Advice on a 100/250 tracker?

sortofwinning

Hello, I am looking for any advice on investing in an index tracker.


I have a HL pension but apart from that, I'm new to investing. I am looking for a low OCF, and am particularly interested in a 250 tracker rather than a 100 tracker. I don't have a lot to invest at the minute, maybe £2.5 - £3k, so I would be looking for a fund manager who doesn't have a high minimum investment.


I have not used any of my ISA allowance this year, so is it possible to use my stocks and shares allowance to purchase a tracker?


Thanks for any help!

Archi_Bald

Nobody on here can give advice as that is a regulated activity which is not available on Internet forums. If you want to get advice, you have to go to e.g. an IFA and pay for it.

If you want to DIY, there's plenty of great reading: https://forums.moneysavingexpert.com/discussion/5043692

Vortigern

Take a look at the monevator website for comparison of passive index trackers.

Also compare brokers/platforms there. With your level of investment you'll want one with a low percentage platform charge, no annual fee and no transaction fees.

dunstonh

Investing 100% into a single sector is bad quality investing. So, why do you want to do that?

Why do you not wish to use a multi-asset investment which would appear to be far more suitable?

BLB53

Hello, I am looking for any advice on investing in an index tracker.

Probably better to look at a more diversified global tracker - the UK is less than 10% of the market.

Also think about asset allocation - what % equities, bonds, property etc.

I like the Vanguard Lifestyle funds - low cost, auto-rebalance, diversified and easy to understand and implement. Here's a link to their site for further investigation - https://www.vanguard.co.uk/documents/portal/literature/lifestrategy-brochure-retail.pdf

Also articles on monevator - http://monevator.com/vanguard-lifestrategy/
and diy investor uk - http://www.diyinvestoruk.blogspot.co.uk/2015/04/vanguard-lifestrategy-one-stop-solution.html

sortofwinning

Hi, thanks very much for your replies. I'm now thinking about branching out a bit. I just thought the index tracker was a good idea because I saw a graph of the returns from one in a Which? magazine article.


I'll have a look on monevator, never even heard of that one. And Vanguard too.


Thanks again!

dunstonh

I just thought the index tracker was a good idea because I saw a graph of the returns from one in a Which? magazine article.

Sorry, that made me laugh. That is not any way to pick an investment. Do a bit more research and look at multi-asset funds (funds which contain all the different areas within them and not just single sector funds - which a FTSE tracker would be)

BLB53

Do a bit more research and look at multi-asset funds

I think there are a couple of negatives with these - for a start they tend to be much more expensive on charges compared to the low cost index funds.

Secondly, they are all managed which means the manager has a lot of freedom to move around to various weightings of equities, property and bonds - returns will therefore be dependent on getting the calls right on a consistent basis and managers do not have a great track record of doing this.

Linked to this - the investor never really knows the precise level of risk they are exposed to at any given time.

At least with the Vanguard LS funds the investor can select th appropriate level of 'risk' and know they will retain that as the fund is automatically rebalanced.

Multi-asset sound good but costs and risk are very important for many investors.

dunstonh

I think there are a couple of negatives with these - for a start they tend to be much more expensive on charges compared to the low cost index funds.

Yes, they cost more. Vanguard and L&G Multi asset funds are about 0.1% more a year. Managed ones about 0.5% more a year.

However, the cost of having bad asset allocation is likely to be more.

Secondly, they are all managed which means the manager has a lot of freedom to move around to various weightings of equities, property and bonds - returns will therefore be dependent on getting the calls right on a consistent basis and managers do not have a great track record of doing this.

The OP is looking to make management decisions by only using a handful of sectors and making up their own weightings. So, in that respect, who is more likely to get it right.

There are also multi-asset solutions that only use index tracking funds if you wish to have that particular method.

Linked to this - the investor never really knows the precise level of risk they are exposed to at any given time.

Most multi-asset funds have a defined range that they will fall under. Just as the VLS does.

jamesd

sortofwinning wrote: »

I just thought the index tracker was a good idea because I saw a graph of the returns from one in a Which? magazine article.

How many years back did that go? The reason I'm asking is that we hav been in a bull (high growth) market since early 2009 with only one small correction (drop) during that time. It's normal for information provided in grapsh for retail investors to:

1. only go back five years, too short a time to include the 2008 drops.
2. not correct for inflation in longer term graphs, so recent gains look much more substantial than past ups and downs.

This doesn't mean it's a bad idea. What it does mean is that you might not be aware that the main UK stock market has historically acted like a rollercoaste in reverse, with one or two drops of 40% a decade and two or three drops of 20%, but still providing an overall gain of around 5% plus inflation.

If you're looking at just the bull market period you won't see the drops but will see one of the longest sustained bull markets in history that will inflate the real growth level.

So it's a good enough idea and not bad at all, just be sure you fill in the parts of the picture that you may not have seen in that piece and don't get shocked when a routine 40% drop happens.