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19-03-2018, 06:30 PM
1

Index Funds?

Looking at the calendar, and in the mirror , I am thinking that it is once again time to tighten the screws of some of my retirement investments slightly more conservatively .

I realize that we are talking about wholly different economies, but have any of you shifted individual stock holdings to the bigger UK indices over time?
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20-03-2018, 01:46 AM
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Re: Index Funds?

Not having a clue what you were talking about, I found a relevant article:

https://www.investorschronicle.co.uk...K/article.html
The 10 best indices to track

A good index tracking exchange trading fund (ETF) can and should be one of the core components of any diversified portfolio.

It's all about the index

Indices are not all equal.
Track an imperfect index that's poorly constructed, over weight in just a few shares (say banking stocks in 2008) and you'll end up destroying a large chunk of your money despite all the talk about efficient markets and perfectly optimised portfolios by academics.
Luckily investors have a huge range major markets that can be tracked using mainstream indices - nearly all the big asset classes and markets boast an index that's become a part of everyday language. In the US, for example, the level of the Dow Jones Industrial Average or the S&P is the subject of intense daily discussion on a number of major news programmes while here in the UK, all the major news organisations talk hourly about the current level of the FTSE 100 index of major London listed blue-chip shares.

Indices are mathematical constructs, which are marketed as brands to both institutional and private investors - they're a shorthand way of 'capturing' the changes in major markets. The number of these index 'brands' has increased exponentially in recent years with major providers such as Dow Jones, MSCI, S&P and FTSE turning into research houses sporting every kind of niche index imaginable -
the FTSE Group, for example, calculates over 120,000 indices covering more than 77 countries and all major asset classes.
The key for investors is to work out which indices - and markets - really matter and then work out how best to invest in these markets. In many liquid, mature markets index tracking funds are probably the cheapest and arguably the best way of buying long-term exposure although over shorter terms there's no doubting that active fund managers can add value. Equally, some of the less mainstream markets are probably better suited to active fund managers - there's a huge array of ETFs that track the big emerging markets but many analysts reckon that an active fund manager can do a better job of navigating around these risky, volatile markets. Remember that an index tracking fund will only ever buy the most popular stocks that are increasing in value - it's a giant weighing machine that is heavily influenced by momentum, so if a market and thus an index is overweight popular mining stocks, expect the ETF to be equally overweight.

The key for investors is to work out which indices to track, how many to include in their portfolio and then work out the best way of buying that exposure to the market - called access to beta in the trade.
Well, I'm a little wiser, but I think I'll bear in mind the old adage "Never invest money that you can't afford to lose." .....

The only risk that I'm taking at the moment is cutting out the financial institutions and dabbling with peer-to-peer banking .....
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20-03-2018, 09:07 AM
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Re: Index Funds?

The trouble is with Index funds is that they go down as the market goes down .I have some funds they tend to be volatile .
I like pharmaceuticals -we are always going to be ill aren't we?
One of the best funds ever must be Fundsmith Equity that invests in America it has done very well in the past -but as they say past performance is no guarantee of the future .
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21-03-2018, 02:52 AM
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Re: Index Funds?

Omah, that's a good introduction. Indexes are an interesting option

I should mention that I'm not doing any ETFs right away because I think the markets over here are over-valued, but I am selling here and there to put into cash and other assets, and am starting to diversify a little more and broaden the risk somewhat - with a lot of research put behind it. In other words, it's time to get more conservative with the nest egg.

Muddy, you are correct that indexes follow the economy, so there has to be flexibility in when to sell. One has to be overall bullish about the growth of the national economy over time and willing to make a long term investment, ten years or more for some reasonable expectation of a return. Here, that return in the overall market is around 7%.
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21-03-2018, 06:40 AM
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Re: Index Funds?

Our markets took a hit this week because the gained value. There are all sorts of reasons the markets go up and down. Actually you can invest in low risk stocks which are pretty safe but get professional advice.
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