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Variance in index fund prices
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Add a third index to the two (one I hold, HMWO) and its the same picture.So, essentially there's either a major conspiracy going on or the major constituents of these funds outweigh the minor stuff to such an extent that they will inevitably follow a similar path. Bit like the FTSE100 when the activity of say the bottom 20 companies is really irrelevant to what the index does. So you could have Fund A which contains the top 80 of the 100 and 20 something else, say from EM which are minnows compared to the top 20, and another which has just the 100. And the difference would be tiny. I haven't looked but maybe say the top 500 companies in these funds are almost identical in composition and % to each other and encompass perhaps 95% of the overall contribution, so of course they will track each other.I had a similar experience with a couple of index funds I bought a few years back when i was getting analysis paralysis between two and decided just to go 50/50. After 5 years there was less than 0.5% between them.Conclusion, dont spend too much time agonising between different world index funds.
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bowlhead99 said:As a side note if you want to direct link someone else's recent post you can click to their profile, look at their Replies and grab the hyperlink to their reply from there, like this, though it would be handy if you could just say Post #5 above without needing to count them for yourself firstNice workaround, I've been missing the ability to link to individual posts. Shame it gets tricky when those posts are older.0
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AnotherJoe said:Add a third index to the two (one I hold, HMWO) and its the same picture.So, essentially there's either a major conspiracy going on or the major constituents of these funds outweigh the minor stuff to such an extent that they will inevitably follow a similar path. Bit like the FTSE100 when the activity of say the bottom 20 companies is really irrelevant to what the index does. So you could have Fund A which contains the top 80 of the 100 and 20 something else, say from EM which are minnows compared to the top 20, and another which has just the 100. And the difference would be tiny. I haven't looked but maybe say the top 500 companies in these funds are almost identical in composition and % to each other and encompass perhaps 95% of the overall contribution, so of course they will track each other.I had a similar experience with a couple of index funds I bought a few years back when i was getting analysis paralysis between two and decided just to go 50/50. After 5 years there was less than 0.5% between them.Conclusion, dont spend too much time agonising between different world index funds.
Edit: I'm going to withdraw my generous offer of odds on tomorrow's fund prices, given that Friday's divergence looks largely to be a convergence correcting Thursday's divergence.0 -
aroominyork said:Thrugelmir said:If the individual holdings differ then so will the performance.
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