Index Tracker Funds

Discussion in 'Stocks & Derivatives' started by petey, May 13, 2013.

  1. petey

    petey Active Member Silver Stacker

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    I am basically a complete rookie when it comes to the stock market, but I have began to realise just how much I should begin to diversify. Few of my assets generate income, and any cash in the bank is losing value over time.

    I have read a lot about index tracker funds (eg Vanguard in Australia) - they sound great in theory as you effectively buy the indexed 500 (or however many the index includes) companies at one time, ensuring diversification throughout the market. I imagine if you had a bit of a cash nest egg, you could drop $5k in Australia, $5k in US, Europe, Brazil?, etc and be at least somewhat insulated.

    Of course reading articles in newspapers and blog posts always leave me somewhat sceptical, so I thought I'd see what the SS community has to say about it all.

    EDIT: Apologies, this was meant to end up in Stocks & Derivatives section.
     
  2. hiho

    hiho Active Member Silver Stacker

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  3. perthsilver

    perthsilver Member Silver Stacker

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    Ive been looking into this http://betashares.com.au/ for my SMSF. Thinking about the Ag and Oil ETF mostly.

    Might be what your looking for.
     
  4. petey

    petey Active Member Silver Stacker

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  5. grinners

    grinners Active Member Silver Stacker

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    Big fan of passive share funds.

    ASX VAS is one of the best ones (ASX300) IMO. Low rates and top 300 companies by capitalisation.

    Looking for a good international (fund or ETF) with a broad structure.

    Vanguard International Shares Fund (Unhedged) is my favourite at the moment, but would like a non-Vanguard one also. Anyone know of any?
     
  6. wrcmad

    wrcmad Well-Known Member Silver Stacker

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  7. mmm....shiney!

    mmm....shiney! Administrator Staff Member Silver Stacker

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    Don't diversify until you are not a complete rookie ;)
     
  8. mmm....shiney!

    mmm....shiney! Administrator Staff Member Silver Stacker

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    They're impressive, wow, financial pron that is. :lol:

    Cost?

     
  9. grinners

    grinners Active Member Silver Stacker

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    What happened to the share price in 2006? Seemingly instantly doubled in price, was there a share merger or something?

    https://www.google.com/finance?q=ASX:WAM


    In fact that was the third time it had happened, once in 2001 and once in 2003 also.
     
  10. wrcmad

    wrcmad Well-Known Member Silver Stacker

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    Yeah, fees seem a bit steep, until you look at the share price performance and dividend payments. IMHO, these investor returns after fees may well justify the fees.

    stock split/merger? looks like.
     
  11. petey

    petey Active Member Silver Stacker

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    But doesn't that defeat the purpose? The whole reason the ITF is meant to be worthwhile considering is super low fees - essentially no "management" - you just buy the index.
     
  12. petey

    petey Active Member Silver Stacker

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    It seems the standard Citigroup M1 Global ex-Australia Index. Macquarie offer it but minimum investment is $500k, I think maybe AMP offer it but they don't like advertising it so it seems.
     
  13. Big A.D.

    Big A.D. Well-Known Member Silver Stacker

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  14. wrcmad

    wrcmad Well-Known Member Silver Stacker

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    If you just want to buy the index, then the cheapest way is to buy an Index CFD.
    If you want to try for a bit of out performance, then this will not come for free.
     
  15. petey

    petey Active Member Silver Stacker

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  16. grinners

    grinners Active Member Silver Stacker

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    As soon as someone makes a passive [World 2000] ETF or similar (2,000 biggest companies) or 10,000 or 1,000 WITH a dividend reinvestment option it will have a good flow of money into I'd say.

    Gaping hole in the current Aus investment market.
     
  17. grinners

    grinners Active Member Silver Stacker

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  18. petey

    petey Active Member Silver Stacker

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  19. Roswell Crash Survivor

    Roswell Crash Survivor Well-Known Member Silver Stacker

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    Beware of survivorship bias when looking at past performance of index funds.

    Surprised a discussion of index funds and other forms of 'buying the index' has gotten this far without survivorship bias being bought up.
     
  20. petey

    petey Active Member Silver Stacker

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    One has limited options at this point in time (IMO).

    PMs = speculation. They are a solid backup plan, but with the can being continually kicked into the future and smackdown after smackdown, it's hard to say "go all in".
    Real Estate = income, yes, but we know it is a largely overvalued asset.

    So what does one do? We know that assets that will produce income is a solid option, but they typically require work too (eg, buy a bobcat - you either need to then rent it or do the excavations yourself. Either option takes time (bookings, servicing, etc).

    I don't have enough knowledge to go in and buy shares in seemingly "bargain basement" companies, nor do I have a great deal of cash to invest. What I do want however, is to preserve the savings I do have.
     

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