Index Tracker Funds

jon3001

Aegis wrote: »

For the sectors I wanted to invest in: UK Equity Income, UK Equity and Bond, Global Equity, Commodities & Natural Resources, China, Latin America and Russia. Of course, my research did take place over a year ago for most of these, and I have encountered a few problems with some of the funds, but they're doing well against their various indices still.

Which investable trackers are tracking the 'UK Equity Income' and 'UK Equity and Bond' sectors?

Aegis wrote: »

Sounds like they fully accept the Efficient Market hypothesis with their justification for picking trackers over managed funds.

Emerging markets aren't usually considered efficient equity markets. I'd expect Commodity & Natural Resources, as well as exposure to emerging markets, to have exposure to small company stocks - also not usually considered an efficient market.

As far as the Global Equity is concerned I assume you used something like IWRD as a comparison? If you just compare against the MSCI World Index itself (which doesn't include dividends) it won't be a total return comparison. The MSCI World Index is a market-cap weighted index of major developed equity markets.

Some of the Global Equity funds out there will include significant emerging market exposure so a comparison the MSCI World Index would be dubious. Others will have country allocations that deviate significantly from the World Index weightings. Therefore there's no reason to expect returns to be that similar and it's basis as a benchmark is questionable. It would be more appropriate to use a weighted aggregation of indices (e.g. FTSE All Share, S&P 500) that reflect the investment fund's asset allocation. That way you can see if the manager's skill in security selection and timing is adding value on top of the asset allocation.

Aegis wrote: »

I don't have a single tracker fund in my portfolio right now.

Given what you've told me that's understandable in your situation. However for people wanting portfolio building blocks for major developed international markets I think they're a viable tool.

jon3001

StevieJ wrote: »

Trackers for me every time :j Except for SG CORE Alpha Japan, this has performed very well even though the index has halved, due partly to exchange rates but also excellent management.

I think it's important to note that trackers following the index also didn't halve in value because of the exchange rates and the surging Yen. Indeed they're about unchanged over 12 months.

The fund you mentioned has done well compared to the trackers. It probably didn't make my selection though as it was a bit light on holdings for me (currently 46) and was therefore on the riskier side.

jon3001

dunstonh wrote: »

However, having done a quick comparison of the two sectors by dumping them into a single list with 12 month performance, there are far more equity income funds at the top end than UK all companies funds.

Personally I wouldn't be surprised if that held true for longer periods too. The strategies for Equity Income should have something in common with value investing which has tended to have higher than average performance.

In the US there a trackers specifically for value indexes, something I've not seen in the UK market.