FTSE tracking ISA advice

Bitstring , from the wonderful person Simon Finnigan said

You may find even lower charges on the Edinburgh Fund Managers UK Tracker Investment Trust - the downside being that the shares can sell at a discount to NAV (or indeed a premium). However do you really want a tracker .. cheap, yes, since a tracker can be adequately managed by a mentally impaired rodent, however you =will= have invested in all the large, overpriced, companies which subsequently come a cropper - even it you track the FTSE all share, an unreasonable proportion is in half a dozen large companies. If you track the FTSE 100 it's even worse.

What alternatvies would you suggest for this kind of level of investment? I don't have the spare time to put the effort in to study the markets ooking for the next fantastic buy - essentially I need something to pay into regularly and make a reasonable level of profit in over the long term. It seems to me that most managed funds don;t manage to match te performance of a tracker :-)

[]

I found an old _IC_ from Feb 1999, the other day - 895 GPB/tonne, vs

3216 GPB/tonne.

Oh wait, I thought you said "come a copper".. ;->

'twas interesting 'tho - FTSE at 5834, p/e of 23.7 yield 2.76 compared with 6024, p/e 12.9, yield 3.08, err, 7th April this year.

rgds, Alan

In message , Simon Finnigan writes

Why a tracker? And which FTSE index? You will be investing in mediocrity in any event.

In investment terms that is only a 'medium' term.

Good.

If you want to invest in a tracker (which I think is a flawed decision) then charges are irrelevant, what you need to look for is whether the tracker actually tracks what you want it to track. The charges it applies are of no consequence. Just look at the post charges tracking error. I.e. after the managers have nicked your dosh, does it still track the index you wanted it to track?

Yes, its one of those 'were a mutual union so we will do a deal with a mutual company. Sod their performance' sort of arrangements. Prospect are not (AFAIAA) authorised to give advice by the FSA.

There you are bothered about charges again! Have a look at the actual performance of the two companies you mention. I assume you mean the L&G UK Index and the Fidelity Moneybuilder UK Index. Have a close look at the performance of each fund, net of charges, and the answer will reveal itself. In fact the fidelity fund is slightly misnamed in so far as its objects are to attempt to track the all share index but not by mimicking it, and it does so by managing a mainstream balanced portfolio without over exposing you to just a few stocks. By comparison with other funds that do the same thing but without the word 'index' in the name, it is a mediocre performer..

Are you sure you want a 'tracker'? I.e. something that tracks the good stocks and the bad ones?

In message , Simon Finnigan writes

I refer to my previous pasts over the last 12 years and will quote the very same names.

Jupiter Income & Invesco Perpetual Income amongst very many worthy others.

These are not 'flavours of the month' but the same funds that I have named here over the last decade.

If you remove all those funds that are either low riosk or 'balanced' funds (which dont attempt to match the volatility of the market as a whole. Then remove almost all of the funds managed by banks or insurance companies, then remove all those funds which dont invest in the UK stock market anyway (i.e. fixed interest & bond funds, cash fund, and those hundreds of funds that invest outside UK) you are left with less than

10% of all the funds available. These remaining funds are generally consistent over the medium term in so far as they soundly beat the indices that measure the market in which they invest.

In message , Alan Frame writes

Yes, quite mediocre compared with what was also available throughout that period.

You should have a look at the Motley Fool website. They have very useful articles and comparison charts for Isas

[Feb1999]

You probably have a longer memory than me, but my two thoughts were" "Yeah, the FTSE is in danger of being overpriced at 6100, err, wait a minute!" and "Interest rates are low, and shares have gone up loads, so the yield is carp - hang on, hmm..."

I'm now enlightened as to why indices on their own aren't terribly usefull.

rgds, Alan

IF trackers are such a bad idea, firstly can you please suggest something better, and secondly why does fool.co.ul, which seems to be held in high regard by most of the posters here, make them sound to be pretty much the perfect investment? :-)

Further to the above, I also have slightly over 3k from last years ISA (currently a cash isa at 3.75% IIRC) that I'd like to move to somewhere offering a better rate. Any better suggestions than the Halifax fixed 5% ISA?

In message , Simon Finnigan writes

Yes, go for a 'Bottom Up' 'Stock Picking' Unit Trusts or OEICs with consistent performance. Go via a fund supermarket such as Fidelity or Skandia and put a few funds in the ISA. Look at (for example) Invesco Pepetual Income, Jupiter Income etc., amongst others. These are funds which I have promoted here for over ten years so their performance is not just a flash in the pan.

Well the name of the site gives some indication ! :-)

I'd broadly agree with you, but for 50 pounds per month I'd look for an investment trust saving scheme which would give low charges and would still allow the choice of a number of trusts with excellent long-term performance. I'm thinking of RIT capital partners, British Empire Securities and the like. I don't know what the minimum investment is for them these days but it used to be around £50. (Personally I would shop around as many of the good ITs like RIT are at a notional premium at the moment - but I like to buy ITs when they are undervalued).

You could even do with via Halifax using the share builder scheme. The flat charge is £1.50 per trade so monthly it works out as 3% for any investment trust - most of the saving schemes charge 1% to buy or sell. Halifax would charge somewherea round £5-15 to sell the entire holding (so could be cheaper at that end). If you invested quarterly you'd pay £1.50 for 150 pounds so would equal the charges most of the saving scheme rates.

Thom

The minimum for British Empire Securities is £100 per month (so is RIT I think).

Caldedonia will accept £50 per month, but as they are trading at over £20 per share right now, it is starting to look a bit expensive.

Neil.

Go back to TMF and read the High Yield Portfolio discussion board.