Which ftse tracker?

[Ginge R]

WindyCommon said:

For those funds that do lend (and many have the power to, but don't in practice as I alluded to earlier) what happens is that the lending income is split between the manager and the fund - usually something like 30% to the manager and 70% to the fund. The manager will represent that their retained portion is a "stock lending service fee" covering the admin involved. They will claim that stock lending income enables them to keep their headline fee lower than it would be otherwise.

It's an area fraught with regulatory and PR risk, so many managers simply don't bother even if they have the correct prospectus powers.

I wonder if anyone has examined the impact on for instance, an equity fund lending just before the start of a particularly strong bull period.

[sidicks]

Ginge R said:

I wonder if anyone has examined the impact on for instance, an equity fund lending just before the start of a particularly strong bull period.

Why would the underlying market scenario make any difference? The fund still has exposure to the same stocks. Counterparts riks might increase slightly, but this shouldn't be material if well managed.

[Ginge R]

sidicks said:

Why would the underlying market scenario make any difference? The fund still has exposure to the same stocks. Counterparts riks might increase slightly, but this shouldn't be material if well managed.

You could be right, I don't know.. it was just an idle question. But if a lender like Black Rock takes cash as collateral, it still has to reinvest that money to generate a return. Another risk might be that the terms of that, a) it doesn't cover the value that may otherwise be generated, b) the value of the asset which has been loaned (works both ways, of course) and liquidity. If the collateral isn't liquid, the fund manager may still experience capability loss. There used to be (probably still is) a standardised agreement covering off all risk factors.

Edit: Still is. A quick scan implies there is indemnity in the event of late recovery if fault lies with the borrower, but that implies there may be loss too, in the course of the loan period. 6.4 e refers.

http://www.isla.co.uk/wp-content/uploads/2015/08/G...

Edit 2: Why would the fund retain the same exposure? The lender retains in-lieu dividend rights etc, but is still exposed to opportunity cost/risk.

Edited by Ginge R on Wednesday 9th August 10:30

Edited by Ginge R on Wednesday 9th August 10:46

[BarryGibb]

OP, why not the FTSE All Share?

[FWIW]

BarryGibb said:

OP, why not the FTSE All Share?

Less risk...possibly.

The question is which one!?

Really interesting info gents, thank you.

[BarryGibb]

FWIW said:

BarryGibb said:

OP, why not the FTSE All Share?

Less risk...possibly.

The question is which one!?

Really interesting info gents, thank you.

It depends what your current holdings are and therefore what you are looking to diversify from? How much of a non UK equity holding do you have as a percentage out of interest?

[FredClogs]

I bought this one.

http://www.hl.co.uk/funds/fund-discounts,-prices--...

Does what it says on tin. Not as cheap as it first appears though as don't forget you've got an annual charge on the platform (Isa or sipp) with HL and the likes.

[FWIW]

So...in the end I opened an account with Vanguard and invested in an S&P 500 tracker. https://www.vanguardinvestor.co.uk/investments/van...

I already have some UK/FTSE exposure so I felt (taking into account the comments in this thread) that some US exposure would balance my portfolio.

[BarryGibb]

FWIW said:

So...in the end I opened an account with Vanguard and invested in an S&P 500 tracker. https://www.vanguardinvestor.co.uk/investments/van...

I already have some UK/FTSE exposure so I felt (taking into account the comments in this thread) that some US exposure would balance my portfolio.

Any reason you didn't go for? - https://www.vanguardinvestor.co.uk/investments/van...

or one with global exposure, such as

https://www.vanguardinvestor.co.uk/investments/van...

[FWIW]

BarryGibb said:

Any reason you didn't go for? - https://www.vanguardinvestor.co.uk/investments/van...

or one with global exposure, such as

https://www.vanguardinvestor.co.uk/investments/van...

Not really! Just needed to make a decision...

I've been reading Millionaire Teacher and he talks about S&P 500 quite a bit. The charges are very low at 0.07% compared to the 0.25% for the all world fund.

I'm drip feeding so I might put a bit in the ones you mention too...thanks.

[BarryGibb]

FWIW said:

BarryGibb said:

Any reason you didn't go for? - https://www.vanguardinvestor.co.uk/investments/van...

or one with global exposure, such as

https://www.vanguardinvestor.co.uk/investments/van...

Not really! Just needed to make a decision...

I've been reading Millionaire Teacher and he talks about S&P 500 quite a bit. The charges are very low at 0.07% compared to the 0.25% for the all world fund.

I'm drip feeding so I might put a bit in the ones you mention too...thanks.

Tim Hale's book is worth a read

https://www.amazon.co.uk/Smarter-Investing-3rd-edn...

it's from 2013, so the product landscape may have changed (for the better) in the interim, and not sure if his view would still be the same on bonds as defensive hedge, but an interesting read.

[FWIW]

BarryGibb said:

Tim Hale's book is worth a read

https://www.amazon.co.uk/Smarter-Investing-3rd-edn...

it's from 2013, so the product landscape may have changed (for the better) in the interim, and not sure if his view would still be the same on bonds as defensive hedge, but an interesting read.

Thanks for the recommendation, I'll add it to my reading list.

[MisterJD]

Has anybody mentioned to always check the bid-offer spread as that is another charge.

Trackers all underperform, but by approximately the fees only hopefully. Isn't that what you want it to do?