dspp wrote:
As to whether the UK itself should form more than a GDP-share of one's portfolio (which is about 2.24% per google), that rather depends on whether one thinks that UK is undersold or oversold at present; and whether the financials & resource sector skews in the UK indexes are likely to be a good or a bad thing. Personally I seen o reason to take a risk on the UK right now - I see very little upside in Brexit, and enormous downside risks.
regards, dspp
Thanks dspp.
Your point re UK potential going forward, above, also made in a more speculative way by another poster, echoes my own.
When you look at world events, the direction everything is going, and then include Brexit, the UK's historic poor performance, the structure of the FTSE100 even if not taking into account our propensity for selling the family silver, it seems clear that Tech, Biotech, China (plus perhaps other Asian markets now bootstrapping themselves up) will most likely continue to outperform the UK market. At least for indexes - of course a single retro picked individual share (mine is Fevertree) could negate every other choice, but we are on the Passive investing board here, after all.
And the indexes that have big tech, decent Bio and a record of growth (while also actually paying dividends) are the S&P500, NASDAQ 100 and going forward probably China and maybe Japan, Vietnam. Of course, making a bigger bet and actually selecting Tech or Biotech ETFs might give much better returns if tech and bio are where you think the future lies (I do, personally) but that is perhaps going almost into stock picking territory, which I would not want to do on this board.
I think it is also worth noting that demographics favour Asia Pac (ex Japan) as well as Africa and South America. I am not sure I would want much in the latter two, but it is food for thought. According to my reading Europe is on a long decline in population growth, dipping into population reduction in the next 100 years.
I also looked up the performance of some actual funds to get a wider view. All are Acc units, so include reinvested dividends. I could only easily go back 10 years, but all are very consistent with the earlier performance i listed, going back 30+ years. It is, in my opinion, interesting to note that even the Vanguard Worldwide fund (exUK) trounces the UK market. I also was wrong in my earlier stats, as the dividend reinvestment in the S&P and the Nasdaq make their outperformance v the FT100 even more than I estimated.
Some examples - like for like Accumulation fund returns
Vanguard FT100 Acc -- 5yrs 17% 10yrs 51%
Vanguard World exUK- 5yrs 32% 10yrs 212% (4x FT100)
Vanguard SP500 Acc -- 5yrs 90% 10yrs 240% (4.7x FT100)
iShares - Nasdaq Acc - 5yrs 192% 10yrs 631% (12.7x FT100)
Personally, bearing in mind past performance and likely future growth areas and demographics (Tech, Bio, Healthcare, Digital Security) I am inclined to abandon UK passive funds altogether, sticking with the S&P500, Nasdaq100 and a Worldwide ETF, for all my passive investing, with some UK stock picks, gold and bonds thrown in for balance.