FTSE Global All Cap Index Fund

digbydog

I was wandering around the internet this morning and came across the FT page for the 'FTSE Global All Cap Index' which showed a 1 year gain of 1.94% which smells about right.

I then looked at the FT page for the Vanguard accumulation version of that index which I believe is the 'Vanguard FTSE Global All Cap Fund'. that showed a 1 year gain of 11.38%.

I expected the Vanguard Fund to be a tad less than the index due to charges but then again I was comparing the index again an accumulation fund so I would expect the fund to get a boost from reinvesting dividends.

Clearly, I must be comparing apples and pears. What am I doing wrong?

System

For a start the index is measured in US$ and the fund in GBP! Why does a one year gain of 1.94% smell about right?

digbydog

I see that the index is in US$ and the fund in GBP, so to account for the approx. 8% difference one would expect the pound to have appreciated again the dollar by 8% over the last year. Looking at this historic site it shows that the pound has fallen again the dollar over the last year. Maybe my maths is bad but I don't think that is the reason.

As for the '1.94% smell', it was just a gut feeling and maybe wrong.

System

Depreciated not appreciated! When the pound depreciates the value of foreign assets increases in terms of sterling. The pound has depreciated by 6.6% against the US$ over the last year, which explains a large chunk of the 8%. If you add on reinvested dividends then the mystery is solved.

digbydog

Agreed, thank you.

I did not realise how significant the movement of the pound had been on the value of foreign investments.

dividendhero

digbydog wrote: »

I did not realise how significant the movement of the pound had been on the value of foreign investments.

It's devalued the value of everything in the country/increased the value of everything outside the country