Is the stock market over heating?

gadgetmind

Perelandra wrote: »

If I invested £1000 in the FTSE 100 in 1984, what would it be worth- after taking into account real changes in the composition of the FTSE 100 over those 29 years

It was close to impossible for an investor to do that.

Trackers were few and far between and had higher fees than they do now. You could have run your own, and had fun doing it, but dealing costs would have been high unless you had a fair few bob to play with.

talexuser

Perelandra wrote: »

"If I invested £1000 in the FTSE 100 in 1984, what would it be worth- after taking into account real changes in the composition of the FTSE 100 over those 29 years, if you regularly (although not frequently) adjust your holdings to maintain your representativeness of the FTSE 100".

It would be up, down, close or not so close to a tracker, since you have tried to be tracker but without the exact same changes timing of a tracker. Most probably down if you lagged selling the fallers and buying the climbers. And you would have higher dealing fees.

cepheus

cepheus wrote: »

There is an total index return for the FTSE100 (UKX.TR) which provides the returns plus dividends. I have adjusted for inflation in the blue line below.

With a tracker you would also have to subtract the costs, about 0.3% minimum per year

Performance and cost of FTSE 100 trackers

Name 10-yr returns (%) TER (%) FTSE 100 97.39 N/A Santander - Stockmarket 100 Tracker Growth 94.26 0.35 Liontrust - FTSE 100 Tracker 92.83 0.46 HSBC - FTSE 100 Index 83.84 0.27 Cler Med - FTSE 100 Tracker 80.75 1 Royal Bank of Scot - FTSE 100 Tracker 80.35 1 Marks & Spencer - UK 100 Companies 80 1.03 Halifax - UK FTSE 100 Index Tracking 56.25 1.52

gadgetmind

cepheus wrote: »

With a tracker you would also have to subtract the costs, about 0.3% minimum per year

True, but also bear in mind that those returns are for a single lump sum at the start of the period. In reality, people nearly always drip-feed, so you'll be looking at a very different return curve, one that actually benefits from those troughs along the way.

TheFactory

Is there any difference between the different FTSE trackers then? If they all track the index the same why is there a call for so many?

Please be gentle, total noob here just compiling research and smartening up.

A_Flock_Of_Sheep

I am yearning for a 30% drop in stocks while I am reading Tim Hales book.

That is when it arrives. I chose Amazon saver free delivery and it says 5 to 7 days. I used to choose this and things came faster than that. Now it seems they hold back your order for a few days before delivering it by 2nd class post to make sure it really is 5 to 7 days.

gadgetmind

TheFactory wrote: »

Is there any difference between the different FTSE trackers then? If they all track the index the same why is there a call for so many?

For the same reason that there are different kinds of shampoo.

The trackers differ mainly by fees (upfront and ongoing), tracking error (mostly caused by fees), and availability.

I mainly use Vanguard trackers. These have small up-front fees that mainly cover stamp duty but these fees go into the fund an so benefit long-term holders. They then have very low ongoing fees and track their index very closely. In some cases they beat their index as they do cautious and modest stock lending.

Sadly, not all platforms offer Vanguard trackers and many that do charge a platform fee if you hold them as they don't get a "kick back" as currently happens with many other funds.

IronWolf

TheFactory wrote: »

Is there any difference between the different FTSE trackers then? If they all track the index the same why is there a call for so many?

Please be gentle, total noob here just compiling research and smartening up.

Trackers make a company some money, so no surprise different companies all offer one. There should be very little difference between them although due to the complexity of people constantly buying and selling the fund, some will track the index more closely. Some may use derivatives in addition to actual share holdings as well.

TheFactory

Thanks for the replies guys

gadgetmind wrote: »

Sadly, not all platforms offer Vanguard trackers and many that do charge a platform fee if you hold them as they don't get a "kick back" as currently happens with many other funds.

I have opened my S&S ISA with HL, and it appears that they do offer the Vanguard trackers...

I am basically have just £350 in it at the moment, I am building this up to a level where it would be acceptable to start to invest, the £2 a month platform charge seems excessive for me if I was to start investing once I have £500 - im sure it doesn't matter as much if you are investing lots.

Im just going to continue to fill this years up while I consider what to do/what my strategy is - I have been reading so much over the last 3 months but it all seems a lot to take in at the moment.

JohnRo

Charles Stanley are the cheapest platform for a single VLS fund with a balance below £9600.

http://monevator.com/compare-uk-cheapest-online-brokers/