Undoubtedly. But how do you know which ones they are (or more accurately, will be, as it's future performance that you're after)?
Generally speaking, good stock pickers will continue to be good stock pickers.
Trackers are great when the market is on the up, but when it stalls, or falls...
What then? We are yet to find out!
They are great for lazy IFAs though, who presumanly pocket the difference in fees themselves...
I'm very glad I've been in legg Mason Japan, frinstance, rather than a Japan tracker
"trading" is a mug's game.
No, it's just a different game. When I used to day trade we thought of investors as the mugs.
Any honest fund manager will admit that their only value is in reducing risk and/or investing in markets that are inaccessible to private investors (e.g. overseas).
Are there any trackers that have actually come close to tracking their target index when you account for reinvestment of dividends? Share price rises are only half of the total return (roughly speaking).
And you can guarantee and increase in your tracker fund?
There are no guarantees with any fund, it's all gambling. However, if the thing it's tracking grows, the fund grows. Which are generally market indices (FTSE100/250, DOW, whatever), which generally rise over time.
..Trackers are great when the market is on the up, but when it stalls, or falls.
And at the times the markets fall significantly, pretty much everything falls, including the 'expertly-managed' funds. Unless, of course, you've been lucky enough, or had the 'expertise', to pick one of the few that may buck the trend.
And, again, the key is the difference in charges. Over time the higher charges on a managed fund often outweigh any gains from any higher top-line growth rates.
Are there any trackers that have actually come close to tracking their target index when you account for reinvestment of dividends?
Trackers, er, track their target index by holding shares in the index in proportion to their value in the index. They will therefore get any dividends due and reinvest them. I'm not aware of any tracker that grow at a slower rate than the thing they're tracking. If I'm wrong, then fair enough...
But you said
It's been shown many times that a low-fee tracker will generally outperform a higher-fee managed fund over time, mainly because of the cumulative effect of the fees. Any 'advantage of expertise' is nullified.
I explained an investment of mine that grew by 150% over 5 yrs. Can you tell me a tracker that has done that?
Are there any trackers that have actually come close to tracking their target index when you account for reinvestment of dividends? Share price rises are only half of the total return (roughly speaking).
Trackers benefit from reinvestment of dividends the same as any other fund.
They are just a managed fund where a formula is used to decide what to own. There are many different tweaks as buying and selling every day to exactly match the index would be a bit daft, so they have various lags / water marks to reduce unnecessary churn.
I explained an investment of mine that grew by 150% over 5 yrs. Can you tell me a tracker that has done that?
Nope (but there might be one, 150% over five years isn't [I]that[/I] amazing).
But will yours do that over the next five years? How do you know?
And at the times the markets fall significantly, pretty much everything falls, including the 'expertly-managed' funds. Unless, of course, you've been lucky enough, or had the 'expertise', to pick one of the few that may buck the trend.
Exactly, Some funds will fall more than most , but just as a good manager can regularly beat the market going up, some can beat the market going down. Luck does have a part to play, but undoubtedly so does skill. Just like Backgammon, or Poker, or other "gambling".
But will yours do that over the next five years? How do you know?
I dont know, just like you dont know if your tracker will.
Luck does have a part to play, but undoubtedly so does skill. Just like Backgammon, or Poker, or other "gambling".
Again, I don't disagree, but there's the added feature that in fund investments there are two 'layers' of luck/skill/uncertainty, call it what you will; the investor picking the right fund manager and the fund manager picking the right stocks.
With a tracker investment, one layer of that uncertainty is removed (the fund manager, cos they just have to buy in proportion to the index) and one is lessened as the investor 'just' has to pick an index, and in general they all rise over time.
There's a huge amount of psychology at play too. Investors, and fund managers for that matter, want to be seen as clever and active in being able to beat the market. Trackers are seen as dumb and passive.
I dont know, just like you dont know if your tracker will.
Nope, but I'll have a bet with you now that the FTSE 250 is higher in five years time than it is now.
Just so we're clear, I see this as an interesting debate, I'm not being all internet know-all, I promise. FWIW I work for a wealth management firm, trackers are not very popular around here, the firewall alerts are probably glowing red-hot as I post this stuff 🙂
😆Just so we're clear, I see this as an interesting debate, I'm not being all internet know-all, I promise. FWIW I work for a wealth management firm, trackers are not very popular around here, the firewall alerts are probably glowing red-hot as I post this stuff
I can imagine...
You'll be pleased then that some investors still value active funds,
but not so pleased with the belief that "wealth" managers are spawn of the devil. 😉
in general they all rise over time.
I'll have a bet with you now that the FTSE 250 is higher in five years time than it is now
Why is it logical for you to base your assertions on past performance but when people invest in funds they are "gambling" 😀
Trackers, er, track their target index by holding shares in the index in proportion to their value in the index.
No they don't.
I'll have a bet with you now that the FTSE 250 is higher in five years time than it is now
I'd expect it to be very slowly climbing out of the next crash/correction in 5 years time.....
I'm looking to possible start buying stocks soon. currently trying on a virtual app, to see how things progress, though i don't think fees and stamp duty are taken into account..
it would be investment rather than buying and selling regularly , but am not sure if i should wait for a possible downturn. it feels like one is around the corner, but isn't that always the case?
If you want the two cents of someone else new to all this I'd say get on with it. Long term they will go up. You just need to ride out the dips. If you want to hedge your bets a bit then put the money in bit by bit, say once a month. It is my understanding that is the best long term (obviously you may get lucky, or unlucky with a lump sum but this averages things out). If you aren't buying and selling then just stick it in a fund or tracker (see earlier [s]arguments [/s] discussion)it would be investment rather than buying and selling regularly , but am not sure if i should wait for a possible downturn. it feels like one is around the corner, but isn't that always the case?
buying and selling regularly
In addition to fees, dealing costs are a killer. I wouldnt bother buying individual shares unless you were confident and even then only ones I was intent on keeping for the long run.
Long term they will go up
Really??
If you want the two cents of someone else new to all this I'd say get on with it. Long term they will go up. You just need to ride out the dips. If you want to hedge your bets a bit then put the money in bit by bit, say once a month. It is my understanding that is the best long term (obviously you may get lucky, or unlucky with a lump sum but this averages things out)
+1 !
The best time to plant a cherry tree was 20 years ago. The second best time is now!
Trackers, er, track their target index by holding shares in the index in proportion to their value in the index.
No they don't.
Educate us (me) then (I realise there's scope for nit-picking in my explanation)
Yep get on with it. I started this year & picked 8 funds from around the world and a 4 shares I fancied. Better off with funds imo.
The best time to plant a cherry tree was 20 years ago. The second best time is now!
Personally I'd buy a wide selection of ready-grown fruit 😉
Can confirm that I've now learned enough to know that I know less than I thought.
The best time to plant a cherry tree was 20 years ago. The second best time is now!
Sounds like reasonable advice!
Therefore the increase of 150% over the last 5yrs on one of my funds indicates that the fund manager has been extremely and consistently "lucky" you know what another word for that is>
I take it you do know of the Texas Sharpshooter fallacy?
I don't, whattisit?
I don't, whattisit?
Trackers, er, track their target index by holding shares in the index in proportion to their value in the index.
No they don't.
Educate us (me) then (I realise there's scope for nit-picking in my explanation)
In proportion to their market capitalisation....
Interestingly, there was an article in the FT, which I can't find, a few years ago which found that unweighted passive funds (eg FT 100, each co has 1% weighting), had the highest long term gains, just beating a monkey with a pin...
sounds like good advice.... cheers
In proportion to their market capitalisation....Interestingly, there was an article in the FT, which I can't find, a few years ago which found that unweighted passive funds (eg FT 100, each co has 1% weighting), had the highest long term gains, just beating a monkey with a pin...
I'll class that as nit-picking 🙂
And them monkeys get paid good money...
I don't, whattisit?
It's a form of confirmation bias. The apocryphal situation is someone shoots a load of bullets at a wall and afterward then draws a target round a close grouping that has appeared at random. The shooter then looks like they are a good shot even though they weren't aiming at a target.
In this situation looking at one specific funds performance might make it seem like it is brilliantly managed when in fact the gains may simply have been down to luck.
Educate us (me) then (I realise there's scope for nit-picking in my explanation)
Sorry I'm being a bit of a dick really, they do more-or-less match the index but (the ones I've looked at) certainly reserve the right to use other investments also.
in fact the gains may simply have been down to luck.
Yep, thats it, 5yrs on the run. Lucky.. As long as the fund manager keeps drawing around the profit "target" then they can keep hold of my money 🙄
1)You could lose all your money.Think Japan and/or1929.
2)The latest fad for trackers and ETFs is taking place in a bull market.They may well come a cropper in a bear market.Don't forget,your buying in most cases all the shares in an index.Including the rubbish.
3)Never confuse brains with a bull market.
4)Nobody knows exactly when the next bear market will occur.We only just crawled out the Depression in 2013.The stock market itself is only just above its 1999 highs.
5)Put some money into gold.After 12 trillion of money printing hyperinflation is surely a possibility.
I take some of your points about trackers,but worry about people chasing heat.Neil
surfer,Anthony Bolton had many years of success,until he didnt.
You could always build up a cash pile and wait for the bear market.I mean would you rather pay 50p for your favourite hamburger or a £1.00.This could be some time away however.I,m looking at German infrastructure at the moment.They've got to do something with their £200 billion current account surplus.We,on the other hand are still in deep turd.Surprised non of you have raised the issue of Brexit and the stock market.I think Merkal has the funds to really screw us over.Just a thought.
I think Merkal has the funds to really screw us over.Just a thought.
The only people who seem determined to screw us over are the hard Brexiteers. Everyone else is just looking at us thinking WTF are you doing?
Merkal will want to set an example of us.You leave the German empire and this is what happens to you.She's got the financial fire power,we haven't.
Merkal will want to set an example of us.
Do you really believe that or did you read it in the Express?
Brexit benefits no one bar a few billionaires who hope a weakened UK will be more easily bought.
Strange then how well the stock markets and the European economy have done since last June.If only the rich benefit how come come so many on here have gained since last June?I would take a look at the unemployment drops since then as well.The only person with Daily Mail style fixed thinking is you.
If only the rich benefit how come come so many on here have gained since last June?
If you actually bothered to look at the markets, we're in a 10 year long Bull market....
Nothing amazing has happened post Brexit to stocks and shares, although lots of UK people are up 15% in GBP due to devaluation, which isn't really up at all as the £ is just worth 15% less.
When and if we leave the EU things then may become more difficult for us.World capitalism won't be affected.Its just like throwing a baked bean at a charging rhinoceros.
How come your bull market hasn't come to a juddering halt with your billionaires Brexit.In fact its reached it's highest point ever.According to your logic it should have brought us to our knees.The very opposite has occurred.
This is what I would recommend, if you are considering buying company stocks:
- Only buy in an industry/ commodity that you understand and holds some interest for you.
- Look around you and see what you think are good or popular products, what is everyone using/ talking about.
- Read up on future industries e.g. solar, genetics, robotics, 3d printing etc.
- Make a list of say 6 companies you are interested in and admire and also that YOU have confidence in. Add these to a share 'watch list' on your phone. This will also give you access to news relative to each company. Spend a small bit of time each day reading this news so you become more familiar with the companies and watch the share prices. Watch these companies for a while before you buy. There is nothing wrong with buying in at high level prices if you have confidence in the company and feel business will expand sending the price up further.
- I buy and hold long term. I sometimes sell a few if the price goes up a good deal.
- Understand that seemingly unrelated events can affect share prices, this to me is the scariest bit.
The thought of using a 'fund manager' gives me the heebie jeebies. You be your own fund manager. A fund manager is only there to make money from your money.
Also, no-one has mentioned dividends - I'd certainly suggest looking at quality companies which pay out a dividend. Don't just go for the companies with the biggest payout though.
I hold a mixture of solid mostly UK blue-chip dividend stocks, various funds with exposure to UK, Europe, US, India etc.
Also I do a bit on in-and-out trading, looking to buy stocks showing weakness and make a quick buck on the bounce. I wouldn't recommend this for a beginner though.
surfer,Anthony Bolton had many years of success,until he didnt.
Yep, investing in the market has risks.
A fund manager is only there to make money from your money.
Well. err yes, but you have to decide if you can choose the stocks they do. If you can then good luck but there is a cost to buying them. Lots of poor fund managers but some good ones. You pays yer money....
