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Global equity indexes
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[Deleted User]
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I recently found out that ftse have a the following global equity indexes:
In addition, does anyone have a full list of all the indexes used by tracker funds? I appreciate there are quite a few!
Thanks
- FTSE Global Total Cap Index, a global index covering approximately 16,500 stocks from micro cap to large cap
- FTSE Global All Cap Index, a global index covering approximately 8,000 stocks from small cap to large cap
- FTSE All-World Index, a global index covering approximately 3,500 mid cap and large cap stocks
In addition, does anyone have a full list of all the indexes used by tracker funds? I appreciate there are quite a few!
Thanks
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Deleted_User said:I have found tracker funds covering the second and third indexes but not the first (total cap). Is anyone aware of any that exist? 16500 stocks is extremely diversified.
Nobody is going to build an affordable investment product covering 16500 stocks including difficult to trade microcaps of a few millions or tens of millions value each when they have already covered over $50 trillion of equity market cap with the Global All Cap (https://research.ftserussell.com/Analytics/Factsheets/Home/DownloadSingleIssue?issueName=GEISLMS&IsManual=false)
or a reasonable approximation with the simpler All-World index
(https://research.ftserussell.com/Analytics/Factsheets/Home/DownloadSingleIssue?issueName=AWORLDS&IsManual=false).
The 'total cap' is just theoretical, rather than a productIn addition, does anyone have a full list of all the indexes used by tracker funds? I appreciate there are quite a few!No, there isn't a full list all in one place of every possible index that some obscure tracker funds might want to use (and not all tracker funds are available to the UK retail market). However you would get to see the main products available to UK investors at somewhere like https://www2.trustnet.com/passive-funds/
FTSE Russell's own factsheets for the indices it creates are at https://www.ftserussell.com/analytics/factsheets/home/search although not every index they produce is designed to have a retail investment product built around it. MSCI are a rival index provider (e.g. MSCI World will track close to FTSE Developed or FTSE World, and MSCI ACWI is similar to FTSE All-World).4 -
Deleted_User said:I recently found out that ftse have a the following global equity indexes:
- FTSE Global Total Cap Index, a global index covering approximately 16,500 stocks from micro cap to large cap
- FTSE Global All Cap Index, a global index covering approximately 8,000 stocks from small cap to large cap
- FTSE All-World Index, a global index covering approximately 3,500 mid cap and large cap stocks
Some advocates of modern portfolio theory say that 20 stocks is extremely diversified. (Although even if it's possible in reality to construct a 20-stock portfolio that captures all geographical and industry sectors and has no material risk of underperforming global markets, it would take so much research that you may as well just buy VLS.)Adding a few thousand micro-cap shares would not in reality make a noticeable difference to your diversification. Bear in mind that if any of those tiny companies making up 0.00001%* of the FTSE Global Total Cap Index ever grew to the point they might actually have a noticeable effect on your returns, they'd enter the Global All Cap Index and you'd've bought them anyway.If you want to add micro-cap exposure to increase growth potential you need to look at smaller companies funds, not waste time tinkering with the margins of the margins. If you want to add micro-cap exposure to increase diversification it's a waste of time and energy as above.(*no idea if that's the right number of zeroes, because they're not worth the effort of finding out)The answer to your question is no, as far as I can tell. There aren't even any ETFs covering the FTSE Global Micro Cap Index as far as I can see (All Cap + Micro Cap = Total Cap), which surprised me, given that the bogey I just flicked into the air already has an ETF tracking it. It may be that the companies it contains are so illiquid that a fund holding them all in the correct proportions would be impractical or too expensive.If you invested £10,000 in a FTSE AIM all-share tracker in 1998 you would now have... £9,700. (FTSE All World - £47,570, Investment Association UK Smaller Companies sector average - £26,090.) You do not want to invest in micro-cap companies via index-tracking. Too many are obvious scams or just garbage.1 -
Deleted_User said:
In addition, does anyone have a full list of all the indexes used by tracker funds? I appreciate there are quite a few!0 -
I found an article I read a while back on the case for global trackers - https://monevator.com/why-a-total-world-equity-index-tracker-is-the-only-index-fund-you-need/
A personal favourite of mine is the L&G International index trust due to its low low fees and good performance over the couple of years I've been investing in it. Not a 'complete' global fund as it doesn't include UK companies. Perhaps with Brexit etc that might not have been a bad thing!0 -
Interesting thread, and I've spent the day reading all about global indexes (indicies?) and the funds/ETFs that track them on trustnet courtesy of the link @bowlhead99 posted - thank you.From my reading I have learnt that global indexes (and/or funds/ETFs that track them) typically have anywhere from 1000-4000 constituents. I have classified them into two categories, all-world and developed world, the former including emerging markets and the later which do not. As noted above, all of the major global indexes only represent mid and large cap, so if one wants the extra growth of small caps, it's probably worth adding a small cap satellite fund to supplement the global tracker. The other thing I noticed when looking for funds/ETFs that track global indexes is there are quite a few that are ex-UK, presumably useful for those of us UK based investors who already have some exposure to UK equities elsewhere in our portfolio.Being an HL customer, I was also familiar with the L&G International Index fund highlighted by @Deleted_User for it's low 0.08% fees. It also seems to have excellent relative performance over the past 5 years, presumably helped by it's low fees and the fact it tracks the FTSE World ex UK Index which does not have exposure to emerging markets nor the UK, so has avoided two of the larger drags on performance over the last 5 years.So would I be right to assume people are making active choices in selecting their global tracker by choosing to include/exclude emerging markets (~10% of FTSE all-world) and/or the UK? Or do people generally just pick what's popular on their platform? I see VWRL (0.22%) which tracks the FTSE All-World Index is popular among Vangard customers but I'm wondering if VEVE (0.12) which tracks FTSE Developed World might not be a better (and cheaper) option as you are not paying a premium for ~10 EM exposure which has been a performance drag. And if you still want EM exposure, adding 10% of VFEM would still work out cheaper whilst giving similar exposure to VWRL?What are people's thoughts on global trackers as we navigate the Covid-19 recovery. My own thoughts are that emerging markets may be hit more and recover slower than developed markets, so I might favour a tracker that tracks a developed world index rather than all-world index. I also already have some exposure to UK equity through an IT so a Developed World ex UK (like the L&G fund) would seem ideal for me. But that leaves me with no exposure to China, and surely I want some exposure to China? Maybe I need a China fund/ETF too.0
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NedS said:What are people's thoughts on global trackers as we navigate the Covid-19 recovery. My own thoughts are that emerging markets may be hit more and recover slower than developed markets, so I might favour a tracker that tracks a developed world index rather than all-world index. I also already have some exposure to UK equity through an IT so a Developed World ex UK (like the L&G fund) would seem ideal for me. But that leaves me with no exposure to China, and surely I want some exposure to China? Maybe I need a China fund/ETF too.
A global tracker will generally be at least 50 per cent USA. US stock market valuations obviously represent a market response to a government rescue, but the combination of record stock prices and an uncontrolled Covid-19 epidemic in an election year is not something that I find attractive.
'Emerging Markets' as a category includes enormous diversity. Brazil is a major player, and appears to have been very badly hit by Covid-19. Russia is also a major player; is overly dependent on oil; and it appears that Covid-19 there has had a greater impact than the government is admitting. OTOH the disease seems to be under control in the Far East: not just China but also Taiwan, South Korea and Vietnam.
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Check out the vanguard ftse global all cap index as this covers pretty much the entire equity market including small caps and emerging markets.0
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