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Advice on Index Funds

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  • Linton
    Linton Posts: 18,154 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Hung up my suit!
    edited 19 March 2023 at 2:57PM
    There are 2 xray trackers. Morningstar and Trustnet

    By far the best functionality is Morningstar.  There is a one-off instant x-ray facility but I dont know whether it can be accessed for free - I pay for the full version which provides detailed anaqlysis of multiple portfolios.  Some platforms do provide morningstar analysis as part of the deal (eg AJBell) but I think this can only be used on real portfolios held on the platform.

    Trustnet is free but has a more superficial analysis compared with morningstar - for example it does not show size of companies nor growth vs value.   Also itfdoes not show how the individual funds contribute to the portfolio as a whole..  Since Trustnet only holds allocation data on those funds that pay to be included you are likely to see a high % of "Others". in the allocation lists.
  • bostonerimus
    bostonerimus Posts: 5,617 Forumite
    Sixth Anniversary 1,000 Posts Name Dropper
    The word "Best" is used far too much in the OP. With index funds you are always going to be in the middle of the pack as far as return is concerned. Decide on you goals and the asset allocation you require and then use index funds from major providers. I like Vanguard, but there are many more.
    “So we beat on, boats against the current, borne back ceaselessly into the past.”
  • Linton
    Linton Posts: 18,154 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Hung up my suit!
    edited 19 March 2023 at 3:23PM
    me107 said:
    eskbanker said:
    How are you defining 'best' - lowest cost, highest number of holdings, lowest tracking error, etc?

    Which indices are you aiming to track?

    Dealing fees will be determined by your choice of platform as well as OEIC v ETF....
    I guess i mean the best for replicating the global market, e.g. the percentage of US stocks reflecting the size of the US market, the percentage of Russian stocks reflecting the proportion of the Russian share of the market. I haven't expressed that very articulately but hopefully you get the picture. 

    Also measuring best by lowest tracking error.
    You need to check the actual allocations.  For example many global trackers include very little China.  Any global index fund based on the MSCI World Index only assigns 2% to the whole of Asia excluding Japan.  If you really want to reflect the world in my view the only choice is Vanguard FTSE Global All Cap with 10% to Asia Excluding Japan.  
  • EthicsGradient
    EthicsGradient Posts: 1,247 Forumite
    Sixth Anniversary 1,000 Posts Photogenic Name Dropper
    Linton said:
    There are 2 xray trackers. Morningstar and Trustnet

    By far the best functionality is Morningstar.  There is a one-off instant x-ray facility but I dont know whether it can be accessed for free - I pay for the full version which provides detailed anaqlysis of multiple portfolios.  Some platforms do provide morningstar analysis as part of the deal (eg AJBell) but I think this can only be used on real portfolios held on the platform.

    Trustnet is free but has a more superficial analysis compared with morningstar - for example it does not show size of companies nor growth vs value.   Also itfdoes not show how the individual funds contribute to the portfolio as a whole..  Since Trustnet only holds allocation data on those funds that pay to be included you are likely to see a high % of "Others". in the allocation lists.
    With AJBell, you can do a Morningstar X ray on "portfolios" that you make up on the spot (so including just one fund if you want) ("X Rays and Alerts" under the "Shares and Markets" menu). This shows by region (eg "Emerging 4 Tigers") rather than individual country, and just the top 10 underlying holdings by company.
  • Eco_Miser
    Eco_Miser Posts: 4,848 Forumite
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    me107 said:
    xylophone said:
    Thanks for this. This is probably a daft question but is there a difference between a low cost index tracker and a global tracker (why the two articles)? I thought they were the same thing.
    A global tracker tracks a world index, an index tracker may track a regional index, or an index based on criteria other than capitalisation. Both types may be tracking bonds, or property or infrastructure, as well as equities.

    As for why two articles - Monevator is blog and the authors try to keep each article to a reasonable length.

    Eco Miser
    Saving money for well over half a century
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