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I think shares in FTSE 100 companies can be a great investment. Over the last 20 years, companies like AstraZeneca, Tesco, and Lloyds Banking Group have provided good returns to shareholders.
One way of owning these stocks is by just investing into an exchange-traded fund (ETF) that owns all the shares in the index. But I think there’s a better way for investors like me to go about it.
Buy high, sell low?
The reason I don’t like buying index-tracking ETFs is that they are committed to buying shares when they are expensive and selling them when they’re cheap. To me, this is the wrong way round.
Take 2023 as an example. Shares in Rolls-Royce roughly tripled, while mining company Anglo American saw its stock fall by around 45%.
As a result, Rolls-Royce accounted for more of the overall index at the end of 2023 and Anglo American accounted for less. If I owned an index-tracking ETF, what would I have…
