Fidelity Index World P Acc

mears1

Fidelity Index World P Acc  aims are "to track the performance of the MSCI World (Net Total Return) Index (before fees and expenses are applied) thereby seeking to increase the value of your investment over a period of 5 years or more"

As the fund tracks the performance before fees and expenses are applied, does this mean that when comparing the performance and return to other Global index funds
(on comparison tools on Morningstar and Trustnet), it is not like for like?

Also, is the MSCI World Index equivalent to the Ftse developed world index? 

Please comment whether I am totally ignorant in comparing Fidelity Index World P Acc, VG FTSE developed world, ex Uk Equity index acc, L&G International Index trust I acc and HSBC Ftse all world Index C acc! These are the ones I have heard about. I realise I am a total ignoramus on these matters, and the posts on these sites are both informative and impressive.

cloud_dog

I would imagine all tracker funds will have similar wording regarding performance, as there is no way to track a index without incurring costs in doing so (administration, transaction, etc).

The two indexes may be similar but there are differences.  For example:

MSCI:  The MSCI World Index captures large and mid-cap representation across 23 Developed Markets (DM) countries*. With 1,555 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country.

FTSE:  The FTSE Developed Index is a market-capitalisation weighted index representing the performance of large and mid cap companies in Developed markets.  The index is derived from the FTSE Global Equity Index Series (GEIS), which covers 98%of the worlds investable market capitalisation.

Regarding the funds, you should just check to see which index they are tracking.  Re the L&G International Fund, I believe that does not hold any UK exposure (usually around 4%)

EDIT:  Have a look at the funds on Trustnet charts.

Alexland

I wouldn't worry about the fees impact on the Fidelity fund's tracking error as the charges are so very low it's negligible anyway.

In terms of picking global tracker funds you need to start by deciding your target asset allocation. Do you want the developed world, developed world excluding UK (UK is normally around 5% of the developed world), or all world (generally 90% developed world and 10% emerging markets). Once you have decided what to invest in then you can choose a fund.

You will find that developed world ex-uk funds will have done better in recent years due to the underperformance of the UK and emerging markets compared to the US. However that share price growth has lead to notable differences in valuation which some are suggesting could lead to the US underperforming going forward.

michaels

Alexland said:

I wouldn't worry about the fees impact on the Fidelity fund's tracking error as the charges are so very low it's negligible anyway.

In terms of picking global tracker funds you need to start by deciding your target asset allocation. Do you want the developed world, developed world excluding UK (UK is normally around 5% of the developed world), or all world (generally 90% developed world and 10% emerging markets). Once you have decided what to invest in then you can choose a fund.

You will find that developed world ex-uk funds will have done better in recent years due to the underperformance of the UK and emerging markets compared to the US. However that share price growth has lead to notable differences in valuation which some are suggesting could lead to the US underperforming going forward.

If you believe at all in 'value' then by definition tracker funds will be overweight in stocks/markets that are currently 'high/poor value'.  Nature of the beast.

BritishInvestor

mears1 said:

Fidelity Index World P Acc  aims are "to track the performance of the MSCI World (Net Total Return) Index (before fees and expenses are applied) thereby seeking to increase the value of your investment over a period of 5 years or more"

As the fund tracks the performance before fees and expenses are applied, does this mean that when comparing the performance and return to other Global index funds
(on comparison tools on Morningstar and Trustnet), it is not like for like?

Also, is the MSCI World Index equivalent to the Ftse developed world index? 

Please comment whether I am totally ignorant in comparing Fidelity Index World P Acc, VG FTSE developed world, ex Uk Equity index acc, L&G International Index trust I acc and HSBC Ftse all world Index C acc! These are the ones I have heard about. I realise I am a total ignoramus on these matters, and the posts on these sites are both informative and impressive.

It's always worth checking the factsheets for performance rather than relying on third party data. You'd be surprised at how often they differ.

mears1

cloud_dog said:

I would imagine all tracker funds will have similar wording regarding performance, as there is no way to track a index without incurring costs in doing so (administration, transaction, etc).

The two indexes may be similar but there are differences.  For example:

MSCI:  The MSCI World Index captures large and mid-cap representation across 23 Developed Markets (DM) countries*. With 1,555 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country.

FTSE:  The FTSE Developed Index is a market-capitalisation weighted index representing the performance of large and mid cap companies in Developed markets.  The index is derived from the FTSE Global Equity Index Series (GEIS), which covers 98%of the worlds investable market capitalisation.

Regarding the funds, you should just check to see which index they are tracking.  Re the L&G International Fund, I believe that does not hold any UK exposure (usually around 4%)

EDIT:  Have a look at the funds on Trustnet charts.

  I have dissected and searched for your phrases and still do not understand the advantages and disadvantages between the MSCI World Index and FTSE developed markets.  As a health worker, I know I must appear dim...sorry! Would you mind explaining?

mears1

Alexland said:

I wouldn't worry about the fees impact on the Fidelity fund's tracking error as the charges are so very low it's negligible anyway.

In terms of picking global tracker funds you need to start by deciding your target asset allocation. Do you want the developed world, developed world excluding UK (UK is normally around 5% of the developed world), or all world (generally 90% developed world and 10% emerging markets). Once you have decided what to invest in then you can choose a fund.

You will find that developed world ex-uk funds will have done better in recent years due to the underperformance of the UK and emerging markets compared to the US. However that share price growth has lead to notable differences in valuation which some are suggesting could lead to the US underperforming going forward.

Thank you for your reply. Veering towards avoiding China because of the political uncertainty, and was going to avoid UK because of articles about UK's underperformance. But now, may include UK, as there is suggestion that the UK is doing better now. This info is influenced by newspaper articles, which I realise may be inaccurate but I have to start somewhere!  

Do you consider the Fidelity Index World would do the task?

Albermarle

mears1 said:

cloud_dog said:

I would imagine all tracker funds will have similar wording regarding performance, as there is no way to track a index without incurring costs in doing so (administration, transaction, etc).

The two indexes may be similar but there are differences.  For example:

MSCI:  The MSCI World Index captures large and mid-cap representation across 23 Developed Markets (DM) countries*. With 1,555 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country.

FTSE:  The FTSE Developed Index is a market-capitalisation weighted index representing the performance of large and mid cap companies in Developed markets.  The index is derived from the FTSE Global Equity Index Series (GEIS), which covers 98%of the worlds investable market capitalisation.

Regarding the funds, you should just check to see which index they are tracking.  Re the L&G International Fund, I believe that does not hold any UK exposure (usually around 4%)

EDIT:  Have a look at the funds on Trustnet charts.

  I have dissected and searched for your phrases and still do not understand the advantages and disadvantages between the MSCI World Index and FTSE developed markets.  As a health worker, I know I must appear dim...sorry! Would you mind explaining?

I think the answer is that there is very little difference. MSCI and FTSE indexes are run by businesses that are competing with each other. and they have some very similar products .

Alexland

mears1 said:
Do you consider the Fidelity Index World would do the task?

Yes if as you say you want to avoid emerging markets, keep your UK exposure to its normal market cap and are happy with the occasional circa 50% crashes that happen when investing in equities. Our kids have their JISAs and SIPPs in that fund and most of our adult money is invested in similar developed world ETFs.

Thrugelmir

mears1 said:

cloud_dog said:

I would imagine all tracker funds will have similar wording regarding performance, as there is no way to track a index without incurring costs in doing so (administration, transaction, etc).

The two indexes may be similar but there are differences.  For example:

MSCI:  The MSCI World Index captures large and mid-cap representation across 23 Developed Markets (DM) countries*. With 1,555 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country.

FTSE:  The FTSE Developed Index is a market-capitalisation weighted index representing the performance of large and mid cap companies in Developed markets.  The index is derived from the FTSE Global Equity Index Series (GEIS), which covers 98%of the worlds investable market capitalisation.

Regarding the funds, you should just check to see which index they are tracking.  Re the L&G International Fund, I believe that does not hold any UK exposure (usually around 4%)

EDIT:  Have a look at the funds on Trustnet charts.

  I have dissected and searched for your phrases and still do not understand the advantages and disadvantages between the MSCI World Index and FTSE developed markets.  As a health worker, I know I must appear dim...sorry! Would you mind explaining?

Easy to reach the point where you end up overthinking things. . The indexes themselves don't have advantages and disadvantages as such. The major indexes are far more complex than they first appear.  Ultimately you need to take the plunge. Only time will tell if you made the better choice. As it will be the financial performance of the underlying companies themselves that determines the final outcome. Though as the decades have past. Fewer and fewer companies make up the bulk of stock market returns. The concentration means that the differential between the indices has narrowed. Vast majority of stocks add little to no value at all. Hence the current attraction of global trackers. Though momentum creates momentum and creates a detachment from reality in terms of valuations. 

mears1

Alexland said:

mears1 said:
Do you consider the Fidelity Index World would do the task?

Yes if as you say you want to avoid emerging markets, keep your UK exposure to its normal market cap and are happy with the occasional circa 50% crashes that happen when investing in equities. Our kids have their JISAs and SIPPs in that fund and most of our adult money is invested in similar developed world ETFs.

Have posters got most of their money invested in just 1 passive fund? 

For a £20k pot, 75% in 1 passive global fund would seem unremarkable. But for a £100k pot, would 75% in 1 global passive fund be crazy, rather than a  2-3 global funds even though they might track the same index?