UK based funds - brexit and onwards

Malkytheheed

The FTSE 100 is full of oil companies and banks. Not businesses I'm keen to invest in these days. I steer clear. It's mostly dinosaur companies that (IMO) won't do well in the future. 

I do however as part of my portfolio have some FTSE 250 stock as I believe in the UK. Having said that 90% of my portfolio is American companies, trackers and REITS. Simply because they perform better and I believe they will continue to do so. 

BananaRepublic

Another_Saver said:

BananaRepublic said:

Another_Saver said:

As for the UK/global debate, the past 5 years the UK has done crap (or since 2007 and 2013, but not consistently). If you look at any long term period out to 1990 that includes the last 5 years, the UK has done crap even though until the last 5 years, the UK and global market were more or less behaving the same way (comparing large Cap or total market indices on a nominal total return basis in £, just use the indices or sectors on trustnet or compare Barclays UK equity index with S&P 500 total returns data which is widely available) and have performed similarly over the very long term.

The FTSE 100 is a poor index to invest in. But UK investments can and do perform well if you look at small and medium size companies. There are plenty of good funds. But it’s best to diversify across markets so look to the US and Europe too, and maybe Asia. Vanguard VLS 100 is invested about half in US stocks, though US stocks have done very well over the last decade or two. 

I think the advice from dunstonh is sound and it did address your questions. Gift wrapped off the shelf funds are good marketing, and like it or not you’re making investment decisions when buying them. 

Why do you think the FTSE 100 is a poor index to invest in, and relative to what? Granted this thread isn't a home/global bias debate or a UK weighting discussion, but I hear it so often, declared as if it's an established fact.

Because returns are modest relative to Europe, US, UK small companies, tech, healthcare and others. It’s easy to verify using historical data. 

MaxiRobriguez

Let's be clear, people only think the FTSE100 is a poor investment because it has been for the past 10 years a poor investment relative to other similar options. 

Personally I feel there is a place for it in a portfolio still. Dividend yields are hefty compared to other indexes and non-equity yields and any return to inflation should be a bonus for bank stocks. That's before considering foreign/institutional investors re-introducing UK based stocks back into their portfolios now the Brexit debacle is settled and we have some certainty on what will happen next.

I'm happy enough to be overweight UK at the moment. 

Albermarle

now the Brexit debacle is settled 

IMO, the recent trade deal is just another step down a long and winding road, and nobody really knows what the long term effect of Brexit will be on UK ( if it still exists ) .

How that might affect the % of UK investments to have , I have no idea, but just saying that Brexit is far from done and dusted in reality.

MaxiRobriguez

Albermarle said:

now the Brexit debacle is settled 

IMO, the recent trade deal is just another step down a long and winding road, and nobody really knows what the long term effect of Brexit will be on UK ( if it still exists ) .

How that might affect the % of UK investments to have , I have no idea, but just saying that Brexit is far from done and dusted in reality.

You're right, it's not done yet, there's still going to be lots of wrangling over the next few years as the trading relationship evolves.

But the future direction of travel has been set, and many key outstanding questions (like, will there be tariffs) have been answered. It gives a relatively clear picture of how things will be for the next decade which we haven't had since 2015. 

masonic

Albermarle said:

now the Brexit debacle is settled 

IMO, the recent trade deal is just another step down a long and winding road, and nobody really knows what the long term effect of Brexit will be on UK ( if it still exists ) .

Yes, seems to be the case. Further deals look likely to need negotiating to cover areas this deal misses, it looks like the whole trade deal expires and needs to be renegotiated in 2026, and lots of potential for arbitration and changes/tariffs if either side diverges from the status quo, which they are entirely free to do at any time. Perhaps not atypical of a trade deal with a third country.

Bobziz

masonic said:

Albermarle said:

now the Brexit debacle is settled 

IMO, the recent trade deal is just another step down a long and winding road, and nobody really knows what the long term effect of Brexit will be on UK ( if it still exists ) .

Yes, seems to be the case. Further deals look likely to need negotiating to cover areas this deal misses, it looks like the whole trade deal expires and needs to be renegotiated in 2026, and lots of potential for arbitration and changes/tariffs if either side diverges from the status quo, which they are entirely free to do at any time. Perhaps not atypical of a trade deal with a third country.

That's my reading of the situation too. Lots more anti EU headlines on front pages to come. I did wonder who would become the scapegoat after we'd left the EU. Looks like it will continue to be the EU.

BananaRepublic

MaxiRobriguez said:

Let's be clear, people only think the FTSE100 is a poor investment because it has been for the past 10 years a poor investment relative to other similar options. 
[snip]
I'm happy enough to be overweight UK at the moment. 

It’s been mediocre for the past 20 years. I’m also happy to be overweight in the UK, and I don’t mean that I am obese. 

masonic

BananaRepublic said:

MaxiRobriguez said:

Let's be clear, people only think the FTSE100 is a poor investment because it has been for the past 10 years a poor investment relative to other similar options. 
[snip]
I'm happy enough to be overweight UK at the moment. 

It’s been mediocre for the past 20 years. I’m also happy to be overweight in the UK, and I don’t mean that I am obese. 

Mediocre is an understatement. If you'd held the HSBC FTSE 100 Index tracker since 2000 you'd have enjoyed annualised returns of just 2% (including reinvested dividends). So you'd have lost money in real terms.

Thrugelmir

MaxiRobriguez said:

Let's be clear, people only think the FTSE100 is a poor investment because it has been for the past 10 years a poor investment relative to other similar options. 

If a market is friendless then it will performance poorly. Doesn't make all the companies bad though, nor not worthy of holding as long term investments in a balanced and diversified portfolio. Reinvestment of income makes a diffference too. A fact that frequently gets overlooked.