Trackers

Out of interest I just looked at the performance of trackers on trustnet. There are 526 UK unit trusts with a 5-year record; the Virgin All share tracker is 436th and the L&G FTSE tracker is 504th. So much for the idea the trackers always outperform ...
Reply to
Stephen Burke
In message , Stephen Burke writes
As I was saying about five years ago,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, :-)
Reply to
john boyle
john boyle wrote in message ...
Presumably there can't be too big a gap between no.1 and no. 526 if they're all trackers. Or maybe The City's definition of tracking is to "hang about in the general vicinity of".
Reply to
stuart noble
Or, as I reported on my own webpage:
formatting link
"An interesting statistic that I worked out from the figures I reported for the FTSE-All Share index:it rose from 1693 at the end of 1993, to 2175 at the end of 2003. that's a compound annual return of 2.5% ( = (2175/1693) ^ (1 / 10) ). Readers may be suprised by this figure - it is, after all, quite low."
And so much for the idea that stocks always return a handsome profit over the long term, too!
Reply to
Mark Carter
The idea is that trackers track, hence the name. In my view it is a pretty pathetic plan to aim to just track an index. A good manager will always aim to outperform.
A tracking fund buys shares because a company is part of the footse index (or whatever is being tracked). Any other fund buys shares because they view them as a good investment. It should be no surprise to see the latter approach doing better.
___
formatting link

Reply to
DP
DP wrote in message ...
I think the point is that they don't do better, well, according to Motley Fool anyway.
Reply to
stuart noble
It is a surprise in some ways, given that for one fund to buy a share someone else has to be selling, and they can't both be right. IMV the problem with the FTSE is more that it's heavily concentrated into a handful of big companies, which have done much worse than the majority.
Reply to
Stephen Burke
A great oversimplification. The market maker holds a big chunk of shares. Whatever people want to do - buy or sell - he/she must oblige. He/she also sets the price. If more people want to buy than sell, the market maker quickly puts the price up until balance is restored. If the market maker wants to slow things down he/she can make the difference between the buying price and selling price wider.
No trader is "right" all the time. The good traders are right more times than being wrong.
The number of traders and shares is enormous. There is always someone wanting to increase a holding of a certain footse share and there is always someone wanting to decrease their holding. Think of pop stars. You can always find someone who hates whoever is at the top of the charts. There is no right and wrong, just different opinions.
___
formatting link

Reply to
DP
What market maker? FTSE 100 shares, and quite a few outside the FTSE, are traded as matched bargains on SETS, directly between participants.
Evidence? AFAIAA all the academic studies say otherwise, there is no evidence that any fund managers add value, at least for large companies in major stockmarkets. Fund managers all have access to the same pool of data, and people are constantly moving from one company to another so there is little scope for any proprietary secrets about trading methods. There are good arguments for investing passively; unfortunately that has somehow been translated into the idea of investing in trackers, which is not the same thing.
Reply to
Stephen Burke
What is your meaning of "investing passively": rolling your own tracker-esque portfolio; or buy-and-hold with selectivity?
Reply to
Mark Carter
I'm not entirely convinced by that. The studies show fairly conclusively that _most active managers_ don't add value. That isn't the same as saying that there is no evidence that any fund managers add value. (Absence of evidence not being evidence of absence). I'm not convinced that most of the quoted studies have sufficient power to distunguish the small set of potentially good managers from the poor ones. I agree with your implicit point that the good managers are more likely to found in certain areas (e.g., small companies, unquoted investments).
Thom
Reply to
Thom

BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.