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MoneyWeek article - Is it still good advice to invest in a global tracker?

Journalist: Marc Shoffman, Freelance

ended 19. March 2024

Hi,

I am writing a piece for MoneyWeek looking at if the traditional wisdom of just sticking money into a global tracker still applies today. Wealth Club has some research suggesting that global trackers have become concentrated towards tech stocks, making it more risky for investors than historically.

I am keen for comments on the pros and cons of just relying on a global tracker?

Do you still advise clients to do this? Have you changed strategies recently? What are the risks/rewards of sticking with a global tracker?

Should investors be looking elsewhere and where should they look to avoid too much risk and concentration in one sector?

Kind regards,Marc

2 responses from the Newspage community

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Editor
Wes Wilkes
CEO at IronMarket Wealth
If concentration is a concern with Global trackers then geographical concentration is arguably more of a concern than sector exposure. For example in the MSCI World index that a lot of ETF providers use, it does have 14% exposure to Tech as its largest sector exposure but it also has 70% exposure to the US alone.
Of course this has been warranted and is essentially where the flows are and that's what you're buying both for good and for bad. Being aware that a Global index is mostly the US by a huge amount may give a buyer some food for thought and I wouldl certainly caution against this being a single holding.
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Philip Dragoumis
Director and Owner at Thera Wealth Management
Throughout the last hundred of years there have been many times when the market has been concentrated around one group of stocks, or one geography or one sector. Global Index returns have not been the worse for it. The market capitalisation weighted Global equity index is merely the outcome of the trillions of dollars of daily transactions of global investors. This index is extremely hard to beat after active manager costs as the overwhelming majority of active fund managers discover every year.