The virtues of trackers

carnet

nrsql wrote: »

If a managed fund was always a good idea you might wonder why cautious managed funds exist.

? - A cautious managed fund is still a managed fund.

Surely best would be to have a fund with no restrictions on what a manager could do so the investments would always be the best for the market conditions

These have been around, in one form or another, for a long time (I remember one or two from 20 odd years ago) - and more are being launched these days in various guises.

None have ever been that successful.

butterfly72

I'm reading up on index trackers and would like to invest via next years ISA allowance. (still reading so excuse my limited knowledge here!!) I'd like a mini cash (as saving for house deposit) and mini stocks and shares in which I can invest a small sum monthly. Can an index tracker be put into a mini stocks and shares ISA wrapper?

Whilst the book Im reading and dicussion boards like this talk about the merits of investing in an index tracker.. I'm a bit baffled about how you go about getting one! I've done a search of some companeis but it doesn't seem obvious whats an index tracker. Its all this fund and that fund!! Maybe its the terminology thats baffling me. Can anyone shed any light!! (And yes, I realise that I need to be more clued up before I take the plunge and part with my pennies! I'm working on it!!)

thanks

Paul_Herring

butterfly72 wrote:

Can an index tracker be put into a mini stocks and shares ISA wrapper?

Yes you can. (Or, rather, I've bought one inside an ISA - I didn't transfer one into it.)

StevieJ

butterfly72 wrote: »

I'm reading up on index trackers and would like to invest via next years ISA allowance. (still reading so excuse my limited knowledge here!!) I'd like a mini cash (as saving for house deposit) and mini stocks and shares in which I can invest a small sum monthly. Can an index tracker be put into a mini stocks and shares ISA wrapper?

Whilst the book Im reading and dicussion boards like this talk about the merits of investing in an index tracker.. I'm a bit baffled about how you go about getting one! I've done a search of some companeis but it doesn't seem obvious whats an index tracker. Its all this fund and that fund!! Maybe its the terminology thats baffling me. Can anyone shed any light!! (And yes, I realise that I need to be more clued up before I take the plunge and part with my pennies! I'm working on it!!)

thanks

This is the Fidelity all share tracker, if you are planning on the ISA tracker it is not a bad one to start with, the charges are pretty fair.

http://www.fidelity.co.uk/cgi-bin/direct/iframe/iframeparent.cgi?sid=0387532

dunstonh

If you are going into a FTSE all share tracker then you need to be aware that you consigning yourself to mid table performance and you are investing in a medium/high risk fund. If that is all you want and the risk matches your profile then that is fine. By risk, the FTSE all share is capable of losing around 40% (as seen in last crash).

StevieJ

dunstonh wrote: »

If you are going into a FTSE all share tracker then you need to be aware that you consigning yourself to mid table performance and you are investing in a medium/high risk fund. If that is all you want and the risk matches your profile then that is fine. By risk, the FTSE all share is capable of losing around 40% (as seen in last crash).

Don't scare them off before they even start.
By risk I think you mean that if they are willing to save into the ISA tracker for ten years+ the returns will almost certainly exceed that of leaving the money in a safe bank account.

dunstonh

The intention isnt to scare but to add a bit of realism. If you are prepared and know that a 30-40% loss in a given year could happen then it wont surprise you when it does.

Just look at all the investment novices that say they will never invest in the stockmarket again because they had one or two bad years and then pulled out missing out on the recovery.

If the thought of a 40% drop scares you then you just reduce the risk of the funds chosen.

cheerfulcat

If the thought of a 40% drop scares you then you just reduce the risk of the funds chosen.

Or see it as an investment opportunity...I think that it is crucial for people to understand that stock markets do not go up in a straight line, at least not for any protracted length of time. It's a pity that the only time the markets get into the news is when they move suddenly and sharply in one direction or another ( preferably, from the journalists' point of view, downwards...), as I think that it gives entirely the wrong picture.

It would be as well for the prospective investor to educate him- or herself a little as to historic returns over the long term on different assets, and stop focussing on short term " safety ", which is nothing but an illusion.

dunstonh

Or see it as an investment opportunity...

Thats the difference in risk and experience. You know it, I know it and all the other experienced investors know it. The novice will often panic and pull out with a loss.

StevieJ

dunstonh wrote: »

The intention isnt to scare but to add a bit of realism. If you are prepared and know that a 30-40% loss in a given year could happen then it wont surprise you when it does.

Just look at all the investment novices that say they will never invest in the stockmarket again because they had one or two bad years and then pulled out missing out on the recovery.

If the thought of a 40% drop scares you then you just reduce the risk of the funds chosen.

Did most funds not take a big hit in the last bear market? not just trackers.