i tbh dont think so - it might provice a return somewhat but compared to the S&P or FTSE all world i wouldnt call it decent, with all the problems the UK has and it doesnt seem that the issues become any better... so i would just (and im doing) investing in All-World etfs and some single companys if you want like i do, because i have a few that i think will at least as good than the all-word if not even better and because of diversifaction (even though most are still US-companys xD) like itochu, blackrock, 3 monthly dividend payer - realty income, stag industrial, main street capital etc, but the bulk of my portfolio will be all world index-etfs i dont bother with UK single shares xD @@pataleno
For all we know the S&P 500 could outperform again. Not really seeing much tech or innovation in uk public companies. Good luck with general AI or EV or space tech coming out of a cluster of oil, tobacco and consumer, chemical and mining companies.
Right but still no path to commercialising AI. Also most of the Mag 7 have similar monetisation model; advertising. Just how much more adverts do we need?
True, but I'm struggling to see many catalysts for the UK stock market. The market has been 'really cheap'. Unfortunately, the UK just doesn't produce the innovative transformative companies that have powered the US stock market performance in recent times. Sure there are a handful of decent firms in the FTSE 100, but where are the ones that are going to exponentially increase their earnings over the coming decade, capture market share across the globe and elevate the overall index higher. It's not British American Tobacco, BP, HSBC or Unilever!
The US is expensive for a reason and the UK is cheap for a reason. I will remain heavy in US as when it comes to markets and the economy, they lead the way and have the best companies going into the future world. I still have some UK, but mostly mid to small cap since they have sold off the most and are generally a bit more growth orientated.
Another great video. Thanks for your work. I’d like to see a follow-up video which compares these index with a Global Index and a S&P equal weighted index. Gut feel is An Equal weighted S&P 500 seems a good alternative at the moment.
Can you make an analysis of the FTSE All World as well? Particularly interested in the significance of emerging markets and how the index would rebalance if the US market falls or if india/china end up surging upwards in the future. In your video on the best ETF a few months ago, you chose the developed world vanguard ETF because of the lower cost, but I've seen arguments that due to the almost 0 tracking difference on this ETF (VWCE), the cost is actually lower than the reported 0.22%. So then the question is if emerging markets diversification has a positive or negative effect on risk and returns.
My work pension with L&G is 60 UK:40 Global - that's the default option. That's about 6x overweight UK compared to the world index! I must do something about it - probably transfer to my SIPP and take back control
You might be able to switch to a L&G global index I had a works pension that the company I worked for would only deal with one insurance company (they did have numerous funds) the company was paying 10% of my salary I couldn’t change to a SIPP I changed from the default fund to a global fund about 10 years ago thank goodness I did
@@davidpearson243with employer contributions you may need to continue to pay into their provider but I believe you can transfer out your funds into your own SIPP but you have to do thus every year or when you want. I'm just someone who watches too much youtube so check if i'm right but this what I understand.
Basically, avoid FTSE as an index while sp500 is good but expensive, prone to volatility swings, riskier based on home markets tech bubbles makeup. I avoided FTSE trackers for the lack of Tech and overweight to oil and domination of few stocks.
You've been listening to too much Merryn Somerset Webb. Being 'contrarian' about the UK stock market will make you feel clever, but it may also make your wallet feel lighter than going global. It's a hard thing for UK-based investors to face, but their market is just an irrelevance from a global perspective.
Fascinating as always, thank you. Would be interested in your analysis on the opportunity of investing in the FTSE250 now, which seems to be at a big discount and much further from its all-time high than the FTSE100.
Ramin, please! As you are comparing two things, the S&P500 and the FTSE100, it should be: "which is better", not "best". Write out 100 times and bring it to my study after school.
Was thinking about this as well. I'm almost certain Ramin has had a rant about these LS funds with their overweight to the UK, but in this video he admits he has a UK overweight too, (albeit, factor tilted).
I think the overweight is way too high. It's 5x over-represented. I mean, maybe overweight it by 10%, maybe 20%, but 500%? It's a big bet on the UK's indexes' future fortunes.
@@blumousey Good point :) But Ramin does state that 4% is insignificant enough to exclude (e.g. World ex UK) without much implication.. Lifestrategy 100 is 22% UK weighted and the US still makes up 50% of the fund, so in my personal judgment, it's not exactly an "extreme" tilt.
Until recently FTSE100 growth over past 25 years was around 10%, of late it's closer to 25%. That's not even covering the inflation! S&P500 has more than 400% and NASDAQ records even higher over the same period. I find your conclusion favouring FTSE100 perplexing! I've disregarded dividends in above comparisons as capital growth has been my focus - blame taxation (and effort needed in working out dividends). UK investors pay 15% US tax on dividends, even if inside ISAs and SIPPs (I'm aware of one exception) so much rather free cash flow goes to grow the company or share buybacks to reward the investor - no effort on my part and no taxes to pay. Wall Street seems to prefer this too
I’ve just started to invest in a FTSE 100 index fund because of the low values and decent dividends. I’m more globally but added a few hundred into FTSE100.
Excellent video as always, the most credible financial youtuber out there! Your messages on the UK appear to be very mixed over the years, sometimes very critical and other times like this more optimistic. Does this represent your personal journey of mixed feelings? Or sitting on the fence/ arguing both sides?
UK needs to catch up with unparalleled innovation in Tech sector… it is still stuck in 70s industrial trend like metal and bulk staffs… need to find something like Microsoft google nvidia
Thank you Ramin for your insight and video. Whilst i have holdings in the S&P 500, It's actually my UK holdings (vct) that have out performed in my portfolio. These are, however, unlisted companies & more risky.
I would like to hear about any frontier indexes. I listened to your podcast and it reminded me that, I have been thinking about a small amount of frontier for a while, in a fun portfolio 🎉
Vietnam is still classified as a frontier economy - but it has three investment trusts trading in London. Two of them (VOF and VEIL) are in the FTSE250
@ttrjw do you know if there are other frontier funds hidden in places like ftse 250? As I already hold FTSE 250, maybe I don't need to add an extra fund to get the exposure.
Another factor why I wouldn't yet bet on the FTSE100 is because UK Corporation Tax is at 25% since 2023 (from 19%) where in the US it's at 21%. All taxes are high in UK and we had the Conservatives in power since 2010 which presumably are for low taxes and spending discipline (needless to say that theory and practice are not the same thing). The UK needs more competitve taxation (cut shares stamp duty, income tax, corporation tax) but to expect that from Labour is to dream with eyes open.
One thing that's important to note is that in the US dividends are taxed at about double what capital gains are taxed at (0%-20%). So you lose a lot of money with dividends.
Thanks for the breakdown of the different Indexes at the beginning of the video. I always that I knew what the distinctions meant, but it turns out that I did not 😐
I remember reading a while back we would have low intrest rates for ever.. well that turned around.! I think eveything is cyclical like nature eveything gets their time in the sun...
Simply, the US market is full of innovation and the UK's is not, therefore there's more growth in its index. You need to be a stock picker to make decent gains out of the UK market and that takes more knowledge, skill and time. And, this won't change anytime soon unless the UK creates an economy where innovation can thrive, be it semi conductors, AI etc.
@@Black-Circle do elaborate. I am a proud Brit but I cannot understand how we have relinquished technology in its entirety to the US. Would love to favour FTSE over S&P but need reasons.
Whether there's growth or not is irrelevant. What matters is how much growth is already priced in -- and for the US the answer us "a lot." What's best : 30% growth when everyone expects 40%, or 5% when everyone expects 0 ?
@mattinterweb The reason the UK stocks in general haven't produced the growth is because those UK companies haven't been reinvesting in their businesses. Instead they pay out bigger dividends and big bonuses and salaries to the fat cat directors, instead of reinvesting their profits back into R&D, better new equipment etc
Great video, Investing in individual stocks can be a lucrative strategy, but it requires careful consideration and research. Different stocks offer various growth potentials and risks. Some may provide steady dividends, while others focus on capital appreciation. It's essential to diversify your stock portfolio to mitigate risk. Consulting a financial advisor can help tailor a strategy based on your risk tolerance, investment goals, and market conditions.
What happened since 2010 in the UK. What happened in 2010. And why are UK works pension Default funds so overweight UK equities which appears to have somewhat reduced their performance since about 2008
I would try to be more ruthlessly rational about it myself, but to each their own! The underperformance of recent years is really heart-breaking as a fellow Brit. I only invest in the UK in proportion to the rest of the world (vanguard global allcap fund and the all-world index).
I went through most companies in the FTSE all share index: it is very hard to find quality there, plus there is plenty of garbage funds. It is no wonder the index has performed so poorly over time. At the same time, the good large companies are already expensive. So the best choice among the massively overpriced s&p and the cheaper mediocrity in the FTSE is probably to look for fairly priced quality elsewhere.
I like REITs at the moment. You can find some really underpriced gems which should correct as interest rates come down. Real estate seems like a pretty safe place to wait for S@P companies you like to go through a correction.
It is a self reinforcing death loop. People will not invest in UK companies because of falling returns, so returns fall, and so the cycle continues. Of course it does not help when UK companies are listing on the NYSE rather than London. That said, we are a very small country and are really only reverting to the mean. I have no idea what the solution is to reverse the long time trend and there are far more intelligent people than me who have been considering the problem for a long time, I hope.
@Kalarandir A change of government is urgently needed, tories in power since 2010 and just look what's happening to our economy and stock market since 2010
I am a bit confused about the $USD and £UK flutuations. If someone is living in the UK and have $100K in a US bank, would it be better to transfer that money to a UK bank in £s when the dollar is stronger? Or should you leave it in dollars in a UK trading account.
Hi @eddycerb I am not a financial advisor so I don't provide financial advice. I do offer coaching and you can find out more about that here pensioncraft.com/investor-education/coaching/
You are investing for 30 years. Pick various 30 year periods in the last say 70 years, you can go even further. 1950-1980, 1970 - 2000, 1985 - 2015... and account for currency changes which were substantial in 30 years. You will not find a single period where UK income stocks (historic FTSE100 div yield is about 3-4%) would return anything close to US stocks, and there are very obvious reasons for that. Can you really imagine a 30 year period where Shell, AZ, HSBC and Unilever outperform MSFT, AAPL, Amazon and Nvidia?
I have Vaug and vwrl and I used to own vuke. But thought i was confusing things with the UK market been within vwrl I do hold some single stocks and they are all uk Any stocks in particular you like from then uk?
Do global equity fund allocations change over time by the fund managers? Ie 65% for the US Is someone over time adjusting those weightings, is that a good / bad thing if that's the case?
Rules and complex calculations determine this against size of markets. Over then years global passive indexes have saw us allocation increase as its market is growing. Index will buy based on benchmark, no fund manager involved. They self adjust
In my lifetime the political class in the U.K. has been increasingly incompetent and foolish. For a society to work it needs a competent ruling class, we don’t have one anymore. Interestingly a lot of people like to criticise the “privileged “ people who used to rule us, but they were far more competent in my view than their counterparts today.
Disagree valuation speaks for the UK market. "Old" industries - and FTSE is just that - naturally have much lower valuations than cutting edge companies. MAERSK - worlds largest container company - has made billions and billions the last years - and valuation still remains rock bottom. And there is no reason to think this will change because people are simply not ready to pay more for shipping companies, no matter what. Not getting my hopes up for FTSE due to this.
FTSE100 isn't tech-less because of index-design choices, but because UK is essentially a stagnant and to a large degree a feudal economy where CAZOO is considered tech :-) Higher education is a privilege where those already on top get to mingle with other people on top, and land a nepotistic job in one of the mentioned top 100 companies - or in politics. When in the future something else becomes a booming global industry, it will likely happen in a country full of invention, venture capital, and opportunities - it might be US or some other country, but it certainly won't be the UK. That is why FTSE100 is cheap, always underperforms SP500, and why UK£ lost 80% of value vs US$ in the last 100 years. The FTSE-topia (where dividend-heavy and politically protected conglomerates of a small and stagnant economy do better in global economy than averages) would actually be a living hell.
My god. In 2011 I had 270k Lloyd's shares , cost me 90k£. Today I would be about 30% up over 13 years. FTSE may not be uk companies anymore, but it sure performs like it. Since 2008, European mkts have been devastating compared to US.
@@TDubya811 all markets,are being artificially propped up by Central banks, to prevent a long overdue collapse, due to debt bubble. But the US indices have been helped far more by the Fed, so yes, expect a widening of performance. I turned to BTC a long time ago.
The FTSE100 as an index should be ignored. If you want to pick stocks, there are some good opportunities in the UK. I made 250% on Rolls Royce last year, but if you just want to stick to funds then ignore the UK and just invest in the US or global funds.
Living in cloud cuckoo land if you think tech and Ai are going anywhere. The ft100 is good value because most of the companies are 🗑 🚮 🗑 . There are some good yields around at the moment that's about it.
Hahaha. Look at these comments so far: "This isn't even a question, Next". Tell you what: when Munger and Buffett start hoovering up "value stocks" in the form of crappy UK financials and (erk!) oil companies, I'll believe this is a moment to go crazy along these lines. But I wouldn't need to lift a finger because I've a lot of BRK.B.
@@MusingsOAM Blimey! That's news. All his assets liquidated in one fell swoop! Yes, apparently he would have turned 100 on January 1. Then my phrase about when I'll invest in UK amounts to: the other side of never.
BRK.B is in my opinion the best stock to own because it is like a tracker, Investment Trust, and collective (read selective) investment that avoids crap. This week has been dire for US stocks: AAPL. AMZN, GOOG, MSFT, META have taken a kicking. BRK.B is up (even though it has a large allocation of AAPL, it's number 1 holding). RIP Charlie Munger. INV.B (Investor AB) a Swedish holding company is also a great stock to own - extremely well diversified and well run. I would liken it to a European Berkshire Hathaway (well almost, anyway.)
You describe the UK market as a rounding error in terms of the market cap of the global stock market - which is true - but it is still one of the largest stock markets in the world ex US. So if the UK is a rounding error then so are virtually all the other markets. With the last 15 years being a period in which interest rates have mostly been close to zero in many economies, growth stocks have benefitted through the low discount rate supporting growth stocks at the expense of value. Although inflation has recently been declining and interest rates are expected to fall over the coming year, it remains to be seen how low rates go and therefore what valuations they can support in coming years.
Yes it is with current relative valuations. S&P is highly overvalued whereas the FTSE is quite cheap, even for the UK. Over the next 5 years I'd wager FTSE investors do better than S&P.
@@crassusofrome6386politely, I'd wager the same was said 5 years, nay, 10 years prior and in every metric the FTSE underperformed 😂 but okay, I'll invest in an aging population with less versatility and hyper banking focused, inarguably even more financialized equity market than the US, with only a handful of banks to choose from. Not saying we don't have the same issue but there's a degree of agility and certain niche sectors like energy whereas England/UK is not afforded the edge of being resource rich in fuel. US, albeit with horrible foreign policy makers and war mongers in power, still have the 4th largest military to project show-of-force and intimidate lesser stable economies into still denominating their debt in USD by way of the IMF, not GBP. I mean no disrespect but what is the UKs own 'Silicon Valley' equivalent? How do health insurers do on margins with NHS in between all the treatments for covered patients? I mean here in America every thing is for sale, including the presidency... we dumped billions into semiconductors with tax funds. Nobody ever discussed how Nvidia took in $200B+ in 1 day in market capitalization. Our politicians will continue to enrich themselves with the stock market as a proxy to embezzle from our working class. Also, US is one of the easiest markets for foreign investment, regardless of what our tax rate is on capital gains. The same cannot be said for, an I'm sure this may piss you off, but European markets (perhaps Ireland being an outlier).
#2 Invest in UK? ... when we're about to be stuffed entirely by the new EU Combined Nomenclature and new Import Control System 2? Haha. Probably take a rain check on that...
I dislike paying stamp duty on purchasing UK stocks and I don't want a high yield, so I usually avoid UK stocks. Also, the Labour party keep threatening to renationalise the stocks that were privatised.
@@davidpearson243 Searched 'which FTSE 100 does the labour party threaten to nationalise' FT 31 May 2019. The Labour Party has said a future Labour government will nationalise energy and water companies. FT 25 Sep 2017. Labour has vowed to nationalise private finance initiative contracts.
@@RogerYeahmon No difference to the world economy. We could disappear and the world markets would barely even notice. We're at the forefront of nothing and make up such a small portion of the world's economy that we're absolutely inconsequential in world terms.
@@Andygb78 there are 195 countries in the world - of those we're the 6th largest economy.. there's a long way to fall beneath UK, a very long way down.. do some travelling - almost all counties there are to visit are worse.. London is still a global financial hub.. UK is quite advanced in its sustainable energy transformation.. far more life sciences work happening here than most developed countries..
@@RogerYeahmon Is it worth investing in a UK FTSE 100 etf over say an S&P 500, or any North America index etf, or world index, or Japan/Asia index etf? Which UK stocks are worth investing in over other world stocks? A punt on Tesco's or Sainsbury's perhaps if the food sector booms?
@@Andygb78there's no quick answer because it depends on your time horizon, how much volatility you can stomach, whether you prefer dividends over capital growth, your world view, whether you wish to be exposed to currency risk (US/Asia ETFS are exposed to forex) etc.. If you have a chunk of capital you're happy to tie up for 5 years say, look at the ETFs you mentioned, their characteristics and components and physically calculate how much dividend return you'd get in 5Y at the current published rate.. ask yourself realistically which of the market ETFs will deliver the most earnings growth over 5Y.. add your projected earnings growth (say 20% 5Y CAGR growth) to your expected 5Y dividend return (e.g. 7% return over 5Y) and go with the biggest number.. you can't just treat it like throwing darts at random names and hoping you hit the bullseye.. REITs are good to own in a falling interest rate environment, which we are due.. BBOX is one I've traded in and out of over the last 12 months, amongst other more high vol names (WHR e.g.)..
UK is cheap like most non US stocks because the US dominates the business world and uses proxy governors worldwide to give them advantage. They lead many industries not only because of scale advantage but also tax, regulation and barriers to entry that they impose. They print trillions for a decade with hardly any impact on their currency value and this liquidity went into the asset markets(stock, commodities, crypto and property). There is a dollar asset bubble but the FED and US investment banks know how to manage it. It's not a fair value market our there so trying to apply any analysis or historical measures may not work at all because historically the level of intervention and manipulation was not the same. We are at the beginning of another industrial tech revolution due to AI,ML and AGI and the US has a massive advantage over other countries due there supercomuters grids and chip industry control. The US industrial and manufacturing sector can cut cost using robotics and develop better products using their AI super computers grid. That's another reason for the premium over old tech UK. Not enough innovation unfortunately in the UK in AI.
I havent watched the video yet, but i'll guess ftse 😊. It's screamingly cheap. Anyone answering SPY doesn't understand that you dont get paid for growth that's already widely anticipated. A company can grow earnings at 100% a year, but it can still be a lousy investment if everyone expects 110% (hello, Tesla fans !)
Ramin, thank you for another great video. Since passive index fund are currently very popular among retail investors, what are your thoughts on what might happen if majority of investing in the world would become passive? Isn’t it that active trading is basically crucial for the effective market prices and afterall for good returns from passive investing? Thanks!
