S&P index tracker vs FTSE dividend fund.

CreditCardChris

The S&P 500 has had tremendous growth over the last 10 years but doesn't pay dividends, whereas the FTSE 100 has had slow growth over the last 10 years but most companies pay dividends.

So if you put £10,000 into an S&P index tracker and £10,000 into a FTSE 100 dividend fund, excluding the GBP/USD slump, which £10,000 investment would have returned more?

Thanks.

Audaxer

I don't have the figures to hand, but I'm fairly sure the S&P index tracker would have had a higher total return over the last 10 years. However that doesn't mean it will have a higher return over the next 10 years.

CreditCardChris

Audaxer wrote: »

I don't have the figures to hand, but I'm fairly sure the S&P index tracker would have had a higher total return over the last 10 years. However that doesn't mean it will have a higher return over the next 10 years.

Do you really believe the UK can become a world leading economy again though? Feels like it's been two decades since the UK produced a global multi billion pound company.

eskbanker

CreditCardChris wrote: »

So if you put £10,000 into an S&P index tracker and £10,000 into a FTSE 100 dividend fund, excluding the GBP/USD slump, which £10,000 investment would have returned more?

No contest: ignoring currency effects, S&P 500 is 248% over 10 years while the FTSE 100 is 105% (40% if dividends not reinvested).

CreditCardChris

eskbanker wrote: »

No contest: ignoring currency effects, S&P 500 is 248% over 10 years while the FTSE 100 is 105% (40% if dividends not reinvested).

Wow. I guess the terrible performance is a reflection of the lack of innovation coming out of this country. From an investor point of view why would you invest in a country which is just coasting along when you can invest in a country bursting with innovation? It's the same reason people are not jumping to invest in the Norwegian stock market or the Chilean stock market etc. They're not bad countries, but they're not countries which are at the forefront of changing the world.

Imagine having your money sitting in the stock market for 10 years and only making 1% a year

CreditCardChris

I just checked and even the Norwegian and Chilean markets are doing far better than us... I guess the UK is now just a completely irrelevant country with no outside investment interest.

Linton

Over the past 10 years

S&P500 tracker: + 326%
FTSE100 with dividends reinvested:+105%
Average UK Equity Income fund:+126%


The S&P500 data will include the effect of currency variation. Removing gain from fall in £:
S&P500 (at 2009 exchange rate):+232%

eskbanker

CreditCardChris wrote: »

Wow. I guess the terrible performance is a reflection of the lack of innovation coming out of this country. From an investor point of view why would you invest in a country which is just coasting along when you can invest in a country bursting with innovation? It's the same reason people are not jumping to invest in the Norwegian stock market or the Chilean stock market etc. They're not bad countries, but they're not countries which are at the forefront of changing the world.

I don't think it's appropriate to use the FTSE 100 index as a measure of the UK's propensity for innovation - it's inherently the top slice of the country's companies and is renowned for being dominated by a few old-school industries such as banking and fossil fuels, so is poorly diversified. By contrast, the FTSE 250, which obviously features more mid-sized companies, has grown by over 200%....

CreditCardChris wrote: »

Imagine having your money sitting in the stock market for 10 years and only making 1% a year

It's not making 1% a year, but more like 10% - the above figures are returns over that period, so a FTSE 100 index tracker will have doubled, not increased by 5% if that's what you were thinking.

Thrugelmir

eskbanker wrote: »

No contest: ignoring currency effects, S&P 500 is 248% over 10 years while the FTSE 100 is 105% (40% if dividends not reinvested).

And without the FANGS the S&P 500 wouldn't have performed as well.

Go back to the 80's and the S&P underperformed inflation (US measure) for a decade.

Just when you think you've found the secret spring of eternal growth. The plug will get pulled.

CreditCardChris

eskbanker wrote: »

I don't think it's appropriate to use the FTSE 100 index as a measure of the UK's propensity for innovation - it's inherently the top slice of the country's companies and is renowned for being dominated by a few old-school industries such as banking and fossil fuels, so is poorly diversified. By contrast, the FTSE 250, which obviously features more mid-sized companies, has grown by over 200%....

It's not making 1% a year, but more like 10% - the above figures are returns over that period, so a FTSE 100 index tracker will have doubled, not increased by 5% if that's what you were thinking.

If it went up 105% in the last 10 years, that's ~1% per year on average?

So basically the FTSE 100 is full of dinosaur companies which are happy to coast along until they eventually die, as that's what happens if you stop innovating and progressing (see Blockbusters, Kodak, Polaroid) etc.

Maybe in 20 years most of the FTSE 250 and 350 companies will replace those in the FTSE 100.

Thrugelmir

CreditCardChris wrote: »

I just checked and even the Norwegian and Chilean markets are doing far better than us... I guess the UK is now just a completely irrelevant country with no outside investment interest.

If investors shun a market as they consider there's better value elsewhere. Then it becomes a self fulfilling prophecy.

The level of foreign interest in acquiring UK companies suggests that there's good value to be had. Ultimately it's company fundamentals that matter. Not the notional market value.