FTSE 100 Sector Weightings

[GeoffF100]

Here are the (almost) current FTSE 100 sector weightings:

https://siblisresearch.com/data/ftse-10 ... r-weights/

The FTSE 100 is not as badly diversified as it has been recently (and for more than twenty years). I am not suggesting that anyone puts all their money in the FTSE 100, but a modest home bias potentially reduces portfolio volatility and taxes (see previous threads). Lars Kroijer recommends a global tracker (UK weighting currently 4.2%). He argues that you do not want your investments to do badly when your country is doing badly. Vanguard uses a UK weighting of 25% in their LifeStrategy funds. That is about average for UK institutional investors.

[1nvest]

End of June 2020 FT100 % Sector weightings

Communications 4.83
Consumer Discretionary 6.96
Consumer Staples 17.93
Energy 10.14
Financials 17.71
Healthcare 13.26
Industrial 10.53
IT 1.37
Materials 11.91
Real Estate 1.16
Utilities 4.19

So as a (non) betting individual, with those weightings you're betting that Consumer Stables and Financials will perform better than Information Tech and Real Estate. Isn't it better to just bet the field equally and accept what's given. A couple of stocks from each sector, for all sectors, all bought in equal capital amounts, and a year on from now that will have found its own sector weightings.

Given for instance no stamp duty for nearly a year, if I were a betting man I'd be more inclined to tilt towards Real Estate rather than betting it to be the least likely to do well.

[JohnW]

So as a (non) betting individual, with those weightings you're betting that Consumer Stables and Financials will perform better than Information Tech and Real Estate. Isn't it better to just bet the field equally and accept what's given.

I wouldn't say you're betting that consumer staples and financials will have better returns than others. All the market participants have decided those sectors will, that's why they're valued higher than others. You'd be betting against the combined wisdom of the market to suggest otherwise; now that's a bet, as you suggested by equal weighting holdings.

[GeoffF100]

End of June 2020 FT100 % Sector weightings

Communications 4.83
Consumer Discretionary 6.96
Consumer Staples 17.93
Energy 10.14
Financials 17.71
Healthcare 13.26
Industrial 10.53
IT 1.37
Materials 11.91
Real Estate 1.16
Utilities 4.19

So as a (non) betting individual, with those weightings you're betting that Consumer Stables and Financials will perform better than Information Tech and Real Estate. Isn't it better to just bet the field equally and accept what's given. A couple of stocks from each sector, for all sectors, all bought in equal capital amounts, and a year on from now that will have found its own sector weightings.

Given for instance no stamp duty for nearly a year, if I were a betting man I'd be more inclined to tilt towards Real Estate rather than betting it to be the least likely to do well.

No, you are not betting on the prospects of individual sectors by buying a FTSE 100 tracker. You are betting that nobody can predict which sector (or individual stock) will beat the index. With that assumption, your expected risk adjusted return is the same wherever you invest your money - provided that you diversify away all the risk that can be diversified away. If everyone invested even the same amount of money in Real Estate as they invest in Consumer Staples, Real Estate would become grotesquely overpriced.