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

jimjames

moneylover wrote: »

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 ?

The benefit of the investment trust comes when you buy it at a discount. Effectively it means you are buying £1 worth of assets (shares) for only 90p for example. That means that your money will grow faster and give higher dividends than the equivalent unit trust - assuming discount remains constant or reduces.

RetiredInThailand

If you buy index-tracking ETFs then be sure to buy ones that actually own real shares in the companies in the index, and not just use derivatives and complex maths to track the index.

If something bad happens (we hope it wont, but it might) at least a fund that physically buys shares will still be worth the value of the shares it owns. A fund that just uses derivatives might find itself worth nothing at all if they get their sums wrong. Some financial regulators have expressed concern about this recently.

As far as I know all ETFs say in the prospectus whether they buy the "real thing" or just use derivatives.

I personally like iShares and I tend to favour the 250 tracker rather than the 100 tracker, as the 250 is much more stable over time. In fact I think the FTSE100 is a bit of a dead loss these days.