2002

The Daily Telegraph - Your Money - - YOUR MONEY - James Con­ning­ton

bub­ble in 1999. He said: “They are trad­ing some­where in the mid­dle of their range, so are nei­ther ex­cep­tion­ally cheap or hideously ex­pen­sive. When the earn­ings gen­er­ated by com­pa­nies in the US and UK mar­kets are fac­tored in, val­u­a­tions don’t show the ir­ra­tional ex­u­ber­ance of 1999.” Amer­ica is the best re­searched mar­ket in the world, which means ac­tive fund man­agers have a poor record of de­liv­er­ing higher re­turns than the in­dex. In a re­cent anal­y­sis con­ducted by Tele­graph Money, only 23pc of fund man­agers in­vest­ing in US com­pa­nies beat the mar­ket over a five-year pe­riod. Cheaper “pas­sive” funds, which just track the mar­ket, may be a bet­ter way to get ex­po­sure to the mar­ket at a lower cost.

Van­guard’s S&P 500 ex­change­traded fund tracks the S&P 500, the main Amer­i­can in­dex, for an an­nual charge of 0.05pc.

L&G’s US In­dex Trust tracks the per­for­mance of the FTSE USA in­dex, which is sim­i­lar to the S&P 500, for an an­nual charge of 0.1pc.

The two in­dices above are more rep­re­sen­ta­tive of the US mar­ket as a whole than the Dow Jones.

For those who do want to buy it, Black­Rock’s iShares Dow Jones ex­change-traded fund tracks the in­dex for a charge of 0.2pc.

The Dow Jones in­dex hit the 20,000 level for the first time ever this week, buoyed by ex­pec­ta­tions that Don­ald Trump will lower cor­po­rate taxes and lift spend­ing

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