MONEY COMMENT
We Need More Trackers

By Maynard Paton (TMFMayn)
August 26, 2004

The Motley Fool loves index trackers. They're simple, transparent, low cost, and allow small, regular investments.

But we need more of them.

Sure, there are trackers that follow the FTSE 100, FTSE 250 and FTSE All-Share, but why can't investors replicate the success of some of the less well-known London indices? A prime candidate for trackerdom is the FTSE 350 High Yield index. As this article reveals, the High Yield index has over the years trashed its Low Yield cousin and FTSE 350 parent hands down.

Then there are foreign indices. Granted, trackers that follow the main US, European and Japanese bourses have been around for years. But what about trackers that give full-on exposure to high-profile growth markets elsewhere? For example, Brits that want to run with the Chinese market have to find some way of buying a Hong Kong-listed exchange traded fund or trust a relatively expensive fund manager to pick the right Far Eastern shares.

And what about a residential property tracker? The future direction of house prices is a hot topic at the moment, yet there's no straightforward product that can benefit the growing ranks of priced-out buyers. There's the odd building society product or covered warrant, but the former has withdrawal restrictions while the latter has a timescale of just two years.

Suffice to say, straightforward trackers that follow high yield shares, foreign growth markets or residential property will undoubtedly be popular with the public. Financial institutions would thus do well if they expanded their product range to allow a simple, cheap entry into these areas. The venerable FTSE tracker has served its followers well over time -- and will continue to do so -- but it is high time ordinary investors were given more choice.

Maynard contributes regularly to a low-cost index tracker fund. If you want to know why, click here.