Tips & Ideas 

Passive strategies beat High Yield System

Passive strategies beat High Yield System

2017 is turning out to be a decent year for UK equities. Since we last updated our High Yield System in October 2016, the FTSE 350 has delivered nearly 10 per cent total returns (TR) in sterling terms. Our screened portfolio, by contrast, has achieved a TR of only 3.47 per cent, given weightings to each stock after the last review. Instead of holding a 15 stock portfolio based on our criteria, you could have made a much higher return buying exchange traded funds (ETFs) tracking the FTSE 100 and FTSE 250 indices. The split between the 350 by market capitalisation is about 83.25 per cent FTSE 100 and 16.75 per cent FTSE 250. Buying two index-tracking ETFs in these proportions, we tracked iShares FTSE 100 (ISF) and Vanguard FTSE 250 (VMID) from our Top 50 ETFs, a 9.07 per cent total return would have been cheap and accessible for any private investor.

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