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Question On Tracker Funds

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Hello.

Back from my hols where I took the time to read Beat the Street and some investors chronicles issues. Both seem to suggest that tracking either SP500 or FTSE 100/all will give a 9%ish per annum return over 10 years. They also suggest that most actively managed funds will NOT meet this return. Some questions:

1) Do people agree that trackers will give these sorts of returns over the longer term? If so why is the 5 year performance of most trackers over the last 5 years so poor?

2) On www.fundsnetwork.co.uk I can not seem to find SP500/Nikkei/German trackers. Why not?

Many thanks

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Hello.

Back from my hols where I took the time to read Beat the Street and some investors chronicles issues. Both seem to suggest that tracking either SP500 or FTSE 100/all will give a 9%ish per annum return over 10 years. They also suggest that most actively managed funds will NOT meet this return. Some questions:

1) Do people agree that trackers will give these sorts of returns over the longer term? If so why is the 5 year performance of most trackers over the last 5 years so poor?

2) On www.fundsnetwork.co.uk I can not seem to find SP500/Nikkei/German trackers. Why not?

Many thanks

Tracker funds will just reflect indexes such as FTSE100, FTSEAllShare and FTSE250. The FTSE100, FTSEAll share indexes are still way down from highs about 5 or 6 years ago due to the dot com crash.

Yes it is true that most active funds do not beat trackers. Also with active funds you have the worry that a star manager may quit and performance may go into the doldrums.

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Most actively managed mutual funds underperform the market over 5 years (about 90%, I think). I would always advocate cost-averaging into a market tracker each month - it's a risk-free way of beating the market over a number of years.

FTSE all-share is very near to it's all-time high. If you include reinvested 6 year's worth of dividends, then you would probably just about be ahead by now (of course, this is not accounting for inflation). So, if you had bought at the very peak of the market in 2000 and had not averaged down at any time, you would just about have gotten your money back by now.. but if you had bought steadily over the last 6 years, you'd be well ahead by now.

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Thank you. I was really looking to use trackers in my ISA allowances, so one off deposit. But I suppose there is no reason why I can't also drip feed into a seperate tracker every month. Will this make as much of a difference as you say?

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Thank you. I was really looking to use trackers in my ISA allowances, so one off deposit. But I suppose there is no reason why I can't also drip feed into a seperate tracker every month. Will this make as much of a difference as you say?

Yes you can pay up to £7000 lump sum into an ISA in 1 hit or spread it out in monthly payments. Difficult to know what is best as no one can be sure when is the best time to put money into the market. Doing the lump sum thing could work out better but it is not certain.

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I'm in a position to put the total ISA amount in as a lump sum. I could then put in a regular amount as non ISA tracker fund to benefit from that tactic aswell.

I'm looking on www.fundsnetwork.co.uk can anyone recommend another funds supermarket?

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I'm in a position to put the total ISA amount in as a lump sum. I could then put in a regular amount as non ISA tracker fund to benefit from that tactic aswell.

I'm looking on www.fundsnetwork.co.uk can anyone recommend another funds supermarket?

I think fund supermarkets are only valuable for active funds - I dont think you get much of a discount, if any, on tracker funds. Legal and General are a big name in tracker funds (but they dont do a FTSE250 fund) http://www.legalandgeneral.com/investments/ you could deal with them direct.

Incidentally dont over do it on the trackers. Make sure you have decent cash reserves and you need to invest for 5 years minimum preferably 10 as if you had invested in 2000 say, you would still be nursing a loss.

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Hiya.

When you say there is not much discount on trackers from a supermarket, do you mean compared to buying through an IFA? If so won't an IFA charge me a fee for arranging it?

Thanks for your help

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Hiya.

When you say there is not much discount on trackers from a supermarket, do you mean compared to buying through an IFA? If so won't an IFA charge me a fee for arranging it?

Thanks for your help

I mean not much discount compared to dealing with, for example, Legal and General direct. It is futile dealing with an IFA unless you want some investment advice from them which will most likely be coloured by how much commission they can screw out of you and they wouldnt get much from trackers.

Edited by penbat1

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I see what you mean now. Thanks. Do all companies let you deal direct ie HSBC as they do some nice Japanese market trackers

Whilst I have your attention, is there anything to watch out for with cash mini ISAs? I'm thinking of going for the Scarborough BS deal thats 5% fixed for 3 years. I have no issue with the cash being 'frozen' for 3 years.

Thanks again

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I see what you mean now. Thanks. Do all companies let you deal direct ie HSBC as they do some nice Japanese market trackers

Whilst I have your attention, is there anything to watch out for with cash mini ISAs? I'm thinking of going for the Scarborough BS deal thats 5% fixed for 3 years. I have no issue with the cash being 'frozen' for 3 years.

Thanks again

Yes you can deal with all companies direct including HSBC.

I cant think of any particular issues with Cash ISAs except if you invest £3,000 in a Cash ISA that leaves you with £4,000 for equities in an ISA wrapper. There is very little benefit these days to buy equities in an ISA rather than outside an ISA - its just about worth doing though.

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you need to invest for 5 years minimum preferably 10 as if you had invested in 2000 say, you would still be nursing a loss.

Even better still - don't invest in a Bear market!

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Even better still - don't invest in a Bear market!

Well i have been in for 7 years and i intend to keep it in for another 18 - that should work through several bull/bear cycles.

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Incidentally dont over do it on the trackers. Make sure you have decent cash reserves and you need to invest for 5 years minimum preferably 10 as if you had invested in 2000 say, you would still be nursing a loss.

I'm sorry but your wrong if you include dividends reinvested e.g total return then the FTSE 100 is still at its all time high.

sorry but I'm heavily short equities at the moment they just seem destined to go down at the moment, It won't last. your better off in bonds.

I'm short 200,000 quid in equities today. go figure. ;)

cash is king.

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I'm sorry but your wrong if you include dividends reinvested e.g total return then the FTSE 100 is still at its all time high.

sorry but I'm heavily short equities at the moment they just seem destined to go down at the moment, It won't last. your better off in bonds.

I'm short 200,000 quid in equities today. go figure. ;)

cash is king.

what are you trading ? CFDS?

which markets?

using any leverage at all?

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IJPN seems to follow the Nikkei pretty well which for the last 2 weeks has been Down.

There is also a Eiro Stoxx50 (EUE) which is a vehicle which will track roughly somewhere between the DAX and CAC.

Personally I think that fundamental indexing IDVY and IUKD has the potential to deliver more consistent returns then Market cap based approch.

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
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      • Even
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      • up 5%



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