my FtSE tracker fund has been underperforming for the ĺast 5 years

[shubhobsession]

I upped my monthly investment into it last year hoping for a recovery. It has recovered a bit but returns aren't great. Not sure what to do? put less in monthly and invest some in something else? don't need the money in the short term but looking for growth.

I would recommend a global index tracker such as VWRL/VWRP or similar, sounds like your in a 100% UK fund, global diversification is generally considered a better approach.

Which fund is it and what are you comparing it to when you say it's been under-performing?

A few questions...
What type of savings product - pension, ISA, GIA?
Is this your sole investment?
Who is the provider and what are their fees?
Can you clarify your investment aims?

m&g index tracker fund. I think underperforming against the benchmark. its in a stocks and shares ISA and my only equity investment apart from my pension

Hi,
I'm not a financial adviser, so these are just my own thoughts and in no way individual advice - Please do your own research.

Looking at M&G itself, the fees seem quite high - minimum £15 per month I think. Depending on how much you have invested that might well affect the performance. Are you also using a Financial adviser? If so they may well be taking a commission on top of that.

Is it an accumulation fund with reinvested dividends, or are you withdrawing the dividends as income from it? This will also affect the growth potential.

The FTSE index fund seems roughly a little under par with the benchmark.
If you look at the photo of the chart I uploaded (Trustnet), You will see over a 5-year period it is just below Vanguard FTSE 100 index tracker (Vanguard likely lower fees).

The main issue I believe, is that since Brexit the FTSE has under-performed compared to many European and US and Global benchmarks. Not just my view but the analysis of many reputable financial publications.

Compare the chart I have uploaded with the Vanguard S&P 500, and the Vanguard Global index fund over the same 5 year time frame of growth:

Vanguard S&P 500 - 79.3%
Vanguard FTSE Global All Cap Index 47.1%
Vanguard FTSE 100 index 20.1%
M&G FTSE All Share Index tracker 16.4%

Looking at 10 year growth
Vanguard S&P 500 289.1%
M&G FTSE Index tracker 63.8%
(the other funds have not been established that long so not displayed)

Now, as all the warnings indicate, past performance is no indication of future growth.
There are risks involved in Global and US trackers - including currency risks.

I would suggest you look at the following:

Your appetite for risk - more risk usually offers greater growth potential but also greater risk of losses.

Fees - can have a significant impact on growth.

Spend more time on researching into investing - use tools such as Trustnet to explore funds, as well as each platforms own Key Information documents.

Read and listen to financial news outlets, journals and podcast/videos. These can be a good source of information on what is happening in the market and trends to be aware of.

Chart

thanks for your detailed and helpful response

yes, I think the fees are high compared to Vangaurd. I will look for something else. is it better to transfer funds to another or open a new ISA and start putting new funds into that

I reiterate this is not financial advice - just my own thoughts, so undertake your own research.

Transfer the funds to maintain the tax free status of the investments.

If you're keen to transfer but not sure yet which funds to invest in, you might consider a Sterling Short term Money Market fund in the interim.

These are low risk investments (but not risk-free) that buy mostly UK Government high grade bonds over a short time frame of days or weeks, with returns designed to track the SONIA rate (SONIA = Sterling Overnight Index Average). They are not growth investments as such but the dividend returns can remain in the account and reinvested.
https://www.bankofengland.co.uk/markets/sonia-benchmark

The current SONIA rate is 4.93% - (reflecting the current rises in interest rates), but dividends are allocated in arrears each month.

Here's one example, but there are other providers:
https://www.vanguardinvestor.co.uk/investments/vanguard-sterling-short-term-money-market-fund-investor-gbp-income-shares/overview

@seekingasimplelife

Amazing reply.

Op I had something in m and g and also moved it to hargreve and invest through them in lots of vanguard funds.

In sure my ftse tracker is doing well?

Op can you move it and also invest into someone broader funds as mentioned above?..

You can't have two stocks and shares isa you would have to open new one and get them to move it

Did you get charged by M&G for moving it?

I recommend Hargreaves too. Their active savings offer is brilliant too

No I don't think so.
I can't imagine they would be allowed to charge?

I closed the M&G funds I inherited from my mum, they weren’t performing. There was no penalty. I think someone publishes a “ dog fund” list and my M&G funds were on there.

Might be a silly question but can I transfer to another ISA provider and split the transfer into 2 trackers? but staying within the ISA wrapper? thinking of a global tracker and en emerging market fund to increase diversity. I know the latter is more risky

You can invest in anything within the account.

yes you can, well at least you can with Vanguard which is what I have. You essentially say you want to transfer and its gives you the option to split the % allocation across as many funds as you like.

I'm one for keeping things simple though so I have my S&S ISA and SIPP invested in the Global All Cap Tracker with Vanguard. I'll add that I'm 41 years old and looking at a 15+year timescale