Index Tracking
<!--EZCODE ITALIC START--> Dogbert<!--EZCODE ITALIC END-->, is there any index which you would concede that it would be daft as a brush to blindly follow? The Moscow SEQ? Taiwan SEQ? Columbian SEQ? Indian SEQ? Hang Seng, NASDAQ, Nikkei, etc. etc.
QLD/EH chose Eurostoxx 50 because with only 50 stocks to track you could do it with an actuarial student and a dog and it had a certain illusory ring of conviction.
Oh, and then we had this report showing that blindly following the Eurostoxx 50 beat the sox of any of your conventional managers over all historical perspectives.
EH really warmed to this populist theme ignoring completely that the short history of the Eurostoxx 50 was absolutely <!--EZCODE BOLD START--> NO GUIDE WHATSOEVER<!--EZCODE BOLD END--> to its future prospects.
If one must invest in equities do so in a diversified, preferably actively managed, portfolio. A blind punt on the EuroStoxx was and still is gambling. If you wish to make this punt do it through the medium of Tracker Bonds which guarantee you a return of your capital. With this guarantee of capital a punt on an Index (any Index) changes from being a gamble to being an investment, albeit a rather cautious one.
To revert to the earlier post, do EH and the other populists ever apologise? Here we are a year later and the Eurostoxx 50 was just about the worst punt they could have advised. What do they respond? "One should take the long term view". In other words, they are never, never wrong and they never, never, never apologise.:rolleyes