Tracker right way to go?

MrMalkin

King_Weasel wrote: »

2 I believe there isn't a huge difference between the FTSE100 and All-Share indices as large caps dominate both.

Last I checked, the FTSE All-Share was made up of about 80% FTSE100, 18% FTSE250, and 2% FTSE Small Cap.

King_Weasel wrote: »

4 My question: if we're talking trackers, should we consider ETFs? What are the pros and cons over unit trusts?

ETFs are generally slightly cheaper in terms of charges, and you can trade them whenever the markets are open, whereas funds tned to be priced at certain times of day (midday?) and traded based on that valuation. The downside of them is that because they're traded like shares, there's usually a a charge per trade which makes them uneconomical for monthly savings of small amounts - a £10 trading fee on a £150/m investment is huge, and more than wipes out the cheaper fund charges.

If you have a large lump sum, ETFs may work out cheaper, but for small amounts and regular savings, probably not.

Jegersmart

R_P_W wrote: »

Thanks for all the comments, looks like i kicked off a lively debate without intending to.

I do understand that investing money into emerging markets (or any markets) comes with high levels of risk, but £150 a month isnt't exactly something I'm going to be losing sleep over. On the other hand I dont want to be reckless either so maybe I need to look at spreading it about a bit more, maybe over 3 instead of 2. The £150 is just what I wanted to start with really and thought a tracker might be a good place to start rather than in investing in specific shares myself.

In my view it is far more risky to invest in a developed and stagnant economy....in a long term sense. I don't use trackers though, in my view that is high risk as well but understand that a lot of people don't want to pay for the services of a fund manager. In your scenario I would be more tempted to invest in a managed fund with a global remit.

All imho

J

saveonarola

If you want to invest using index funds, this site has loads of useful information:

http://monevator.com/category/investing/passive-investing-investing/

jamesd

First, note that the UK is about 8% of the global equity market. A tracker of either the FTSE World or MSCI World index would be a better core. An emerging markets tracker in addition is consistent with your investment timescale provided you can handle the ups and downs. Remember to rebalance out of the EM fund during up times and into it during the down ones.

mania112

Lokolo wrote: »

So half your money in a developed country with no currency risk, and the other half in the complete opposite risk profile... with nothing inbetween?

It's a common strategy - called positive correlation.

If you have 50% of you investment with a Umbrella company and the other 50% in a sunglasses company, you're always winning.... whatever the weather (literally!)

Leahcim1985

I started investing with a ftse 100. This has since grown into trackers for UK, US, Europe (ex UK), Asia (ex JP), Japan, EM and inflation linked bonds. What I'm saying is, chuck some in a tracker (preferably HSBC with it's sweet 0.27% TER) and once you feel comfortable, think about diversifying.

With no disrespect to any other posters, sometimes when you get people telling you how much you have to diversify it can get a bit overwhelming. At £150 a month, you're not risking life changing amounts, so give it a try and then in a year you'll be much more aware of the system through experience.