Index Trackers Are So Widely Recommended..... But...?

Linton

Thrugelmir wrote: »

UK companies have been acquired by overseas investors at a considerable rate in the past decade. Seems as if some people value companies by their financial results and not by market indices.

ISTM the FTSE100 has been a lousy index to follow at least partially because the decent companies tend to be bought out by overseas investors long before they can make a real impact on the FTSE100. What is left are the few companies no-one can afford to buy and the majority which no-one wants to buy.

MaxiRobriguez

With global growth slowing, and three years of non-investment into UK assets due to Brexit, I suspect that the relative valuations and dividend yields are going to make FTSE assets quite attractive over the next year or two.

I've started to take an overweight UK position over the last six months or so.

Thrugelmir

Linton wrote: »

ISTM the FTSE100 has been a lousy index to follow at least partially because the decent companies tend to be bought out by overseas investors long before they can make a real impact on the FTSE100. What is left are the few companies no-one can afford to buy and the majority which no-one wants to buy.

Selling the family silver springs to mind. Been happening for an extended period of time.

capital0ne

steampowered wrote: »

In general I find the evidence in favour of tracker funds compelling.

Don't go looking for the needle, just buy the haystack!

Thrugelmir

capital0ne wrote: »

Don't go looking for the needle, just buy the haystack!

Which haystack though?

quirkydeptless

Thrugelmir wrote: »

Which haystack though?

Not all of the haystacks have needles in them

arwain

jamesrichards808 wrote: »

However your (and other's) points about dividends do make a lot of sense, and for the FTSE100 this certainly seems to be where the return comes from!

It's not just the FTSE 100. Jeremy Siegel in his book The Future for Investors (Crown Business, 2005). Calculated that over a 130 year period, 97% of the total return from US stocks came from reinvested dividends. $1000 invested in 1871 would have been worth $243,386 by 2003 if no dividends had been reinvested, but a amazing £7,947,930 if they had been.

See page 93 of John Barons book 'Investment Trusts'

Afraid_of_Kittens

I have a Legal and General stocks and shares ISA with 7 funds. I drip feed about £50 per month into each fund.

Last week the FTSE plummeted. My L&G UK Index Trust R Units dropped in value by 4.5%.

On Thursday I placed an order for £1000 of UK Index Trust R units and purchased them on Friday when the vaue had fallen even further to 2.931 per unit. Today they are valued at £2.960 per unit a .99% increase. I have made a small £9.99 profit - I hope the FTSE will recover further this week.

I'm in the habit of buying extra units in my funds when they have had a particular spectacular fall. I don't always time it right but my little portfolio is ticking along nicely. I have increased my holding in Gilts and Bonds to about 40% of my portfolio and this cushions the drops a bit.

I gave up trading shares as the platform and trading fees ate up too much of my profits. I just stick to index trackers now.

Davy_Jones_II

To look at the effect of dividends you need to look at the Total Return index, not the Price Return index. It’s generally easy enough to find.

capital0ne

Thrugelmir wrote: »

Which haystack though?

Doesn't matter - all haystacks have a needle of sorts. That's the point - hehehehe! :rotfl: