FTSE 100 - is there a simple way to track the index?

Runnerman

Does anyone know if it is possible to invest in the actual performance of the FTSE100 index, rather than taking out a so called 'tracker' which only spreads your money in companies in the FTSE100. So, for instance, the index is at 5000 points, I invest £1000, the index rises to 5500 (a gain of 10%) and I withdraw £1100, less any commission, making a gross profit of £100. This to me seems a simple and sensible way to 'track' the index. But can it be done? Are there any online brokers who offer this? And what is a fair price to pay for entering and leaving the index? I mean we keep getting told each night on the news what the FTSE is doing - why not take a direct investment dcision based on it? Thanks for any advice!

IronWolf

Isn't that the purpose of a tracker?

qpop

That is exactly what a tracker aims to do, some with more success than others.

A big, well funded, phsyical ETF fund will buy/sell shares to reflect the underlying index as best they can.

Sometimes they use financial instruments and derivatives instead, (synthetic ETFs) which is a bit of a perfect storm tbh.

BLB53

You might want to look at spread betting? eg IG Index.

jon3001

Runnerman wrote: »

Does anyone know if it is possible to invest in the actual performance of the FTSE100 index, rather than taking out a so called 'tracker' which only spreads your money in companies in the FTSE100.

What do you think the FTSE 100 index is then?

Runnerman wrote: »

So, for instance, the index is at 5000 points, I invest £1000, the index rises to 5500 (a gain of 10%) and I withdraw £1100, less any commission, making a gross profit of £100. This to me seems a simple and sensible way to 'track' the index. But can it be done?

Don't you want the dividends?

Runnerman wrote: »

Are there any online brokers who offer this?

Yes - they offer something called a 'tracker'.

dtsazza

If you want to exactly track the index, such that there's no tracking error, then you'd need to buy some sort of derivative whose value depends on the index.

As BLB53 points out, likely the simplest way to do this is via financial spread betting. Any company that offers this will have several contracts on the FTSE. There are doubtless other ways to go about it, but they're less likely to be as approachable for an individual investor.

dunstonh

I mean we keep getting told each night on the news what the FTSE is doing - why not take a direct investment dcision based on it? Thanks for any advice!

The FTSE100 does not include dividends. So, any investment based on the FTSE100 index value alone is going to perform around 3% a year less than a FTSE 100 tracker where you get the dividends.

So, this "so called" tracker is better than what you seem to want.

jimjames

The Edinburgh UK tracker investment trust (IT) trust trades on the stock market in its own right so can be bought and sold at will unlike a unit trust tracker. It tracks the all share not the 100 though.

It is so cheap buying a tracker that is seems pointless to try to replicate it in any other way unless you are trading in millions.

moneylover

jimjames wrote: »

The Edinburgh UK tracker investment trust (IT) trust trades on the stock market in its own right so can be bought and sold at will unlike a unit trust tracker. It tracks the all share not the 100 though.

.

Thats interesting, is there any advantage to it over, say, the HSBC all share tracker or is it just useful if you want to go in and out of the market with a tracker far more quicker and at a known price than you can with a unit trust tracker ?

Jegersmart

I have traded FTSE100 and other indices using CFD's on and off for quite a few years. Yes, you do get some dividend although check your CFD providers details. Additionally, all CFD's are leveraged - I think the minimum stake is £1 or £2 per point so make sure you understand your risk and your *funding costs*. Certainly for the layman the simplest way is to use a tracker as long as you do not need to react quickly to events. imho, dyor.

J

cepheus

Read this. I think an exchange traded fund might be more suitable if you wish to buy in and out quite often (I am tempted to mention spread betting, Futures, or CFDs which are cheaper still but everyone will jump down my throat!)

The cheapest FTSE All-Share ETF is the DB X-trackers FTSE All Share Retail, which carries an AMC of 0.4%. While the cheapest FTSE 100 ETF, is the HSBC ETF FTSE 100 Retail Accumulation, which has a TER of 0.35%.

Read more: http://www.thisismoney.co.uk/money/investing/article-1583915/A-guide-cheapest-index-tracker-funds.html#ixzz1abhhKa8F

http://www.thisismoney.co.uk/money/investing/article-1583915/A-guide-cheapest-index-tracker-funds.html