MrFoolish wrote:Jon277 wrote:Thanks very much for the annual update on HYP1.
i'm always suprised by the level of animosity these reports get.
PYAD was clear as to the purpose and why FTSE100 was chosen as the comparision - having people second guess with hindsight or suggesting different indices should have been chosen is a ...strange at best
Jon
What reason was that? I would have thought an index based on total world market cap would make more sense. Or even the FTSE all-share at a push.
What you or I might think, isn't relevant except to our own portfolio conduct
Pyad's decision at that time was that for a UK amateur investor is would be better to stick with UK shares, and that the "foreign" content to an extent would be provided by dollar earners. But the reason why the FTSE
100 is the benchmark is based on one of the safety factors: that it is safer for an amateur to invest in the biggest and best in class. The decision wasn't based on trying to find the index with the flashiest go-faster stripes, that doesn't enter the thinking at all. The requirement was for a portfolio which a UK investor could set up with minimum fuss and knowedge but with reasonably high safety, reliability and durability.
I happen to believe it works within the bounds set, and for the purpose described, but that's not to say that other schemes haven't performed better. One can always find something which performs better - particularly if one alters the purpose of the portfolio.
So back to the question: why compare with the FTSE100? Because that's what HYP was based on, not the world index. For that reason, I also compare my HYP TR with the FTSE 100 TR because it is the closest comparable benchmark.
Arb.