FTSE 100 - Vanguard

AlanP_2

How does your proposed FTSE 100 investment fit with your overall Asset Allocation / other savings & investments approach, or to ask a slightly different question:

If this will be your only investment why are you convinced that the FTSE 100 will generate the highest return in the future compared to all the other options available across the world?

The main bemefit of the FTSE 100 for a good number of years is that the constituent companies tended to pay out relatively high dividends, so good for those seeking an income, and for the others the dividends can be reinvested so growing the capital value.

Dividends are likely to be in short supply for the next couple of years at least and the bulk of the companies in the FTSE 100 are not going to be high-growth businesses as the largest ones are in mature industries like banks & oil.

Alexland

bargainhunter888 said:

surely the index is just as good as any other for a semi/long term investment

The long term historical total return (capital growth and dividends) of the FSTE100 compared to a global index would suggest otherwise. Sure people have made money but not as much as they could have made if they were better diversified.

dunstonh

The FTSE100 has been a dire index to track for over 25 years.  It is one of the worst performing major indices in the world.  It has very poor diversification and is not really reflective of the UK economy (UK mid cap and UK small cap are much more representative and historically much better performing.  Although more volatile with it).

Part of the reason for poor growth is that it has a higher number of good dividend payers.  However, with dividends being switched off all over the place, that attraction is gone.

Investing 100% into a single sector is bad quality investing.  Investing 100% into a focused single sector (in this case UK Large cap) is very bad quality investing.  

Poon

At risk of being shot down in flames again... 🤣
I already invest in the VGLS80 fund but I feel like I should be investing elsewhere also to try and make the most of a potential recovery. Any other particular VG funds I should be looking at?

Thrugelmir

AlanP_2 said:

Dividends are likely to be in short supply for the next couple of years at least and the bulk of the companies in the FTSE 100 are not going to be high-growth businesses as the largest ones are in mature industries like banks & oil.

Which index do you favour for exposure to high growth companies? 

ColdIron

Poon said:

At risk of being shot down in flames again... 🤣
I already invest in the VGLS80 fund but I feel like I should be investing elsewhere also to try and make the most of a potential recovery. Any other particular VG funds I should be looking at?

VLS is already well diversified, there aren't many sectors (industry or geography) that it doesn't cover. It's mostly large cap so you could look at smaller companies but there is no guarantee they will out perform. Same with different asset classes such as property, infrastructure, metals etc. Broadly other than that you are looking at overweighting what it already invests in, but what those areas would be is a matter of opinion. No one will know until after the (rolling) event. FTSE100 would be in the bottom half of my list of candidates

AlanP_2

Thrugelmir said:

AlanP_2 said:

Dividends are likely to be in short supply for the next couple of years at least and the bulk of the companies in the FTSE 100 are not going to be high-growth businesses as the largest ones are in mature industries like banks & oil.

Which index do you favour for exposure to high growth companies? 

US, Japan and China is where I see the majority of high growth companies being based over next 20 years.

Thrugelmir

AlanP_2 said:

Thrugelmir said:

AlanP_2 said:

Dividends are likely to be in short supply for the next couple of years at least and the bulk of the companies in the FTSE 100 are not going to be high-growth businesses as the largest ones are in mature industries like banks & oil.

Which index do you favour for exposure to high growth companies? 

US, Japan and China is where I see the majority of high growth companies being based over next 20 years.

Those are countries not indexes. After the US , the UK is second in creating Unicorn companies. 

AlanP_2

Thrugelmir said:

AlanP_2 said:

Thrugelmir said:

AlanP_2 said:

Dividends are likely to be in short supply for the next couple of years at least and the bulk of the companies in the FTSE 100 are not going to be high-growth businesses as the largest ones are in mature industries like banks & oil.

Which index do you favour for exposure to high growth companies? 

US, Japan and China is where I see the majority of high growth companies being based over next 20 years.

Those are countries not indexes. After the US , the UK is second in creating Unicorn companies. 

I'm sure you can find contrary statistics but from a quick google shows that as at Aug 2019:

"The United States leads in share of unicorns (49%), holding steady since our last analysis in June 2019. China, in second place, saw its share fall slightly from 25% to 24% in the same time frame.

Third and fourth place go to the United Kingdom and India at roughly 5% each, with 20 and 19 unicorns, respectively."

Source - https://www.cbinsights.com/research/unicorn-startup-market-map/

Point taken re countries rather than indexes, but in the context of discussing a UK foucused investment in the FTSE 100 I don't think it's unreasonable to make comparisons with otherv countries.

Hopefully we both agree that too much focus on the FTSE 100 is not a well rounded, long-term investment philosophy.

Thrugelmir

Totally agree with your last sentiment.   
Doesn't mean that some of the companies themselves aren't worth investing in at the right price. Not as if all S&P 500 constituents are stellar performers. Far from it.