Benefit of your hindsight with Global Tracker Funds

mears1

The impressive discussions (Global Equities, next decade)  and your experiences of drops lately make me feel  really out of my depth but also curious. I understand the equity markets is volatile at the moment.

 So, should  investors with a large cash lump sum to invest for 10 - 15 years buy Global tracker funds take advantage when there is flash news of the market drop eg yesterday's drop  ? Because it would be silly to buy Global tracker funds now, if you can wait a bit. I know investors drip feed but if you got a lumpsum it must be different scenario because each transaction costs £5 and sitting as a lumpsum sitting in cash gets very low interest.

Is taking advantage of a dip not apply to  funds as I am not sure whether it takes 3-4 days to complete that keeping your ears for the news is futile? Or is it only shares because the price is the actual  price and the purchase is immediate.

 

george4064

Don’t mess around with trying to time the market, just invest as soon as you can with as much as you can afford to risk and ride it out.

Thrugelmir

Have a read of

Wealth Creation in the U.S. Public Stock Markets 1926 to 2019 Hendrik Bessembinder


The abstract summary of the paper is below:-

This report quantifies long-run stock market outcomes in terms of the increases or decreases (relative to a Treasury bill benchmark) in shareholder wealth, when considering the full history of both net cash distributions and capital appreciation. The study includes all of the 26,168 firms with publicly-traded U.S. common stock since 1926. Despite the fact that investments in the majority (57.8%) of stocks led to reduced rather than increased shareholder wealth, U.S. stock market investments on net increased shareholder wealth by $47.4 trillion between 1926 and 2019. Technology firms accounted for the largest share, $9.0 trillion, of the total, but Telecommunications, Energy, and Healthcare/ Pharmaceutical stocks created wealth disproportionate to the numbers of firms in the industries. The degree to which stock market wealth creation is concentrated in a few top-performing firms has increased over time, and was particularly strong during the most recent three years, when five firms accounted for 22% of net wealth creation. These results should be of interest to any long-term investor assessing the relative merits of broad diversification vs. narrow portfolio selection.

It's these top performing companies which have propelled global equity funds in recent years. 

GeoffTF

"Do Not Buy the Dip!":

https://www.youtube.com/watch?v=UvkqIDE9itg

InvesterJones

mears1 said:

The impressive discussions (Global Equities, next decade)  and your experiences of drops lately make me feel  really out of my depth but also curious. I understand the equity markets is volatile at the moment.

 So, should  investors with a large cash lump sum to invest for 10 - 15 years buy Global tracker funds take advantage when there is flash news of the market drop eg yesterday's drop  ? Because it would be silly to buy Global tracker funds now, if you can wait a bit. I know investors drip feed but if you got a lumpsum it must be different scenario because each transaction costs £5 and sitting as a lumpsum sitting in cash gets very low interest.

Is taking advantage of a dip not apply to  funds as I am not sure whether it takes 3-4 days to complete that keeping your ears for the news is futile? Or is it only shares because the price is the actual  price and the purchase is immediate.

Depends on your platform of choice. The cheapest may charge per transaction, but others might allow a number of or even limitless transactions, so if you want that flexibility you can always pay for it. As mentioned above, trying to time the market is hard, so if you are on a per-transaction cost fund you could just get it in there and then look away for the next five years. Or what I tend to do in moments of indecision is split the difference - so in your shoes I'd stick 50% in now and then 50% in at some future point in time - maybe 6 months or sooner if there's a dip of another 20% beforehand.

Funds typically have a daily dealing point and an instruction cut off before this, so you won't be trying to time an intraday dip, but getting fund pricing on the same day as you're interested is quite possible (completion often takes longer, but the pricing is fixed at the dealing point and that's the main thing).

mears1

Thank you all. Very enlightening and has brought some clarity. So, keeping up with the news is futile with funds, after all!

 How does this sound?

Use half the lumpsum  to buy funds split between several global trackers via iWeb.

       Fidelity Index World P

        HSBC Ftse All-world Index C

 Then in 6 months buy different global trackers with the other half

        L & G International Index I

 Then from this April, drip feed my full isa allowance monthly into Vanguard products ie. FTSE Developed World ex-UK equity index fund combined with FTSE U.K. All Share Index Unit Trust  because of no fees for regular transactions. Then transfer this in species to iWeb because of the iWeb do not have platform charges and transfer is free.

 Is this correct, that you can transfer funds in species to iWeb? Can you do it the other way, funds in iWeb to Interactive investor?

 Because of the high value of the ISA, I am leaning towards a few global funds as I feel scared to put it all in one product! Does that make sense?

ColdIron

All you would be achieving is massive duplication

GeoffTF

mears1 said:

Thank you all. Very enlightening and has brought some clarity. So, keeping up with the news is futile with funds, after all!

 How does this sound?

Use half the lumpsum  to buy funds split between several global trackers via iWeb.

       Fidelity Index World P

        HSBC Ftse All-world Index C

 Then in 6 months buy different global trackers with the other half

        L & G International Index I

 Then from this April, drip feed my full isa allowance monthly into Vanguard products ie. FTSE Developed World ex-UK equity index fund combined with FTSE U.K. All Share Index Unit Trust  because of no fees for regular transactions. Then transfer this in species to iWeb because of the iWeb do not have platform charges and transfer is free.

 Is this correct, that you can transfer funds in species to iWeb? Can you do it the other way, funds in iWeb to Interactive investor?

 Because of the high value of the ISA, I am leaning towards a few global funds as I feel scared to put it all in one product! Does that make sense?

It will just make life harder if you split your money between several global trackers. Just choose one of them. Transfers are often very slow currently. You will most likely save yourself a lot of pain by starting with the platform that you intend to use long term.

valiant24

GeoffTF said:

 Transfers are often very slow currently. 

Especially with iWeb, mentioned by the OP.   I started 5 transfers into iWeb last year; only 2 are complete thus far and one of those took 5 months, and relied on the good nature of a lady at the platform losing my business to keep my updated!

iWeb's good once you're there though, in my experience.

mears1

Thanks all. Appreciate your clear answers, this website is very  helpful.

ChilliBob

I echo the iweb transfers comments.

Fidelity world p and HSBC are different trackers, ones all of world one just developed, one MSCI methodology, one FTSE. I do hold both actually as it spreads the risk of just having something with one manager (I'm not suggesting either will go bankrupt or anything, just if there was some reason you couldn't sell for a certain period or something).

Lots of trackers wouldn't be a good idea though, if you need to sell to realise a gain (hopefully!) you'd have more transaction costs if you needed to sell more funds. 

As regards lump sum vs drip, I'd have been waaaaay better off if I had just lumpsummed everything in about 12 months ago. However, I was getting used to everything. Things are even more Volatile now. Whilst lump sum has been proven to be the best I think it's difficult mentally, especially if you're a new investor.