Help with L&G US Index Tracker

snarffie

Hi,

I signed up for a L&G US Index Tracker which the literature says:

"To track the capital performance of the US equity market, as represented by the FTSE World USA Index, by investment in a representative sample of stocks selected from all economic sectors (including a stock or stocks reasonably expected to be shortly part of that index"

Can somebody in the know tell me if this effectively tracks the Dow Jones Index because the last few days of rises on the Dow haven't transferred as rises in the value of my units. In fact it has dropped from £500 to £488 in a week!

I also have a L&G UK Index tracker which has increased in value by about £4 over the last week, despite the FTSE rising by a much higher percentage since initial purchase of £500 worth of units last week.

I'd really appreciate some ideas as to what's going on?

As you can probably gather, I'm an amateur, so please be kind!

snarff

jon3001

They're probably tracking differen indices.

FTSE World USA Index isn't Dow Jones (which only has 30 stocks?)
UK Index tracker is probably FTSE-All Share rather than FTSE-100.

Either way you can expect some tracking error.

Don't forget the effect of currency movements. If the Dow is rising but so is the pound vs dollar then your GBP-valued could still go down.

snarffie

jon3001 wrote: »

They're probably tracking differen indices.

FTSE World USA Index isn't Dow Jones (which only has 30 stocks?)
UK Index tracker is probably FTSE-All Share rather than FTSE-100.

Either way you can expect some tracking error.

Don't forget the effect of currency movements. If the Dow is rising but so is the dollar vs pound then your GBP-valued could still go down.

Of course the Dow only has 30 stocks! Thanks for pointing it out

I think my UK tracker follows the all share as you suggest (defo not the ftse100).

Interesting that you say currency variations will affect the gains/losses. I hadn't considered that as the fund is priced in sterling, but of course the shares will have to be purchsed in dollars at some stage.

Just wish I could find out what the FTSE World USA Index that L&G mention in their literature is...

Thanks.

dunstonh

Also remember that there is a delay in US stockmarket performance being factored into UK unit prices.

Paul_Herring

IIRC, the pricing time for L&G (certainly for the UK) Trackers is midday, and that price reflects the closing price on the previous day - so there'll be a time delay as well for those.

snarffie

I can see that there is some crossover because the prices are set at 3pm daily and of course the us markets are still in full swing by then, so that confuses things as well. So presumably the delay could be at least 1.5 days, and currencies will factor in on the sterling gains as well. Even a simple tracker is a minefield!

This is a good excercise for us as this is the first time we've dipped our toes into shares (all be it within an index tracker). I've been reading "Investing for dummies" and picked up on the Dow being a small representation of companies (although in market cap terms, massive), but still managed to forget this fundamental fact when choosing which index to track.

It's great to get guidance from forum members at these early stages, and nice not to be talked down to...we all have to start somewhere. Much appreciated.

snarff

sabretoothtigger

Theres a day or two lag I'd say and you wouldnt want to track the dow anyway, track the sp500 if possible

If you google hl and look for l&g funds then it'll give a graph you can compare to the real ftse or all share

l&g_all_share wrote:

Buy : 98.65p | down 2.55p 3rd mar
Buy : 98.61p | down 0.79p 5th
Buy : 96.76p | down 1.85p 6th
Buy : 96.40p | down 0.36p 9th
Buy : 98.93p | up 2.53p 10th
Buy : 100.90p | down 0.20p 12th
Buy : 105.00p | up 4.10p 13th
Buy : 105.90p | up 0.90p 16th
Buy : 105.50p | down 0.40p 17th
Buy : 107.50p | up 1.50p 19th
Buy : 105.60p | down 1.90p 20th
Buy : 107.80p | up 2.20p 23rd
Buy : 107.20p | down 1.00p 25th
Buy : 108.30p | up 0.40p 27th
Buy : 105.90p | down 2.40p 30th
Buy : 108.00p | up 0.90p 1st april

http://finance.yahoo.com/q?s=^FTAS wrote:

DateOpenHighLowCloseVolumeAdj Close*
1-Apr-09 1,984.17 2,009.751,943.282,003.260 2,003.26
31-Mar-09 1,906.81 1,985.671,906.811,984.170 1,984.17
30-Mar-09 1,971.50 1,971.501,906.811,906.810 1,906.81
27-Mar-09 1,984.18 1,995.161,961.621,971.490 1,971.49
26-Mar-09 1,972.50 1,986.011,963.021,984.180 1,984.18
25-Mar-09 1,978.40 1,990.311,949.711,972.500 1,972.50
24-Mar-09 1,995.94 2,014.381,963.111,978.400 1,978.40
23-Mar-09 1,942.90 2,006.191,942.901,995.950 1,995.95
20-Mar-09 1,931.04 1,947.061,912.111,942.900 1,942.90
19-Mar-09 1,923.10 1,976.391,921.891,931.040 1,931.04
18-Mar-09 1,946.80 1,967.831,906.321,923.110 1,923.11
17-Mar-09 1,952.07 1,952.071,917.581,946.800 1,946.80
16-Mar-09 1,899.25 1,952.071,899.251,952.070 1,952.07
13-Mar-09 1,876.99 1,928.941,876.991,899.250 1,899.25
12-Mar-09 1,867.84 1,882.541,829.571,876.990 1,876.99
11-Mar-09 1,874.62 1,898.261,845.591,867.840 1,867.84
10-Mar-09 1,791.68 1,878.891,780.021,874.620 1,874.62
9-Mar-09 1,789.13 1,802.171,755.821,791.670 1,791.67
6-Mar-09 1,792.72 1,814.761,772.591,789.130 1,789.13
5-Mar-09 1,848.971,848.971,792.721,792.720 1,792.72
4-Mar-09 1,781.641,850.411,781.641,848.970 1,848.97
3-Mar-09 1,832.451,858.321,775.051,781.640 1,781.64
2-Mar-09 1,929.741,929.741,832.451,832.450 1,832.45
27-Feb-09 1,970.191,970.191,897.921,929.750 1,929.75

* Close price adjusted for dividends and splits.

Its a mess, just go on the final column, the close figure.

3rd mar to 1st apr is 1781.64 to 2003.26 or 12.4% which is not too bad but less then I'd thought it had rose.

Comparing to the L&G fund which has risen on the same dates, 98.65 to 108 or about 9.5% So yea not great, if we take a couple of days lag into account and take it from 6th mar till todays figure for that fund which gives a range of 96.76 to 112.90 (Buy : 112.90p | up 4.90p Last valuation as at 02-04-2009) that would make it 16.68%

Conclusion, it lags and somewhere between those figures its emulating the all share fairly accurately it seems