I don’t know much about index fund but still like to invest in them.
Please can anyone give recommendations or opinions on index fund that are worthy, with key focus on disruptive and innovative products in their various fields.
P.s special thanks & regards.
Index funds track indexs like the S&P500, FTSE100, Nikkei and Hang Seng. These are generally representative of the US, UK, Japanese and Chinese markets respectively. For example the S&P500 is considered to be the largest 500 companies in america. The FTSE100 would be the largest 100 in the UK. I’ve simplified this somewhat because there are actually certain requirements to make it on one of these lists, but that’s the general principle.
So from these lists, index funds are created. They try to mirror this list as closely as possible and their performance is generally judged by tracking error and fees. Vanguard is the probably one of the most popular creators of these types of funds. iShares by Blackrock are also another major provider of index funds. The easiest way to access them is to buy the version of this called an Exchange Traded Fund (ETF) which are available on Trading 212.
Not investment adivce, but the Vanguard All World ETF (VWRL) offers just over 3000 stocks which are globally diversified. Very simple investment for a beginner. It is more heavily weighted into the US market, by that I mean it has a higher percentage of it’s portfolio value in US stocks like Microsoft and Apple. You can pick an Accumulating or Distributing version of the fund. The accumulating version has the dividends reinvested automatically in the fund, you won’t notice any dividend payments and provides the fastest rate of compounding. Distributing versions will payout the dividend to the free funds in your account to do with as you please, reinvest or withdraw and spend. Scroll down to the bottom of this page to see the holdings:
https://www.vanguardinvestor.co.uk/investments/vanguard-ftse-all-world-ucits-etf-usd-distributing/portfolio-data
If you want to target a particular industry, say tech. The Nasdaq is mainly comprised of the largest US tech stocks. You can see what it’s comprised of here:
https://etf.invesco.com/gb/private/en/product/invesco-eqqq-nasdaq-100-ucits-etf-dist/index-components.
I’m not telling you to buy any of this, just a place to start looking.
Edit: If you are looking for something abit more exotic, unfortunately most of these types of funds are unavailable to us as they are US funds. You can take a look at Unit Investment Trusts like Scottish Mortgage Investment Trust (SMT). Don’t let the name fool you, their largest position is Tesla and have nothing to do with mortgages anymore. Portfolio here: https://www.bailliegifford.com/en/uk/individual-investors/funds/scottish-mortgage-investment-trust/performance/portfolio/
These types of investments often carry much higher risk than a traditional index fund. In fact becauase they are actively managed, and incur higher fees, they often fail to “beat the market”. Often referring to the S&P500, but could be compared to local markets depending on where you are buying.
Thank you for explaining about Index Funds - I found this very useful.