Are These Funds Closet Trackers?

THE INCOME INVESTOR: If you are searching for yield, are you better off buying an exchange traded fund weighted by dividend, or buying an actively managed fund?

Emma Wall 17 June, 2014 | 5:04PM
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Income investors; are you better off holding a tracker or paying for active management?  The 10 largest stocks in the FTSE 100 are:

  1. Royal Dutch Shell (RDSB)
  2. HSBC (HSBA)
  3. BP (BP.)
  4. BHP Billiton (BLT)
  5. Unilever (ULVR)
  6. Diageo (DGE)
  7. GlaxoSmithKline (GSK)
  8. British American Tobacco (BATS)
  9. Rio Tinto (RIO)
  10. AstraZeneca (AZN)

 

If you invested in a market cap weighted exchange traded fund a sizable proportion of your money will be allocated into those top 10 stocks. You would be looking at an attractive level of income too – Shell yields 4.5%, BP yields 4.6% and BHP is yielding 3.9%. Attractive when you consider the recent fall in inflation to 1.5%.

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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
Artemis Income R Inc2.23 GBP0.66Rating
AstraZeneca PLC8,480.00 GBP0.00Rating
BAE Systems PLC552.00 GBP0.00Rating
BHP Group PLC2,258.00 GBP0.00Rating
BP PLC284.10 GBP0.00Rating
British American Tobacco PLC2,769.00 GBP0.00Rating
BT Group PLC184.75 GBP0.00Rating
GlaxoSmithKline PLC1,416.00 GBP0.00Rating
HSBC Holdings PLC401.60 GBP0.00Rating
Imperial Brands PLC1,569.00 GBP0.00Rating
Invesco UK Equity Inc UK Inc1,271.20 GBP0.76Rating
iShares UK Dividend ETF GBP Dist739.80 GBP0.98Rating
Legal & General Group PLC263.90 GBP0.00
Rio Tinto PLC5,926.00 GBP0.00Rating
Royal Dutch Shell PLC B1,341.40 GBP0.00Rating
Schroder Income Acc94.71 GBP-0.15Rating
Threadneedle UK Equity Alpha Inc Rtl Inc0.67 GBP0.40Rating
Unilever PLC4,144.00 GBP0.00Rating

About Author

Emma Wall  is former Senior International Editor for Morningstar

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