FTSE100 tracker
Discussion
NickCQ said:
leef44 said:
Indeed 0.5% is the market rate now. Between 1998 and 2012, those rates were much higher.
No - the Vanguard 500 Index Fund has had fees <0.5% since it was founded in 1974. Even by the 1990's it was already c. 0.2%I remember back in the 1990's trying to find a fund which had low fees and I could only get it down 1-2% when some funds were up to 5%. But back then, platform fees, mmgt fees, admin fees, holding fees etc. - there were so many labels and you didn't have TER back then.
leef44 said:
Were they readily and easily available to UK investors at that time or only US domestic market or only USD.
I remember back in the 1990's trying to find a fund which had low fees and I could only get it down 1-2% when some funds were up to 5%. But back then, platform fees, mmgt fees, admin fees, holding fees etc. - there were so many labels and you didn't have TER back then.
I think it was possible but tricky wrt US taxes and as you say easy to get loads of intermediate layers added on, especially if you were trying to use funds in a pension.I remember back in the 1990's trying to find a fund which had low fees and I could only get it down 1-2% when some funds were up to 5%. But back then, platform fees, mmgt fees, admin fees, holding fees etc. - there were so many labels and you didn't have TER back then.
Zoon said:
Mattt said:
Depends if you held it through SJP or similar...
SJP pension blackhole.Guarantees to eat what you've invested.
I guess the moral of the story is that diversification is key - I am guilty of chucking 30% of my portfolio at FTSE100 and 250 Vanguard funds expecting a Boris Bounce last December.
I am now buy URTH on a monthly basis for my Son's school fund - at least it flattens out some of the country risk by being weighted by market, so a declining FTSE won't drag as much as a single index/country
leef44 said:
NickCQ said:
soofsayer said:
Joey Deacon said:
The FTSE 100 is currently 5772, exactly the same as it was on 6th March 1998
Does that mean if you invested back in 1998 your investment would be worth exactly the same value today?
Yes if you were invested in a tracker.Does that mean if you invested back in 1998 your investment would be worth exactly the same value today?
FTSE 100.
In bare index number terms, the FTSE 100, at 5,886 points, is below the level it was at 20 years ago, when it was just above 6,200 points. That’s even excluding the costs of holding the index in a tracker and paying fund and platform fees. Looking at the above chart, a £10,000 investment would be worth £9,560 after 20 years, but that sum would be worth nearly £20,000 including dividends – so an investor would have doubled their money, a reasonable if not spectacular result given the gains available in other parts of the world in that time period.
FTSE 250.
The mid-cap focused FTSE 250 has fared much better than the FTSE 100 or AllShare over 20 years, rising from 6,404 in 2000 to 17,868 today, a gain of 179% (for comparison, the Dow Jones is up by a similar amount in percentage terms over the period).
Taking our investor's notional £10,000 invested in 2000, that would have turned into an impressive £28,000 on the capital gains alone and nearly £50,000 including dividends (effectively a five-fold return in 20 years).
FTSE AllShare.
The AllShare is only 300 points higher than in October 2000 and the £10,000 invested in 2000 would have become a paltry £11,000 without dividends, and £22,000 with - so like the FTSE 100, on a total return basis, you would have doubled your money.
Fees and Inflation.
It’s worth bearing in mind that the after-fees return of a tracker fund is likely to be lower than the index itself. However, costs have come down considerably in recent years and the increased Isa allowance (currently £20,000) means investors can enjoy tax-free returns.
But inflation is also a key consideration for investors; according to the Bank of England, from 2000 to 2019 inflation averaged 2.8% a year, meaning £10,000 in 2000 is effectively worth nearly £17,000 now. This means that if you could have found a saving account that kept up with inflation in that period, you would have been better off keeping your money in cash than buying a FTSE 100 or AllShare tracker - the stock market investor would also have had to endure the rollercoaster ride that was the global financial crisis and coronavirus pandemic in that period.
With dividends taken into account, however, the picture is more promising. Still, the current UK dividend drought makes it hard to project such generous payouts continuing over the next 20 years. Brexit complications are also a reason to be cautious towards UK shares, as well as the astonishing success of US tech firms in recent years, which has tempted investors to look overseas for returns. Of the Morningstar-rated funds, Vanguard FTSE UK AllShare and the L&G UK Index have Gold Analyst Ratings.
Phooey said:
https://www.morningstar.co.uk/uk/news/206481/which...
FTSE 100.
In bare index number terms, the FTSE 100, at 5,886 points, is below the level it was at 20 years ago, when it was just above 6,200 points. That’s even excluding the costs of holding the index in a tracker and paying fund and platform fees. Looking at the above chart, a £10,000 investment would be worth £9,560 after 20 years, but that sum would be worth nearly £20,000 including dividends – so an investor would have doubled their money, a reasonable if not spectacular result given the gains available in other parts of the world in that time period.
FTSE 250.
The mid-cap focused FTSE 250 has fared much better than the FTSE 100 or AllShare over 20 years, rising from 6,404 in 2000 to 17,868 today, a gain of 179% (for comparison, the Dow Jones is up by a similar amount in percentage terms over the period).
Taking our investor's notional £10,000 invested in 2000, that would have turned into an impressive £28,000 on the capital gains alone and nearly £50,000 including dividends (effectively a five-fold return in 20 years).
FTSE AllShare.
The AllShare is only 300 points higher than in October 2000 and the £10,000 invested in 2000 would have become a paltry £11,000 without dividends, and £22,000 with - so like the FTSE 100, on a total return basis, you would have doubled your money.
Fees and Inflation.
It’s worth bearing in mind that the after-fees return of a tracker fund is likely to be lower than the index itself. However, costs have come down considerably in recent years and the increased Isa allowance (currently £20,000) means investors can enjoy tax-free returns.
But inflation is also a key consideration for investors; according to the Bank of England, from 2000 to 2019 inflation averaged 2.8% a year, meaning £10,000 in 2000 is effectively worth nearly £17,000 now. This means that if you could have found a saving account that kept up with inflation in that period, you would have been better off keeping your money in cash than buying a FTSE 100 or AllShare tracker - the stock market investor would also have had to endure the rollercoaster ride that was the global financial crisis and coronavirus pandemic in that period.
With dividends taken into account, however, the picture is more promising. Still, the current UK dividend drought makes it hard to project such generous payouts continuing over the next 20 years. Brexit complications are also a reason to be cautious towards UK shares, as well as the astonishing success of US tech firms in recent years, which has tempted investors to look overseas for returns. Of the Morningstar-rated funds, Vanguard FTSE UK AllShare and the L&G UK Index have Gold Analyst Ratings.
It's all rather confusing to me. Back in the day I had a L&G ISA with FTSE 100 tracker fund. It was an accumulation fund so dividends reinvested and all in annual fee of just over 1%.FTSE 100.
In bare index number terms, the FTSE 100, at 5,886 points, is below the level it was at 20 years ago, when it was just above 6,200 points. That’s even excluding the costs of holding the index in a tracker and paying fund and platform fees. Looking at the above chart, a £10,000 investment would be worth £9,560 after 20 years, but that sum would be worth nearly £20,000 including dividends – so an investor would have doubled their money, a reasonable if not spectacular result given the gains available in other parts of the world in that time period.
FTSE 250.
The mid-cap focused FTSE 250 has fared much better than the FTSE 100 or AllShare over 20 years, rising from 6,404 in 2000 to 17,868 today, a gain of 179% (for comparison, the Dow Jones is up by a similar amount in percentage terms over the period).
Taking our investor's notional £10,000 invested in 2000, that would have turned into an impressive £28,000 on the capital gains alone and nearly £50,000 including dividends (effectively a five-fold return in 20 years).
FTSE AllShare.
The AllShare is only 300 points higher than in October 2000 and the £10,000 invested in 2000 would have become a paltry £11,000 without dividends, and £22,000 with - so like the FTSE 100, on a total return basis, you would have doubled your money.
Fees and Inflation.
It’s worth bearing in mind that the after-fees return of a tracker fund is likely to be lower than the index itself. However, costs have come down considerably in recent years and the increased Isa allowance (currently £20,000) means investors can enjoy tax-free returns.
But inflation is also a key consideration for investors; according to the Bank of England, from 2000 to 2019 inflation averaged 2.8% a year, meaning £10,000 in 2000 is effectively worth nearly £17,000 now. This means that if you could have found a saving account that kept up with inflation in that period, you would have been better off keeping your money in cash than buying a FTSE 100 or AllShare tracker - the stock market investor would also have had to endure the rollercoaster ride that was the global financial crisis and coronavirus pandemic in that period.
With dividends taken into account, however, the picture is more promising. Still, the current UK dividend drought makes it hard to project such generous payouts continuing over the next 20 years. Brexit complications are also a reason to be cautious towards UK shares, as well as the astonishing success of US tech firms in recent years, which has tempted investors to look overseas for returns. Of the Morningstar-rated funds, Vanguard FTSE UK AllShare and the L&G UK Index have Gold Analyst Ratings.
I remember calculating that it had gone up by 50%, FTSE went something like 3600 to 5400 in that period. But I was investing monthly after 20% initial lump sum. So I was expecting about 25% appreciation in my fund. Instead my fund saw a 15% increase. It was about a five or six year period.
So the dividends never seemed to compensate for the cost of fees and spread costs. It was transparent how it got calculated when you see the units purchased and the end value. There was no audit trail to where the costs went.
Condi said:
I know. But the likes of Shell, BP, Bank of Scotland etc are hardly "the future" are they? They might be big companies, but they can be big companies in decline rather than the companies which will be important in our future economy.
Rockin argued this point right back at the start of this thread in 2017:rockin said:
The name "FTSE 100 index" makes it sound like 100 similarly sized big companies. It's not. A handful of humungous companies at the top dominate the index, making it very lopsided towards banks, pharmaceuticals and oil.
http://www.stockchallenge.co.uk/ftse.php
The performance of the FTSE over the last 10 years has been piss poor because Tech has eaten the world. Do I think Tech is way, way, over-priced? Yep, but if I were to buy an Equities index fund, it would have to include a Tech component (look at the S&P500 - the lack of breadth is astonishing - yet the large proportion of growth is a handful of Tech stocks).http://www.stockchallenge.co.uk/ftse.php
What worries me about the FTSE10 is the lopsidedness towards Financials in a negative interest rate (short-term rates) environment, potential mass insolvency event, and high amounts of debt. Inflation? A decade of QE and where is it? Velocity of money has declined over the last decade because for all of the printing [monetary], not much is reaching the real economy because Banks are not lending. Why? They're f**ked. European Banks more than others.
Due to high Govt debt levels, Govt cannot afford for rates to rise. In fact, due to Brexit, they need Sterling to devalue (as do many other countries re: their own currencies) - and they *will* devalue / debase fiat. Devaluation will make exports cheaper [competitive advantage] and also 'inflate' away debt in devalued GBP. Perversely, this may help the FTSE due to multinationals generating earnings from USD, which is the Bull case I guess?
Have I just done a Dennis Wise and lost an argument with myself?
I'd look at the FTSE from a value perspective rather than growth i.e 18 month trade or so. For longer term, I'd choose a World index, with separate smaller EM country / region specific ETFs (giving any EM w/ high USD denominated debts a wide berth).
Edited by putonghua73 on Thursday 19th November 09:38
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