Tracker fund investment for retirement

kidmugsy

If it turns out that in a globalised age international stock markets are pretty highly correlated then you'll get much less diversification than you hoped for by scattering money around.

The best case for scattering the money may not be that you wish to harvest the general benefits of diversification in normal times but that you want insurance against your own country suffering a financial calamity not shared elsewhere. I find that argument compelling though you still have to choose exactly which insurance to buy. Gold stored in Singapore, perhaps, or Swiss equities, or ..... Who knows? Therefore use more than one.

AnotherJoe

Tom99 wrote: »

Yes spot on and that's why I split UK/ExUk so that I can decide the ratio.

Except you arent deciding the ratio because the UK funds you hold are predominately invested in the global economy which means a high % in US, and the global shares you own also mean a high % in US. Unless you take extreme measures with very specific funds, its very difficult to do anything else. And by doing that you would miss huge swathes of the global economy and most likely do worse. And it would be expensive .. so it would be worse.

Tom99

AnotherJoe wrote: »

Except you aren't deciding the ratio because the UK funds you hold are predominately invested in the global economy which means a high % in US, and the global shares you own also mean a high % in US. Unless you take extreme measures with very specific funds, its very difficult to do anything else. And by doing that you would miss huge swathes of the global economy and most likely do worse. And it would be expensive .. so it would be worse.

I can decide the ratio by Market Cap rather than take that offered by a World Index Tracker.

coastline

Looking at todays valuations I don't see why you can't have and extra 10% or more in a FTSE based tracker. The index has changed considerably since the heights of the dotcom boom. Big companies traded on P/E values way over 20 and the sideways move of 10 years or more has given a much better picture. Entry now is around £5bn Mkt Cap against £1bn years ago . Although it is still dominated by huge companies the forward P/E values are now closer to 10 than 20 which is a good deal better than the US market. I'm not saying it won't follow in the footsteps of the USA but its certainly got room to progress.

Looking at the three in the link below The FTSE hasn't always lagged the rest. If you set the timeframe way back to the 80's you get a different result. Even the 25 year period suggested in the thread shows favourable conditions. Where you get underperforming is from 2013 onwards.

https://www2.trustnet.com/Tools/Charting.aspx?typeCode=NM990100,NUKX,NASX

Tom99

masonic wrote: »

Which is more equal, buying 6 125g bars of "value" chocolate (@ 20p) to each 125g bar of "premium" chocolate (@ £1.20) or buying 1 bar of each?

Value chocolate tastes like mud so I only buy premium bars.

Tom99

[FONT=Verdana, sans-serif]

Economic wrote: »

Amazing, you really do not have a clue about diversification!

[/FONT]
[FONT=Verdana, sans-serif]Is that the best argument you can come up with?[/FONT]
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Economic wrote: »

How are those portfolios that are overweight in the UK doing this morning?
https://www.bloomberg.com/quote/GBPUSD:CUR

[/FONT]
[FONT=Verdana, sans-serif]Overweight relative to what? You may think that weighting by country relative to market cap is spot on but I don't.[/FONT]
[FONT=Verdana, sans-serif]Does that make one of us right and the other wrong, of course not.[/FONT]
[FONT=Verdana, sans-serif]Does that make one of us clueless and the other not, of course not. [/FONT]

System

Tom99 wrote: »

[FONT=Verdana, sans-serif] [/FONT]
[FONT=Verdana, sans-serif]Is that the best argument you can come up with?[/FONT]
[FONT=Verdana, sans-serif] [/FONT]
[FONT=Verdana, sans-serif]Overweight relative to what? You may think that weighting by country relative to market cap is spot on but I don't.[/FONT]
[FONT=Verdana, sans-serif]Does that make one of us right and the other wrong, of course not.[/FONT]
[FONT=Verdana, sans-serif]Does that make one of us clueless and the other not, of course not. [/FONT]

It is patently obvious from your comments that you are clueless about diversification. Given that making investments proportional to market capitalisation is conventional wisdom, it is incumbent on you to explain your crackpot ideas about your portfolio choice. Being over-weight in the domestic market is a common error: https://en.wikipedia.org/wiki/Equity_home_bias_puzzle

Tom99

Economic wrote: »

It is patently obvious from your comments that you are clueless about diversification. Given that making investments proportional to market capitalisation is conventional wisdom, it is incumbent on you to explain your crackpot ideas about your portfolio choice. Being over-weight in the domestic market is a common error: https://en.wikipedia.org/wiki/Equity_home_bias_puzzle

[FONT=Verdana, sans-serif]You are resorting to insults again to prop up your view about what is the right balance.[/FONT]
[FONT=Verdana, sans-serif]I am now am now a clueless crackpot.[/FONT]
[FONT=Verdana, sans-serif]What's the next insult you are going to come up with?[/FONT]

System

Tom99 wrote: »

[FONT=Verdana, sans-serif]You are resorting to insults again to prop up your view about what is the right balance.[/FONT]
[FONT=Verdana, sans-serif]I am now am now a clueless crackpot.[/FONT]
[FONT=Verdana, sans-serif]What's the next insult you are going to come up with?[/FONT]

Some facts about performance today:
FTSE250: -1.31%
iShares Core MSCI World UCITS ETF (SWDA.L): +1.49%
Net gain from diversified portfolio: 2.8%
I think that you have chosen the wrong day to put forward the case for being overweight in the UK.

Ray_Singh-Blue

It's bad if the stock market goes way up and you're not in it – of if it goes way down your completely in it. So split things between bonds and equities.

Passive investing is easy and effective. Don't look for a needle in a haystack- buy the haystack. The global haystack. Harvesting the consensus of investors all around the world.

Vanguard, Fidelity, HSBC and others provide suitable funds.

A 2 fund portfolio like this costs very little. And less than an hour of your time. Simple's beautiful and need not be inferior.