Stock market dealing

[Justin Passing]

So for 2026....
I'm looking at which largest sectors have done best in 2025.
Wouldn't it be nice to just use a low cost index fund and forget about it?
No not really!.
You can't even just for "global" to get an equal contribution from everywhere, because so much of the global market comes from the USA, and so much of the USA is about 10 companies, overall leaning on AI quite heavily.

Vanguard is a platform which is good for "low cost Index" hunters, so to look at what's where:

The Best Vanguard ETFs 2025

Compare the best Vanguard ETFs 2025 at a glance. Currently, the best performing ETF with 32.06% is the Vanguard FTSE Developed Asia Pacific ex Japan UCITS ETF (USD) Accumulating.

www.justetf.com

WHich would you pick as a reasonable punt for a long period, from here, having looked at the performances for the past 12 or 6 months?:

Asia/Pacific is not a homogeneous group. You have Japan, China and smaller ones - Korea, Taiwan, Vietnam, each doing their own unaligned thing

Europe though, tends to more in a more "together" way.

USA is still the centre of world growth, but mostly because of AI.

BUT The dollar weakened by about 7% over the year.
The Euro strengthened by about 4% over the year.
That means if you bought the USA fund, it got reduced in GBP terms, but the European one was aided.
In both cases you can get a hedged fund, which seeks to reduce the effect of currency shifts. . The USA Hedged ones would therefore have been a couple of percent better for you, european hedged, worse
Europe UNhedged, then, did best over the 12 months , at 20% ish.
With the far east, you have e.g JYen or Chinese Juan to USD to GBP rates , all changing, so they can be very significant too. Makes it hard.

TRump wants the dollar to weaken further - look out.
For an AI play, you could use the Dutch company ASML, which makes the 400m Euro machines which make the machines which make the chips.

Use Europe then, or you could use an overall ETF/OEIC Fund, then tweak it by using some of, e.g. Barings 3x Germany , or a Euro defence fund if that's what's cookin. Or Euro Banking, which has been doing very well.
Spain was rising for a useful period. To understand and use something like that, you would have to be constantly watching, and googling for reasons why.

Most of the wunnerful earnings figures, growths and therefore stock gains, HAVE been in the USA though.
The problem can be that some are annoyingly volatile. Solid old Apple did nothing for ages, just getting its Dollar value reduce by 7% - ouch.
There ARE some fund managers who know their onions from their Apples, and MANAGE funds to do better than simple stock picks. Some use US or other global stocks, as they choose. One is Artemis Global Income:

This chart is a bit busy but shows what I've been on about. General USA = S&P 500, not great. Europe (unhedged) quite a lot better(yellow). Those are unmanaged, index funds.
Orange is the Managed US fund - it did well, but see how badlly it was hit when the market objected to Trump's board of tariffs, in April.
European funds were bothered less, and gold barely at all.
Note Europe Unhedged, benefitted as above from the strengthening Euro, (green) so it's higher than the hedged version(blue).

See also how Gold was FAB at times, but pretty choppy, and ultimately not so extra great by year end.
Note how the Europe OEICS are better then the sector curve(yellow based on share prices.

Hope that all makes sense.
RIght, now I'll leave the green one on the next chart, it's Europe unhedged, but add European Banks 3x, and Gold Miners 3x (both 3x leveraged)
plus 3x each of Barclays, Rolls Royce, Lloyds Bank Grp.

NOte the % growths, on the left axis.
European Banks 3x, (3BAL) has crushed it. 3x Gold Miners (3GDX) is higher but so volatile you could have been down 50% on your money at one point.

These all work in ISAs, (or SIPPs) so they're tax free.

Resumé so far:
If you're happy at 12% or so , see previous posts, use a bond thing. Fairly immune from an AI crash.
Better rate, would have been to use Europe. Higher returns this last year, and less damaged by USA stocks drop.
3x European BANks (3BAL) would have seen you very happy.
If you'd used 3x Gold miners (the miners go faster than the metal) then you could have done better again, or got caught quite badly.
Continues...

 

[Justin Passing]

Continued:
If you're going to invest in these things, you can use
¶ The shares themselves
¶ ETFs (Exchange Traded Funds) which are groups of shares bundled together. One might include say gold, silver, some silver miners, Palladium....
¶ "Funds" These are often OEIC Funds, which are typically MANAGED groups of shares, bonds, with derivative dealing sometimes, to boost returns.

ETFs trade more or less like shares depending on the platform, except it can take a couple of days to get your money out on eg Invest Engine, ietc. (It's imho a scam, they call "settling"). There is a spread, and you can use stop losses etc depending on the platform. It's instant on Trading212.

Funds(OEICs) usually have NO spread, cost you a management fee (~1%), and are slow to buy and sell. You typically have to order one day (or at night) have the trade go through the next day ( or an extra day) and again it takes a few days to get your value out, or switched to something else. So if you ordered it on a Monday because you thought it was going up, you would get Tuesday's price, and not be able to sell it again until maybe the following Monday, - some platforms are that slow. You could have lost half your money in that time if you were unlucky.

The well managed OEICS do better than ETFs. You cannot trade them on sharedealing platforms like Trading212. You need AJ Bell, Hargreaves Landsdown, ii, etc.

You Cannot put stop-losses on OEICS funds. Important when selling can take so long.
Then there's
¶ The shares themselves, ON MARGIN (like CFD or spread betting)
You Cannot use these in an ISA/SIPP.
Your leverage is higher, usually 5x for shares like Barclays, and 10x for commodities like gold. You can't buy Leveraged shares on margin.
You pay a smallish fee for borrowing the money for the share multiple you're using.
Platforms which do Margin, often don't do OEICs. You can't use OEICs on CFD even at those which do like IG.
IG's borrowing rate is much lower than Trading 212's. (as is Pepperstone's , CMC markets', and others)


So you can use say 3LGO ( 3x long, Gold) in an ISA, slow to trade, tax free
OR 10x Gold on CFD in a general platform. Instant, can use preset stops for buying and selling

And here's a chart
Gold spot, people don't generally buy, but you can. ETF.
Orange and green, are OEICs. See how, though not leveraged, they do better than Gold Spot.
Purple, 3x gold, is an ETF, but not as whacky as the top one, golf miners.
NOT SHOWING here is Gold on Margin, say CFD, which would be at 10X. It's not available on the platform I'm using for illustration, Hargreaves Lansdown: Purple 3x gold is up 300% on the year, so CFD at 10x would be around 1000%, less the fee, 7 - 20% depending on platform)

Takeaway - OEIC Funds are great for giving you a Managed fund whch isn't too volatile, or for up to 3x leveraged which you can use in an Isa. But dangerous. 3x going DOWN is horrible if you're stuck for a week. Not so bad on a platform like Trading 212 where trading is instant.
If the basic stock goes down 34%, you go down 3x 34% which means you lose ALL your money. just about OK on a sharedealing platform where you can place STOP losses, but those are very imprecise, so be warned. You have to sit and watch.