Simple way to the S&P 500

GazzaBloom

Tackkers said:

GazzaBloom said:

Tackkers said:

GazzaBloom said:

aroominyork said:

dunstonh said:

Asking for a friend. 

He just wants to simply chuck some money into a S&P 500 type account, within an ISA. 

Although the S&P 500 is not really a good choice for the core US holdings.

What other options are there for passive investing in the US? The only one I am aware of (in large caps) in an equal weight S&P fund (XDWE). Do you disagree with the oft-stated mantra that the US is so highly researched that it is difficult to beat the index? It certainly seems true; looking at a 10 year table on Trustnet, only about a quarter of active funds have beaten the index.

The FTSE USA Index which is made up of around 600 companies, essentially it's the S&P500 plus some mid-cap companies. Blackrock have an index fund that tracks this, Blackrock ACS US Equity Tracker Fund.

https://www.morningstar.co.uk/uk/funds/snapshot/snapshot.aspx?id=F0000103AV

I invest in this fund via my work pension with Aviva who offer It as Aviva MyM Blackrock US Equity Index Tracker Pension Fund at a very respectable total fee of 0.16%

Vanguard also offer the US Equity Index Fund which tracks the S&P Total Market Index which consists of pretty much the whole US stock market of over 4,000 companies, larger, mid, small and micro cap.

https://www.vanguardinvestor.co.uk/investments/vanguard-us-equity-index-fund-gbp-acc?intcmpgn=equityusa_usequityindexfund_fund_link

The problem with the Total Market Index, and all index's to a degree, is that you are still investing 5.91% in Apple at the top of the index but only a tiny, tiny amount in the majority of the thousands of companies outside the top 500. So, the performance of the index is pretty much pegged to the performance of the top 500, so I'm not really sure of the advantage of holding it over the S&P500.

In fact only 0.00001% is invested in the company currently at the bottom of the index: Contra Aduro Biotech. So if you invested £10,000 into this fund over a year only 1/10th of 1 penny would be invested in Contra Adoro compared to £591 in Apple.

And on Vanguard this morning US Equity Index Fund is up whilst S&P 500 is down.

Settlement timing. Do you really think a price difference within a day is worth noting?

There is barely a fag paper between the S&P Total Market Index & S&P500 Index over 10 years.

Yes absolutely, it happens frequently between the funds. I should know.
And frequently = far more than a dirty fag paper.

Why does it matter for a buy & hold long term investor which one they choose?

VUSA is down -7.32% YTD and Vanguard US Equity Index is down -8.07% YTD

Over 5 years annualised averages they show gains of 13.34% (VUSA) vs 12.84% US Equity Index

Prism

Tackkers said:

GazzaBloom said:

Tackkers said:

GazzaBloom said:

aroominyork said:

dunstonh said:

Asking for a friend. 

He just wants to simply chuck some money into a S&P 500 type account, within an ISA. 

Although the S&P 500 is not really a good choice for the core US holdings.

What other options are there for passive investing in the US? The only one I am aware of (in large caps) in an equal weight S&P fund (XDWE). Do you disagree with the oft-stated mantra that the US is so highly researched that it is difficult to beat the index? It certainly seems true; looking at a 10 year table on Trustnet, only about a quarter of active funds have beaten the index.

The FTSE USA Index which is made up of around 600 companies, essentially it's the S&P500 plus some mid-cap companies. Blackrock have an index fund that tracks this, Blackrock ACS US Equity Tracker Fund.

https://www.morningstar.co.uk/uk/funds/snapshot/snapshot.aspx?id=F0000103AV

I invest in this fund via my work pension with Aviva who offer It as Aviva MyM Blackrock US Equity Index Tracker Pension Fund at a very respectable total fee of 0.16%

Vanguard also offer the US Equity Index Fund which tracks the S&P Total Market Index which consists of pretty much the whole US stock market of over 4,000 companies, larger, mid, small and micro cap.

https://www.vanguardinvestor.co.uk/investments/vanguard-us-equity-index-fund-gbp-acc?intcmpgn=equityusa_usequityindexfund_fund_link

The problem with the Total Market Index, and all index's to a degree, is that you are still investing 5.91% in Apple at the top of the index but only a tiny, tiny amount in the majority of the thousands of companies outside the top 500. So, the performance of the index is pretty much pegged to the performance of the top 500, so I'm not really sure of the advantage of holding it over the S&P500.

In fact only 0.00001% is invested in the company currently at the bottom of the index: Contra Aduro Biotech. So if you invested £10,000 into this fund over a year only 1/10th of 1 penny would be invested in Contra Adoro compared to £591 in Apple.

And on Vanguard this morning US Equity Index Fund is up whilst S&P 500 is down.

Settlement timing. Do you really think a price difference within a day is worth noting?

There is barely a fag paper between the S&P Total Market Index & S&P500 Index over 10 years.

Yes absolutely, it happens frequently between the funds. I should know.
And frequently = far more than a dirty fag paper.

I assume you are taking exchange rates into account?

tebbins

Tackkers said:

GazzaBloom said:

Tackkers said:

GazzaBloom said:

aroominyork said:

dunstonh said:

Asking for a friend. 

He just wants to simply chuck some money into a S&P 500 type account, within an ISA. 

Although the S&P 500 is not really a good choice for the core US holdings.

What other options are there for passive investing in the US? The only one I am aware of (in large caps) in an equal weight S&P fund (XDWE). Do you disagree with the oft-stated mantra that the US is so highly researched that it is difficult to beat the index? It certainly seems true; looking at a 10 year table on Trustnet, only about a quarter of active funds have beaten the index.

The FTSE USA Index which is made up of around 600 companies, essentially it's the S&P500 plus some mid-cap companies. Blackrock have an index fund that tracks this, Blackrock ACS US Equity Tracker Fund.

https://www.morningstar.co.uk/uk/funds/snapshot/snapshot.aspx?id=F0000103AV

I invest in this fund via my work pension with Aviva who offer It as Aviva MyM Blackrock US Equity Index Tracker Pension Fund at a very respectable total fee of 0.16%

Vanguard also offer the US Equity Index Fund which tracks the S&P Total Market Index which consists of pretty much the whole US stock market of over 4,000 companies, larger, mid, small and micro cap.

https://www.vanguardinvestor.co.uk/investments/vanguard-us-equity-index-fund-gbp-acc?intcmpgn=equityusa_usequityindexfund_fund_link

The problem with the Total Market Index, and all index's to a degree, is that you are still investing 5.91% in Apple at the top of the index but only a tiny, tiny amount in the majority of the thousands of companies outside the top 500. So, the performance of the index is pretty much pegged to the performance of the top 500, so I'm not really sure of the advantage of holding it over the S&P500.

In fact only 0.00001% is invested in the company currently at the bottom of the index: Contra Aduro Biotech. So if you invested £10,000 into this fund over a year only 1/10th of 1 penny would be invested in Contra Adoro compared to £591 in Apple.

And on Vanguard this morning US Equity Index Fund is up whilst S&P 500 is down.

Settlement timing. Do you really think a price difference within a day is worth noting?

There is barely a fag paper between the S&P Total Market Index & S&P500 Index over 10 years.

Yes absolutely, it happens frequently between the funds. I should know.
And frequently = far more than a dirty fag paper.

Assuming you're talking about the S&P500 in $, there are two reasons for that difference.
1. Vanguard US equity index fund is a total US market fund updated daily, that has costs, updated daily at different times to the S&P500 which updates live.
2. The S&P500 is measured in $...
Day to differences do not compound over time but actually even out.

Thrugelmir

Tackkers said:

GazzaBloom said:

aroominyork said:

dunstonh said:

Asking for a friend. 

He just wants to simply chuck some money into a S&P 500 type account, within an ISA. 

Although the S&P 500 is not really a good choice for the core US holdings.

What other options are there for passive investing in the US? The only one I am aware of (in large caps) in an equal weight S&P fund (XDWE). Do you disagree with the oft-stated mantra that the US is so highly researched that it is difficult to beat the index? It certainly seems true; looking at a 10 year table on Trustnet, only about a quarter of active funds have beaten the index.

The FTSE USA Index which is made up of around 600 companies, essentially it's the S&P500 plus some mid-cap companies. Blackrock have an index fund that tracks this, Blackrock ACS US Equity Tracker Fund.

https://www.morningstar.co.uk/uk/funds/snapshot/snapshot.aspx?id=F0000103AV

I invest in this fund via my work pension with Aviva who offer It as Aviva MyM Blackrock US Equity Index Tracker Pension Fund at a very respectable total fee of 0.16%

Vanguard also offer the US Equity Index Fund which tracks the S&P Total Market Index which consists of pretty much the whole US stock market of over 4,000 companies, larger, mid, small and micro cap.

https://www.vanguardinvestor.co.uk/investments/vanguard-us-equity-index-fund-gbp-acc?intcmpgn=equityusa_usequityindexfund_fund_link

The problem with the Total Market Index, and all index's to a degree, is that you are still investing 5.91% in Apple at the top of the index but only a tiny, tiny amount in the majority of the thousands of companies outside the top 500. So, the performance of the index is pretty much pegged to the performance of the top 500, so I'm not really sure of the advantage of holding it over the S&P500.

In fact only 0.00001% is invested in the company currently at the bottom of the index: Contra Aduro Biotech. So if you invested £10,000 into this fund over a year only 1/10th of 1 penny would be invested in Contra Adoro compared to £591 in Apple.

And on Vanguard this morning US Equity Index Fund is up whilst S&P 500 is down.

US markets aren't open yet,  

RyanHello

Personally if i was in the S&P 500, I would get out of it ASAP. Doesn't take a genius to work out it's the most over valued index in history.

The upcoming crash this spring will be the most devastating crash in our lifetime. 

GET OUT!

Prism

RyanHello said:

Personally if i was in the S&P 500, I would get out of it ASAP. Doesn't take a genius to work out it's the most over valued index in history.

The upcoming crash this spring will be the most devastating crash in our lifetime. 

GET OUT!

So you think people should sell out of every US and global fund completely? How about US smaller companies?

Most people have plenty of time to ride a crash down and wait for a recovery. No need to try and time the market.

GeoffTF

GazzaBloom said:

GeoffTF said:

GazzaBloom said:
The problem with the Total Market Index, and all index's to a degree, is that you are still investing 5.91% in Apple at the top of the index but only a tiny, tiny amount in the majority of the thousands of companies outside the top 500. So, the performance of the index is pretty much pegged to the performance of the top 500, so I'm not really sure of the advantage of holding it over the S&P500.

That is not a problem. It is an essential feature. That is what the respective companies are worth (in the market's estimation). Companies shrink and grow all the time, but no one can reliably predict that in advance of the market. You cannot invest $trillions in micro-caps.

Yes, you're right, problem isn't the right word, it's how an index works for sure. I just don't really see the benefit of owning infinitesimally small parts of thousands of US companies vs the top 500 which equates to 85% of the market cap anyway.

In theory, it is better to include the small caps. They are not perfectly correlated with the larger caps, so including them should reduce volatility. The impact of companies entering and leaving the index is also reduced, because those companies are smaller. Nonetheless, the Russell 2000 (the next 2,000 companies after the first 1,000) lost money last year, whereas the Russel 1000 had a bumper year. It is possible that the small caps are still over-priced relative to the larger caps, and will still under-perform.

GazzaBloom

RyanHello said:

Personally if i was in the S&P 500, I would get out of it ASAP. Doesn't take a genius to work out it's the most over valued index in history.

The upcoming crash this spring will be the most devastating crash in our lifetime. 

GET OUT!

Excellent - thanks! I sold all my US fund to cash this morning when you posted. Now, if you could just let me know when to move it all back into the US market when we hit the bottom after the devastating crash of a lifetime I would be very grateful.