM
    Based on the questions you've asked I suspect you currently haven't invested before. If that's the case then plonking all your money into a FTSE100 tracker may not be the best idea.

    If you have a read of www.monevator.com then hopefully a lot of your questions will be answered and you'll get a better overview of investing.
    Remember the saying: if it looks too good to be true it almost certainly is.
    • switch76
    • By switch76 15th Oct 16, 1:14 PM
    • 107 Posts
    • 24 Thanks
    switch76
    • #3
    • 15th Oct 16, 1:14 PM
    • #3
    • 15th Oct 16, 1:14 PM
    I won't be putting in all my money. I'm planning to buy and then hold for many years to smooth out the effects of volatility.
    • Linton
    • By Linton 15th Oct 16, 1:42 PM
    • 6,955 Posts
    • 6,548 Thanks
    Linton
    • #4
    • 15th Oct 16, 1:42 PM
    • #4
    • 15th Oct 16, 1:42 PM
    If you dont have any other investments in my view a FTSE100 tracker is one of the worst options. It is very restricted obviously in terms of geography but more problematically in terms of the types of companies in which it invests - for example there arent any world class major IT tech companies in the FTSE100 nor major manufacturers such as car companies or ship builders. Lots of banks and oil/mining companies though. You need to be invested in as broad a spread of underlying assets as possible, go for a global tracker instead. Or look at the multiasset funds which include investments in things other than equity (shares).

    On your other questions...
    1) If you want to reinvest dividends go for an ACC fund. An ETF is a type of fund which is bought and sold like a share rather than from a fund manager. They they tend to be be far more focussed than a broad fund, so only holding one probably wouldnt be a good idea.There are a number of other key differences, I suggest you start off with a well diversified unit trust-type fund and then move into ETFs when you fully understand what they are and their advantages/disadvantages.
    2) The general best policy is to buy funds when you have the money. If you spread buying over time when you dont need to prices could get cheaper or more expensive. On average they will get more expensive over time - that's why you invest in the first place. Whilst you are waiting for the next buy point you will be missing out on dividends you would have earned had you invested earlier.
    3) If you are investing in shares or share funds you should be in it for the long term. So again I would say buy when you have the money, not when various financial statistics say its a good or bad time. The reasons are much the same as in (2).
    • Glen Clark
    • By Glen Clark 15th Oct 16, 1:44 PM
    • 3,456 Posts
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    Glen Clark
    • #5
    • 15th Oct 16, 1:44 PM
    • #5
    • 15th Oct 16, 1:44 PM
    What are the differences between a fund and an ETF? .
    Originally posted by switch76
    An ETF is a Fund. Its an Exchange Traded Fund, which means its units are bought and sold on the stock exchange just like shares. For further info you could start here: https://en.wikipedia.org/wiki/Exchange-traded_fund
    Do you have ideas for other trackers that might be useful? I was thinking about tracking things like the S&P100 but thought that it wouldn't be a good idea because of the exchange rate and the chance that the pound will eventually strengthen against the dollar
    Originally posted by switch76
    Markets are being driven by politics like Central Bank policy and Brexit which makes them impossible to predict, especially without inside knowledge. Some of us have sold our shares and are sitting in Sterling cash, which is likely to pay off handsomely if there is a second referendum on Brexit.
    But if you don't want to take big risks, your best bet is to spread your eggs around lots of baskets. Like some in a world tracker,http://forums.moneysavingexpert.com/showthread.php?p=71443455 and some in cash. If you do that you are probably best to set a percentage in shares and a percentage in cash and stick to it. Otherwise you could find yourself swaying backwards and forwards between shares and cash according to the latest news item in the media. This is unlikely to end well.
    Last edited by Glen Clark; 15-10-2016 at 1:51 PM.
    For society to function well, people generally need to feel that they have a fair chance of success through their ability and efforts. The more entrenched hereditary elites we have, the less likely people are to feel that way
    • switch76
    • By switch76 15th Oct 16, 1:59 PM
    • 107 Posts
    • 24 Thanks
    switch76
    • #6
    • 15th Oct 16, 1:59 PM
    • #6
    • 15th Oct 16, 1:59 PM
    If you dont have any other investments in my view a FTSE100 tracker is one of the worst options. It is very restricted obviously in terms of geography but more problematically in terms of the types of companies in which it invests - for example there arent any world class major IT tech companies in the FTSE100 nor major manufacturers such as car companies or ship builders. Lots of banks and oil/mining companies though. You need to be invested in as broad a spread of underlying assets as possible, go for a global tracker instead. Or look at the multiasset funds which include investments in things other than equity (shares).

    On your other questions...
    1) If you want to reinvest dividends go for an ACC fund. An ETF is a type of fund which is bought and sold like a share rather than from a fund manager. They they tend to be be far more focussed than a broad fund, so only holding one probably wouldnt be a good idea.There are a number of other key differences, I suggest you start off with a well diversified unit trust-type fund and then move into ETFs when you fully understand what they are and their advantages/disadvantages.
    2) The general best policy is to buy funds when you have the money. If you spread buying over time when you dont need to prices could get cheaper or more expensive. On average they will get more expensive over time - that's why you invest in the first place. Whilst you are waiting for the next buy point you will be missing out on dividends you would have earned had you invested earlier.
    3) If you are investing in shares or share funds you should be in it for the long term. So again I would say buy when you have the money, not when various financial statistics say its a good or bad time. The reasons are much the same as in (2).
    Originally posted by Linton
    I have money maturing from a savings accounts. If I could have got a decent rate of interest I would have locked it away in a bank for a couple more years.

    The FTSE 100 is nearing it's high. That's why I'm thinking of putting the available money in over a few months rather than all in one go.
    • dunstonh
    • By dunstonh 15th Oct 16, 2:05 PM
    • 85,141 Posts
    • 50,152 Thanks
    dunstonh
    • #7
    • 15th Oct 16, 2:05 PM
    • #7
    • 15th Oct 16, 2:05 PM
    I'm interested in buying a FTSE 100 tracker and wondered if you could recommend one.
    Interesting choice. The FTSE100 has been one of the consistently worst performers for over 20 years. What is it that interests you?

    Also, single sector investing is poor quality investing. So, why are you picking one sector and not diversifying?

    The asset allocation models have been lowering their UK equity content. Yet you want to go 100% into UK equity. So, why do you think professional models are wrong and you are right?
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
    • switch76
    • By switch76 15th Oct 16, 2:05 PM
    • 107 Posts
    • 24 Thanks
    switch76
    • #8
    • 15th Oct 16, 2:05 PM
    • #8
    • 15th Oct 16, 2:05 PM
    An ETF is a Fund. Its an Exchange Traded Fund, which means its units are bought and sold on the stock exchange just like shares. For further info you could start here: https://en.wikipedia.org/wiki/Exchange-traded_fund

    Markets are being driven by politics like Central Bank policy and Brexit which makes them impossible to predict, especially without inside knowledge. Some of us have sold our shares and are sitting in Sterling cash, which is likely to pay off handsomely if there is a second referendum on Brexit.
    But if you don't want to take big risks, your best bet is to spread your eggs around lots of baskets. Like some in a world tracker,http://forums.moneysavingexpert.com/showthread.php?p=71443455 and some in cash. If you do that you are probably best to set a percentage in shares and a percentage in cash and stick to it. Otherwise you could find yourself swaying backwards and forwards between shares and cash according to the latest news item in the media. This is unlikely to end well.
    Originally posted by Glen Clark
    But wouldn't a world tracker have an exchange rate headwind if there is a 2nd referendum or sterling goes back to its value before the 1st vote?
    • switch76
    • By switch76 15th Oct 16, 2:30 PM
    • 107 Posts
    • 24 Thanks
    switch76
    • #9
    • 15th Oct 16, 2:30 PM
    • #9
    • 15th Oct 16, 2:30 PM
    Interesting choice. The FTSE100 has been one of the consistently worst performers for over 20 years. What is it that interests you?

    Also, single sector investing is poor quality investing. So, why are you picking one sector and not diversifying?

    The asset allocation models have been lowering their UK equity content. Yet you want to go 100% into UK equity. So, why do you think professional models are wrong and you are right?
    Originally posted by dunstonh
    I have cash in the bank if I need to spend. I have equities of individual companies. I want an investment where there is no chance of losing all the money and a good chance of beating the return from a bank account.

    The FTSE 100 trackers seem to return about 4.5%-5% on average. I'm open to other trackers but if sterling strengthens it might wipe out most of the gains of things like world trackers.
    • Linton
    • By Linton 15th Oct 16, 3:11 PM
    • 6,955 Posts
    • 6,548 Thanks
    Linton
    But wouldn't a world tracker have an exchange rate headwind if there is a 2nd referendum or sterling goes back to its value before the 1st vote?
    Originally posted by switch76
    It would but if there isnt it wont. You should be investing for very many years. During that time there will be any number of possible but ultimately unpredictable headwinds or tail winds. You cant go changing investments all the time - overall you will probably lose out. Just buy an investment and keep it. The most you need to do if you hold multiple investments is to rebalance by selling some of those that have performed very well to buy others which havent.
    • Glen Clark
    • By Glen Clark 15th Oct 16, 3:34 PM
    • 3,456 Posts
    • 2,498 Thanks
    Glen Clark
    But wouldn't a world tracker have an exchange rate headwind if there is a 2nd referendum or sterling goes back to its value before the 1st vote?
    Originally posted by switch76
    Share prices are in sterling. If a second referendum was called Sterling is likely to strengthen, so the share price in Sterling would fall.
    For society to function well, people generally need to feel that they have a fair chance of success through their ability and efforts. The more entrenched hereditary elites we have, the less likely people are to feel that way
    • Glen Clark
    • By Glen Clark 15th Oct 16, 3:38 PM
    • 3,456 Posts
    • 2,498 Thanks
    Glen Clark
    The FTSE 100 trackers seem to return about 4.5%-5% on average. I'm open to other trackers but if sterling strengthens it might wipe out most of the gains of things like world trackers.
    Originally posted by switch76
    On the face of it the FTSE 100 is good value. But the more you find out, the more confused you get. Yield is past performance, its the future that matters. Also the tax system in the US apparently favours investment and share buybacks rather than paying out dividends, making capital appreciation more likely.
    For society to function well, people generally need to feel that they have a fair chance of success through their ability and efforts. The more entrenched hereditary elites we have, the less likely people are to feel that way
    • dunstonh
    • By dunstonh 15th Oct 16, 4:17 PM
    • 85,141 Posts
    • 50,152 Thanks
    dunstonh
    It should be noted that Sterling has been ripe for a devaluation for a while. It was higher than most people thought it should be given the UK balance of payments. So, Brexit vote gave it the push it needed but its unlikely to return to the previous level until the UK finds a way (if) to improve exports and reduce imports.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
    • Glen Clark
    • By Glen Clark 15th Oct 16, 6:49 PM
    • 3,456 Posts
    • 2,498 Thanks
    Glen Clark
    It should be noted that Sterling has been ripe for a devaluation for a while. It was higher than most people thought it should be given the UK balance of payments.
    Originally posted by dunstonh
    As I understand it, Sterling was given a temporary boost by the floods of dirty money coming into London to buy property due to Opaque ownership laws, low Council Tax (Westminster) and Government intervention in the housing market to maintain high house prices. That couldn't continue because once the property is sold, planning restrictions prevent building more.

    (Sterling) is unlikely to return to the previous level until the UK finds a way (if) to improve exports and reduce imports.
    Originally posted by dunstonh
    I have an idea. Lets join the EU
    For society to function well, people generally need to feel that they have a fair chance of success through their ability and efforts. The more entrenched hereditary elites we have, the less likely people are to feel that way
    • BobQ
    • By BobQ 15th Oct 16, 7:11 PM
    • 8,707 Posts
    • 11,202 Thanks
    BobQ
    I'm interested in buying a FTSE 100 tracker and wondered if you could recommend one. I'm looking to get a better return than locking away money in a bank.

    .
    Originally posted by switch76
    How much of your savings are you planning to put in this FTSE venture? 1% 10%, 50%?

    It is an interesting strategy to invest in tracking a single index when it is almost at its highest point ever. I would start with a global growth fund.
    • Glen Clark
    • By Glen Clark 15th Oct 16, 8:01 PM
    • 3,456 Posts
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    Glen Clark
    It is an interesting strategy to invest in tracking a single index when it is almost at its highest point ever. I would start with a global growth fund.
    Originally posted by BobQ
    I think you will find global growth funds close to their highest point ever (when priced in Sterling) too
    For society to function well, people generally need to feel that they have a fair chance of success through their ability and efforts. The more entrenched hereditary elites we have, the less likely people are to feel that way
    • switch76
    • By switch76 15th Oct 16, 9:08 PM
    • 107 Posts
    • 24 Thanks
    switch76
    How much of your savings are you planning to put in this FTSE venture? 1% 10%, 50%?

    It is an interesting strategy to invest in tracking a single index when it is almost at its highest point ever. I would start with a global growth fund.
    Originally posted by BobQ
    About 10%. The timing is awkward but that's when the money from the savings account matures. That's why I was asking if the FTSE 100 is expensive compared to its usual P/E. I'm thinking of putting the money in stages over several months.
    • switch76
    • By switch76 15th Oct 16, 9:19 PM
    • 107 Posts
    • 24 Thanks
    switch76
    What are the differences between these 2 funds? The 1st one has lower fees doesn't it? Any better funds than this?

    https://www.halifaxfundscentre.co.uk/index.php?section=sheet&idShareclass=F00000OOAS

    https://www.halifaxfundscentre.co.uk/index.php?section=sheet&idShareclass=F0GBR04CPU

    Since several people have mentioned a world tracker, are there any you can recommend from that website? Any good US trackers since that is a foreign market that gets a lot of coverage?
    • bowlhead99
    • By bowlhead99 15th Oct 16, 11:39 PM
    • 5,140 Posts
    • 9,069 Thanks
    bowlhead99
    What are the differences between these 2 funds? The 1st one has lower fees doesn't it?
    Originally posted by switch76
    Correct: same objective and strategy, same manager, cheaper fees.
    Any better funds than this?
    Yes, all the ones that don't just put all your money in 100 equities listed on one single country's stock exchange, heavily weighted to the largest companies within that 100, ignoring the other thousands of companies listed in that country which aren't in the 100, ignoring every other company in all the other countries that make up the other 94% of the world's investible equity market capitalisation, and ignoring every other asset class such as government and corporate bonds and direct property.

    As alluded to by the other posters above.
    Since several people have mentioned a world tracker, are there any you can recommend from that website?
    In post #5 Glen posted a link to a discussion on another thread which discussed the merits of the cheapest world trackers
    Any good US trackers since that is a foreign market that gets a lot of coverage?
    The US is indeed a foreign market. And there are lots of good US trackers.

    But single-country trackers (whether US 2000 or US S&P500 or US DJIA30 or or UK100 or UK All-Share) are not designed to be held by themselves, because they are highly specialist funds designed to be held as part of a wider portfolio with other geographic regions and other asset classes.

    If you have already accepted the idea of a world tracker - or at least a more balanced fund than the UK FTSE100 - why go and pick another specialist fund like a US tracker? Are you going to also get a Europe tracker and a Japan tracker and a developed Asia-exJapan tracker and an Emerging Markets tracker and a UK bonds tracker and an overseas bonds tracker and a real estate tracker and so on and so on? And how would you decide how much to put into each? It would seem like there is a strong case for buying a single managed multi-asset fund.
    • switch76
    • By switch76 16th Oct 16, 12:14 AM
    • 107 Posts
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    switch76
    Because US trackers seem to outperform global trackers. There doesn't seem to be a huge outperformance between global trackers and the FTSE 100 trackers from the ones I've seen so far.

    I have enough diversity in the equities I hold. I'm not going to buy lots of funds. Just one or two.
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