All World Trackers - High Risk? - I Don't Think So

eskbanker

bd10 said:

Investing is easy, picking the winners a piece of cake?

To be fair, OP's point is about all-world trackers rather than picking winners....

Ciprico

Is there a single all world tracker that excludes USA....? 

dunstonh

Ciprico said:

Is there a single all world tracker that excludes USA....? 

That is a management decision.
You would just pick single sector funds (sector as in IA Sector) and leave the US out.  

ChilliBob

There are msci and ftse indexes which do, so I would guess so. 

Regarding the original post, I think the risk side of things is interesting. Morningstar will rate global index funds at 6 out of 7. It will also rate a clean energy Etf or a random active fund from a new manager (for exsmple) a 6.

In my view the latter two examples are actually fat riskier. It's not that I'm saying a global tracker isn't risky, just that it's not the same level of risk as a thematic Etf, for example. 

El_Torro

maxsteam said:

Personally I expect a fund manager to beat the indices rather than just match them. Tracker funds have a place in the investment world (lots of derivatives rely on them) but any idiot can track an index.

You're right in saying that any idiot can track an index. However I don't think people invest in global trackers because they think that the fund manager is some sort of genius. If the methodology works then why mess with it?

Sure, we'd all love to get behind fund managers who consistently and persistently beat the index. But in a world where most fund managers don't do this (especially taking fees into account) what's the point in playing that game? Especially when trackers will fit the goals of many investors anyway.

redpete

maxsteam said:

Personally I expect a fund manager to beat the indices rather than just match them. Tracker funds have a place in the investment world (lots of derivatives rely on them) but any idiot can track an index.

"a study by research firm WM Company found that 82% of managed funds failed to beat the market over the course of twenty years" from here.
"Every year, S&P Dow Jones Indices does a study on active versus passive management. Last year, they found that after 10 years, 85% of large-cap funds underperformed the S&P 500, and after 15 years, nearly 92 percent are trailing the index." from here.

Linton

redpete said:

maxsteam said:

Personally I expect a fund manager to beat the indices rather than just match them. Tracker funds have a place in the investment world (lots of derivatives rely on them) but any idiot can track an index.

"a study by research firm WM Company found that 82% of managed funds failed to beat the market over the course of twenty years" from here.
"Every year, S&P Dow Jones Indices does a study on active versus passive management. Last year, they found that after 10 years, 85% of large-cap funds underperformed the S&P 500, and after 15 years, nearly 92 percent are trailing the index." from here.

Over the past 10 years the weighted average UK fund outperformed the relevent S&P Index  in 5 out of the 8 sectors for which data is available.
See https://www.spglobal.com/spdji/en/documents/spiva/spiva-europe-mid-year-2020.pdf?force_download=true page 12.

dunstonh

redpete said:

maxsteam said:

Personally I expect a fund manager to beat the indices rather than just match them. Tracker funds have a place in the investment world (lots of derivatives rely on them) but any idiot can track an index.

"a study by research firm WM Company found that 82% of managed funds failed to beat the market over the course of twenty years" from here.
"Every year, S&P Dow Jones Indices does a study on active versus passive management. Last year, they found that after 10 years, 85% of large-cap funds underperformed the S&P 500, and after 15 years, nearly 92 percent are trailing the index." from here.

It is unlikely someone would invest in a managed fund for 20 years as they would alter their strategy over time.  Plus, you can largely eliminate 80% of managed funds without much effort.

US research is pointless as their internal taxation funds hinders managed funds. We do not have the issue in the UK.

EthicsGradient

Ciprico said:

Is there a single all world tracker that excludes USA....? 

Vanguard have one traded on the LSE (and domiciled in Germany) for nearly a year now (judging by the maximum price history available, though "issue date" is Jan 2018), following the FTSE All World Ex-US index:
https://www.londonstockexchange.com/market-stock/0LMO/vanguard-ftse-all-world-ex-us-index/overview?lang=en
Which platforms will trade it for you may be another matter - indications are Hargreaves Lansdown won't, since the key documents haven't been provided, and Interactive Investor seems to baulk at giving such information too. There is an equivalent MSCI index that has US-based ETFs following it, but I'm not sure if they are LSE-traded.

ZeroSum

maxsteam said:

Personally I expect a fund manager to beat the indices rather than just match them. Tracker funds have a place in the investment world (lots of derivatives rely on them) but any idiot can track an index.

Like neil woodford?