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Tracking FTSE 100, 250 & All-Share Indexes

MoneyPower100
by MoneyPower100 29 March 2011  |  Comments 1 comment  |  Love Love  0 loves

HSBC has index funds tracking the FTSE 100, 250 & All-Share Indexes all with total expense ratios of about 0.25%.

Is it a good idea to track all these indexes or only one or two - what are the pros and cons of tracking them all.

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Comments (1)

  • MikeGG1
    Love rating 909
    MikeGG1 posted

    The 100 is the top 100 companies. The 250 is the next 250 companies. Any references to 350 is combination of the 100 & 250. The All-share naturally covers the whole market. The proportions are all based on the market capitalisations of the companies.

    Having all 3 would see substantial overlap because the top 350 are much bigger than the rest

    The problem with the 100 & 250 trackers is that every 3 months there is a movement of the constituents. This results in forced selling (at a discount) of companies leaving the index and forced buying (at a premium) of those joining. The discount & premium are because all those trackers are doing it at the same time.

    Some saving can result where investment houses have both 100 & 250 trackers and can transfer some shares between trackers.

    With the All-share index trackers, there is no forced sale or purchase. The top 350 companies would be most of the index anyway, so I would go for the All-share on its own.

    Mike

    Posted on 29 March 2011 | Love Love  0 loves Report

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