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Simon, I posed a question the other day about these trackers ( or should I call them near trackers?). And the question related to expenses ito what comes off earnings - when I saw the REDUCTION in dividend yield
from Gross to net with Eurostox 50 - which as I recall was about a 75% reduction... I nearly fell over ? Your comments?
1. Trackers are great - up to a point. While these "trackers" allow diversification for the small man( the only free lunch all investors can get) - they are not this "free coffee with your lunch" that people seem to want to believe they are - as if my opening comment is going to continue to be correct the long term RIY for the holder is significant?
2. NOW . Thinking only about the lonnnnnnngggg term. This narrows the "advantage" that these "TRACKERS" offer - as while you cannot buy an actively manageD fund which will offer this sort of diversification ( well you can up to a point) AND their onoging managment fees we know are a multiple of 3 -4 that of a tracker - but FIRSTLY they don't bury the bulk of the dividend in their pocket - so the obvious point is - if they are above average - then I think you are only going to be buying Spanish Champagne versus the widow's.....?
And of course a quality manager is not impossible to find - why do people think this is an impossible task. Time for coffee.
24-05-2017 08:24 AM
yip, trackers always have slim dividends as that's mostly where the costs are taken from. They also may have tracking errors from costs.
But here's the thing, does it matter where the fee is taken from? Ultimately it gets paid and as it is way lower than active managers and ensured to track the index which most managers under perform I feel alls good?