Tracking the FTSE 250: Do You Know What You're Buying?

LOW COST FUNDS: Investors should be mindful of the real composition of the FTSE 250. It is not a pure mid- and small-cap play as investors buying an ETF may expect

Hortense Bioy, CFA 2 May, 2014 | 12:25AM
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Unless you’ve been hibernating for the last twelve months, you’re probably aware that ‘smart beta’ is the hottest topic in the ETF world right now. Everyone talks about it and seems to have a strong opinion about it. Some will try to convince you that by weighting a traditional market capitalisation index differently they’ve built a better mousetrap, while others will argue there is nothing new under the sun.

Where everybody seems to agree, though, is that the marketing term ‘smart beta’, is rather inappropriate, if not outright misleading. Why? Because it implies that traditional indices – those that are not ‘smart’ – are dumb. The reality is of course much more complex than that.

That said, it must be recognised that some traditional indices tracked by index funds and ETFs may indeed be somewhat dumb. And in this article, I’d like to highlight one in particular, the FTSE 250.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
3i Ord1,285.15 GBP-5.68Rating
Alliance Trust Ord990.86 GBP-2.86Rating
City of London Ord365.43 GBP-3.32Rating
HSBC FTSE 250 ETF2,141.55 GBP0.54Rating
HSBC FTSE 250 Index Retail Acc3.21 GBP-2.00Rating
Invesco FTSE 250 ETF16,859.10 GBP-3.09Rating
iShares FTSE 250 ETF GBP Dist2,060.18 GBP-3.19Rating
iShares Mid Cap UK Equity Idx (UK) A Acc  
Murray International Ord1,051.70 GBP-3.87Rating
Scottish Mortgage Ord1,475.10 GBP-0.83Rating

About Author

Hortense Bioy, CFA

Hortense Bioy, CFA  is global head of sustainability research at Morningstar