Index trackers....best buy ???

kinster_2

carnet wrote:

If you just want to compare charges why don't you look somewhere like here;

http://www.bestinvest.co.uk/funds/fmpro?-DB=webprices.fp5&-Lay=fund_info&-format=fundperflist.htm&-error=fundperflist.htm&-SortField=invname&-max=200&-find=&calc_fundtype=open&groupcode=&invname=uk+tracker&fundsize=&netyield=&calcsector=&assetclass=&Theme=&portfolio_turnover+charge+best=&fundmanager%3A%3Amanagername=&-op=gt&manterm=&initial+charge+best=&total_ann_cost+charge+best=&total_ann_cost+charge+best=

thank you very much

carnet

Or, even more comprehensively, here;

http://www.bestinvest.co.uk/funds/fmpro?-DB=webprices.fp5&-Lay=fund_info&-format=fundperflist.htm&-error=fundperflist.htm&-SortField=invname&-max=200&-find=&calc_fundtype=open&groupcode=&invname=index+&fundsize=&netyield=&calcsector=&assetclass=&Theme=&portfolio_turnover+charge+best=&fundmanager%3A%3Amanagername=&-op=gt&manterm=&initial+charge+best=&total_ann_cost+charge+best=&total_ann_cost+charge+best=

Just click the Charges button, upper left.

MSE_ForumTeam1

Guys,

I'm reopening this but I've had to remove a few post. Remember we are not allowed to publish financial advice. Can you be a bit wary of this or the thread will have to be perminently locked or removed.

Thanks

cheerfulcat

kinster, you really can't have a sensible conversation here about investments. Have a look at the Motley Fool's index tracker board instead -

http://boards.fool.co.uk/Messages.asp?mid=9709197&bid=50072

ReportInvestor

The Global 100 Tracker from Legal & General is an international option to counter some of the objections of our IFAs. I was unable to find another single fund with the same objective.

http://www.fool.co.uk/trackers/pdf/factsheetGLI_20051124.pdf

but is obviously biased towards the top world companies and certain sectors especially energy pharmacueticals and financials/banks.

But the IFAs may not agree with TMF:

"The Motley Fool believe that for most people...

An index tracking fund is the most suitable investment vehicle.
Saving money, on a monthly basis, into an index tracking fund, is the best form of long-term investment."

dunstonh

The Global 100 Tracker from Legal & General is an international option to counter some of the objections of our IFAs. I was unable to find another single fund with the same objective.

Not exactly diversified is it? We end up with a FTSE100 tracker, FTSE250 tracker and global 100 tracker.

An index tracking fund is the most suitable investment vehicle.
Saving money, on a monthly basis, into an index tracking fund, is the best form of long-term investment."

The FSA dont agree with that stance. Most professional investors dont agree with that stance. Stick it all in one place whether its tracker or managed and and you will not get the best out of your investments.

At this time, there are not enough trackers covering a wide enough range of sectors to make a viable diversified portfolio.

Take this quote from the MF website:

Why Invest In An Index Tracking Fund?

• Research published by The WM Company in April 2004 showed that over the past 20 years, 82% of active funds failed to beat the benchmark FTSE All-Share Index.

The problem here is that most managed funds have some downside protection or have investments that have little or nothing to do with the FTSE All-Shre Index. A corporate bond fund, fixed interest fund or property fund are likely to perform lower over the long term but not everyone is willing to accept the risk that goes with FTSE all share tracker. That doesnt make the lower volatile funds less attractive.

I would like them to show other timescales apart from 20 years as that is just as bad as the adverts that say "top fund over 5 years". Over the last 5 years, trackers have been quite poor.

Also, when you look at performance you need to look at the history of why it happened. Ten years ago the top ten UK companies accounted for just 23 per cent of the FTSE All-Share; now they amount to over 40 per cent. So, its a totally different index today than it was 20 years ago.

Take a read of this article which I thought was pretty well written. http://www.whatinvestment.co.uk/features/tracker-funds.htm
Its very hard to get an unbiased opinion from the fund houses/managers. Those that promote trackers, make them out to be best. Those that promote managed funds make them out to be best. I will stick with my mix and match.

MF is a website that lives on past performance and good time stories.

kinster, you really can't have a sensible conversation here about investments. Have a look at the Motley Fool's index tracker board instead -

Its a shame because there was little or nothing in this thread for it to be closed or edited. Generic discussion of the merits of diversified portfolios, trackers etc are not going to get anyone in trouble. Its only when someone starts making recommendations or says you should invest in this specific "thing".

ReportInvestor

dunstonh wrote:

The FSA dont agree with that stance. Most professional investors dont agree with that stance. Stick it all in one place whether its tracker or managed and and you will not get the best out of your investments.

The Fool site said for most people, not for professional investors.

Most people do not have large sums of money. The Legal & General Global Tracker combined an appropriate proportion of cash savings seems a reasonably basis for ordinary people's savings.

The FSA doesn't seem to have taken an objection to the statement on the Fool's site.

dunstonh

The Fool site said for most people, not for professional investors.
Most people do not have large sums of money. The Legal & General Global Tracker combined an appropriate proportion of cash savings seems a reasonably basis for ordinary people's savings.

But surely its better to get it right regardless of the status. Also, how large is large? I know some that think 20k is large but others that think that isn't. Even with 5k you can build a diversified portfolio.

The FSA doesn't seem to have taken an objection to the statement on the Fool's site.

There is nothing to object to. Its a naive statement but its their opinion. It lacks that balanced pros and cons.

EdInvestor

The problem here is that most managed funds have some downside protection or have investments that have little or nothing to do with the FTSE All-Shre Index. A corporate bond fund, fixed interest fund or property fund are likely to perform lower over the long term but not everyone is willing to accept the risk that goes with FTSE all share tracker. That doesnt make the lower volatile funds less attractive.

The comparison of index trackers and managed funds only includes funds invested in equities, not the kind of "Balanced managed" and "With profits" funds that used to be so popular as a supposedly lower risk way of investing in equities.As you say these usually contain property, cash and bonds as well as equities.This mix reduces risk and will usually lower performance.

But it is quite interesting to note that if you compare equity index funds with equity income funds over long periods, then the equity income funds outperform, despite their higher charges.This is because they contain shares which pay higher dividends ( it's not rocket science.....;) ).

I thus disagree with the Fool's view that index funds are the best for the ordinary investor here.For someone who wants long term equity exposure, I would recommend equity income funds instead.

This Fool opinion derives I believe from the US parent, and in the American context, it could be correct.This is because US companies tend to pay significantly lower dividends than UK companies ( the tax systems are different), and US index fund charges are much lower than in the UK ( eg 0.1%-0.2% compared with 0.5%+ in the UK).

Thus the advantage would probably swing over to the trackers in the US context.But not in the UK.

carnet

ReportInvestor wrote:

The Fool site said for most people, not for professional investors.

Not only professional investors.

I would say that most serious (as everyone looking after their own money should be ) personal fund investors, as they become more experienced, will tend towards managed funds and away from trackers.

Having said that, I too would not invest in 95% of the managed funds out there - its the remaining 5% one has to identify and concentrate on .

However, I would not invest in 100% of the trackers.

Speaking as a fund investor of some 20 years standing, IMHO much of the Motley Fool's advice and conclusions are really rather simplistic and their site reads, to me, more like a marketing tool than as source of sound financial advice.