Tracker Funds?

dilied

baldbloke wrote:

Firstly - I must say a big thank you to Dunstonh & Cheerfulcat - whose replies to my occasional posts are always interesting and helpful. They make me think again about a position I had resolved to hold against all challenges!

Oh Well Never Mind!

I like the hamburger analogy - apart from the US flavour - but I shake my head in bemusement through the whole process. I want the market to fall as I am about to buy and then to rise should I decide to sell! There's no logic to the act of investing if I am to wish for different outcomes to the same daily events based on my personal calendar. It's fascinating and gripping but it's not good sense nor good management of meagre resources.

I am down to £150 pcm spread across 3 funds (FTSE All-Share, FTSE 100 + Ethical) these days - all with L&G - and I intend to never allow this fantastic game to involve over time more than 10% of my money so the risk is limited to that portion of my savings. That may be 'sad' but at least I recognise my own risk level and I suggest others seriously consider their attitude to risk as properly recommended by Dunstonh, EdInvestor et al. The problem is that the returns can be spectacular if the investment is managed properly and with good timing (in hindsight!). There I go again! Damn you MSE!

"Most investors, both institutional and individual, will find that the best way
to own common stocks is through an index fund that charges minimal fees.
Those following this path are sure to beat the net results (after fees
and expenses) delivered by the great majority of investment
professionals." Warren Buffett

dilied

"Most investors, both institutional and individual, will find that the best way
to own common stocks is through an index fund that charges minimal fees.
Those following this path are sure to beat the net results (after fees
and expenses) delivered by the great majority of investment
professionals." Warren Buffett

dunstonh

You are taking that statement out of context as it refers to owning common stocks and not the other sectors where trackers funds are unlikely to exist.

Key example sectors that get mentioned a lot here would be UK equity income or commercial property but there are many more. Not investing in UK Commercial Property for example because a tracker doesnt exist would be a daft position to take.

cheerfulcat

But trackers do exist for a large number of areas, not just the FTSE100. ETFs track a very comprehensive collection of indices, including bonds, commodities and property; there are even a couple of high yield trackers now...

EdInvestor

Those following this path are sure to beat the net results (after fees
and expenses) delivered by the great majority of investment
professionals." Warren Buffett

Sure. But this ignores the existence of the small minority of investment professionals who regularly produce excellent returns. The challenge for those who want to engage with the fund universe ( as opposed to buying shares directly) is to find out which funds they are, and who runs them.

Fortunately, help is at hand

https://www.citywire.co.uk/Funds/Home.aspx

This website rates the funds and the fund managers .So if your fund and its manager has a good track record in the top 10 of the sector, it should comfortably beat both the relevant trackers and the relevant managed funds (of which there are undoubtedly thousands which fall into the dross category.)

All you really need to do is to check now and again that the same fund manager is in charge.

It's really not rocket science.

PS to CC: it would be interesting to do a comparison between the performance of the ETF divi tracker and the Invesco Perpetual Income fund as a higher risk complement to an HYP, when the former has been going longer.

dilied

Cheerfulcat, you took the words right out of my mouth! ETF's and tracker funds are surely the way forward. 60% of all institutional funds are passively invested. Suggest you read Tim Hale's excellent book entitled Smarter Investing

dunstonh

I agree with avoiding passive managed funds as they are an unnecessary expense. Active managed funds though can bring something that trackers cannot.

I dont want to sound negative on trackers as I do use them as part of a diversified portfolio. I am just against the 100% investment into a single tracker just as I would be if it was 100% into a single sector managed fund.

dilied

Do any of you guys invest in NYSE listed ETF's? Would be v grateful to hear if you do, and if so which ones

Chrismaths

I have access to them, but the hassle of dealing in the US is great. For every client I have who wants to invest in them, we would need a W8-BEN form filling in every 3 years, which gets to be a pain for both us and the client. The Vanguard S&P has a TER of 9bps! That's not bad at all, but as I'm not investing in the US at the moment, I don't really need any of those products. Not to say I won't in future though.

angelus

Is the US a poor area to be investing in just now? t's just that all US sector funds i look at are doing poorly.