Cheapest FTSE All share Tracker

dunstonh

But worth saying that the Financial Services Authority came to that conclusion back in 2000

http://www.fsa.gov.uk/Pages/Library/...2000/107.shtml

A firm near me recently had an FSA visit and they brought him up on the fact that he wasnt comparing past performance on funds when switching products. His comments about past performance not being an indication of future returns was not accepted by them. They may have worked on that nearly a decade ago but they are not taking that view now.

I am certainly open-minded to the possibility that active funds that outperform can be chosen.

Take the UK all companies sector for UT/OEICs. You have three tracker funds. 100,250 and all share. So, you have three areas covered. All share will be mid table. 100 and 250 will bounce from top to bottom depending on whether mid caps or large caps are where the growth is at that time. What about when its blend or value or equity income etc? Where is your tracker then?

The reason that managed funds are not likely to be consistent applies just as much to 100 and 250 trackers. It may not be the time to invest in the particular area that the fund covers. The FTSE100 trackers have spent most of the last 15 years at the bottom in performance terms. The only consistent tracker is going to be an all share tracker and that will consistently float around mid-table.

I am certainly open-minded to the possibility that active funds that outperform can be chosen. I just haven't seen any evidence of it to date.

What about the two most well known funds for generations. Fidelity Special Situations under Anthony Bolton and Inv Perp High Income. Neither of which has a tracker available with a similar objective.

31st Jan 95 to yesterday:
UK all companies sector average: 79.57%
L&G UK Index Tracker: 91.73%
Fid Spec Sits: 412.84%
Inv Perp High Inc: 321.75%

Those funds are not the top performers most of the time but consistent and more importantly, you would have found them in most recommended portfolios as they were consistently in the most recommended and bought funds. So, I havent picked out what was best in that period. Just two funds that you would almost certainly have bought if you included managed funds.

Count_Dante

I appreciate that it is possible for a good manager to outperform an index over the long run. However, will it not be the case that a diversified portfolio will include some funds that perform worse than the index and that overall performance will balance out, only with higher charges? Unless you were willing to put an unusually large percentage of your portfolio in these better performing funds, with greater risk.

Aegis

Count_Dante wrote: »

I appreciate that it is possible for a good manager to outperform an index over the long run. However, will it not be the case that a diversified portfolio will include some funds that perform worse than the index and that overall performance will balance out, only with higher charges? Unless you were willing to put an unusually large percentage of your portfolio in these better performing funds, with greater risk.

Well, the idea is that you find the funds that outperform the index on a regular basis and invest there rather than in the ones more likely to underperform. There are no guarantees, but you wouldn't deliberately construct a portfolio that contained funds with a general ongoing tendency of failing to beat the index in question, unless they did so because of their lower-risk nature.

sabretoothtigger

You could outperform with a ftse tracker but you'd have to manage the timeframe yourself.
Sell before a bear run and buy in before the bear rally, in theory its not that hard.
Just wait for everyone to predict the end of the world, look out the world and observe its fairly normal still and buy. Then sell when everyone is saying we'll be out of this by xmas

You could make 10% that way fairly easy I reckon and 10% a year is just fine for any fund on average.
The low costs (and zero spread) of these trackers means you have that advantage, I dont think they often are used like this though hence why they are not the best choice

tradetime

Perhaps the part of the problem lies in the fact that in the UK you are restricted,, if you focus on the LSE to a small slection of what you call "trackers" when if you get out of the UK you can track whatever you want. seems to me everyone in the UK wants to track the FTSE or the FTSE250, why not track the Dry Baltic index, or the Semi- Conductor Index, or the Gold Miners, or the Metals and Miners ad infinitum.
Educate yourselves!

SnowMan

I would say it would depend on your investment objectives which index or commodity you track. If (say) you live in the UK and have a lot of investments which you are using over a long period to support early retirement at a young age your main objective is to achieve a real return relative to the cost of items that you will buy. To achieve this you probably need to buy into the UK economy as far as possible.

In that case the best choice would probably then be to invest in the FTSE all share rather than the FT100 or a commodities index or (say) a cheese shares index because it is the widest available index that reflects the broad UK economy. It’s not perfect because as dunston will rightly point out it doesn’t cover the smallest capitalisation stocks. That is one of the limitations of tracking that it only works with relatively large marketable stocks in an efficient market. If you think that small companies will outperform large companies over the very long term or you believe you can identify short periods when this will happen then you can rightly criticise tracking the FTSE all share. The debate is whether this is possible and the posters here fall on different sides of this argument.

I wouldn’t say that stops the investor above from investing in things like commodities indices or overseas indices etc (if you believe a better return is there to be had) but you need to identify the risk you are taking to do this against the return.

If you were a retired mouse you would probably be investing in the cheese shares index

aspiration_2

Ancillary arguments can be useful.

Getting back to the main question : Can people please give their opinions on the various TRACKERS ?

max11

Aegis wrote: »

Don't worry too much about the £1000 minimum investment, just call HL and ask them if you can put a smaller amount into some funds. I've managed to get down as low as £250 before for a couple of popular funds, so you shouldn't have too hard a time.

Hi Aegis!
I tried to call but they say that I cannot invest less then teh minimum for the vantage ISA. How did you manage to low the minimum investment.
I called the vantage help desk
thank you

Aegis

max11 wrote: »

Hi Aegis!
I tried to call but they say that I cannot invest less then teh minimum for the vantage ISA. How did you manage to low the minimum investment.
I called the vantage help desk
thank you

Maybe they're being a little less lenient at the moment... Normally you can get down to £500 per fund on a good day.

sabretoothtigger

Do it monthly and you will distribute risk over time as well as need a smaller amount.
We're in a bear market so why would you want to invest it all right now, bear means cheaper prices in future or do we all know better