The worry and occasional happiness we hear from clients about the state of their investments often results from hearing on the news that ‘The FTSE rose (or fell) sharply today’. But here’s the thing, it hardly matters any more. Our own stock market now makes up less than 4% of the world’s total, and that will reduce still further if the likes of Shell decided to move and list in New York instead. Even funds which have around 10% in UK shares are ‘overweight’, and demonstrating ‘home bias’. The City is far from the centre of global finance it once was and as for ‘reconnecting with the world…’ So, for better or worse, it’s what happens everywhere else (and having a well-diversified portfolio) that matters most. And that’s not going to change in a hurry.
“LSEG report: Most active funds are underperforming their benchmarks”
So-called ‘tracker’ or ‘passive’ funds have become very much more sophisticated in recent years, largely facilitated by technology. The originals, you may remember the Virgin UK Index Tracker, launched nearly 30 years ago, mimicked the FTSE index and, as they don’t need anyone to manage them, were and are very much cheaper than ‘active’ funds.
