Tracker fund actual performance history

westernpromise

One often reads - here and elsewhere - that tracker funds are better value than managed funds because few of the latter beat the market over time. Motley Fool reckons 90% of managed funds fail to do so, because over 20 years 82% underperform, and the count only includes those that still exist. If you included those that underperformed so badly they closed within 20 years, you'd be over 90%.

So I Googled "tracker fund performance history" and got some peculiar results:
Tracker funds underperform over ten years
https://www.moneywise.co.uk/news/2017-02-16/tracker-funds-underperform-over-ten-years

The best and worst funds for following markets
https://www.thisismoney.co.uk/money/diyinvesting/article-3078576/The-best-worst-tracker-funds-following-markets.html

and so I am scratching my head. Apart from charges, how much can any tracker differ from any other? And how to reconcile this with the first link?

My mother has a sum of money invested cautiously which has gone sideways or downwards over the last 2 years. So I was wondering if there is a way to find what a tracker would have returned, which seems to be hard to find out...

AnotherJoe

GIGO.
The markets they use for tracking would in many cases be poor ones to track. So its unsurprising they have mediocre results. If you decide you want to track the FTSE100, well theres your problem, but what would you compare it with to say "it wasnt as good"? If I wanted to track the FTSE100, I'd buy a tracker fund. Any other fund that invested in the UK would be a different sort of fund. No doubt there area dozen different types of UK fund - cautious, income, recovery, growth blah blah blah. If you wanted one that was, say "cautious" then that would include bonds and similar and wouldnt be a tracker,and it woudl make no sense to say "this Acme FTSE100 tracker did worse than XYZ's managed recovery fund" because they are different things.

And if i wanted to track the global markets, i certainly wouldnt get seperate S&P500, Dow Jones, FTSE, Japanese, Asian trackers. I'd just get one global tracker.
So this seems to be a case of criticising something very few if any would do.
Another issue is that, of course trackers have mediocre performance, you would not expect them do do better than average because thats in effect what they are tracking ! You are happy to get average or a bit less (since it can onlu retur the index minus costs) to avoid the problem of thinking a guru like woodford will do magic and then be horribly dissapointed when it goes wrong.

As for your mother's investments, without knowing what she invested in theres no way to know if thats par for the course or not and what, if any, equivalent tracker she could have bought

Linton

http://www.trustnet.com has the performance of all currently available funds both as 1,3,5,10 years or the last 5 individual years. To go further back you can use their charting tool which allows you to compare multiple funds as a graph over any given time period back to around 1990.

Lokolo

If you wanted to compare how the fund would have done against a tracker, it's unlikely (not impossible) to be a valid comparison. Funds tend to have objectives, that may not be to follow a specific index. It's more than possible to find one close to it though.

However I would tend to compare to Blackrock iShares (although limited selection), HSBC, or Vanguard. These providers have a large number of low cost index trackers.

westernpromise

I'd have to log into Transact to remind myself what her money is actually in. All I am trying to find out is how her stash has done versus how it would have done in a FTSE100 tracker.

In googling for that, I came across the above links suggesting some trackers are worse than others at tracking the same thing. This seems a bit weird unless they're not all near identical trackers at all, at which point one wonders when is a FTSE100 tracker not a FTSE100 tracker...

Edit: thanks to Linton for that link - using the filters and then sorting by benchmark I've found a number of FTSE 100 trackers that are all down by about 3% on the year and up about 27% over 5 years.

gadgetmind

Do you feel lucky? Can you pick that star manager who will perform in future? Maybe just take a look at past performance and that will ... google Woodford on a news channel to see why it really, really won't help.

Go multi-asset, go global, go passive.

Thrugelmir

westernpromise wrote: »

In googling for that, I came across the above links suggesting some trackers are worse than others at tracking the same thing. This seems a bit weird unless they're not all near identical trackers at all, at which point one wonders when is a FTSE100 tracker not a FTSE100 tracker...

Not all trackers are 100% replications of the indices they follow.

AnotherJoe

westernpromise wrote: »

I'd have to log into Transact to remind myself what her money is actually in. All I am trying to find out is how her stash has done versus how it would have done in a FTSE100 tracker.
That's not a very high benchmark

In googling for that, I came across the above links suggesting some trackers are worse than others at tracking the same thing. This seems a bit weird unless they're not all near identical trackers at all, at which point one wonders when is a FTSE100 tracker not a FTSE100 tracker..
It costs money to track. Various shortcuts can be taken to minimise costs. Some value more exact replication over less exact but cheaper. You pays your money ......

Edit: thanks to Linton for that link - using the filters and then sorting by benchmark I've found a number of FTSE 100 trackers that are all down by about 3% on the year and up about 27% over 5 years.

And ............. ? What's the index done? The other thing for comparisons is to check if dividends are included or not.

Prism

gadgetmind wrote: »

Do you feel lucky? Can you pick that star manager who will perform in future? .

You don't especailly need to - just try to avoid the poor funds (managers). If you don't feel confident in doing that then passive is the way to go.

nrsql

Different tracker funds use different methods to track indexes so you will see differences but they should be slight.
Some buy the index (if relatively small) and some will buy selections that they think will represent it.
Some will make more use of derivatives and different weightings.
They will also want to reduce the number of deals.
Tracking the ftse 100 for instance - when companies move into the index they would get an immediate boost and be expensive for trackers to buy so they will have strategies to mitigate that, similarly for companies that get dropped.

gadgetmind

Prism wrote: »

You don't especailly need to - just try to avoid the poor funds (managers). If you don't feel confident in doing that then passive is the way to go.

A quick look at Best Invest's "Spot The Dog" will show plenty of previous star funds/managers underperforming for longer than most people would be happy with.

Who'd have labelled Woodford as "poor" previously and avoided investing in his equity income fund, which just closed itself to withdrawals?