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Investors not in step with FTSE changes

Investors in FTSE tracker funds are living under a false sense of

security, according to new research from Friends Ivory & Sime.

Many investors are buying FTSE tracker funds to lower the risk in their

pension plans, Peps or Isas in the belief that trackers are stable

investments.

But, FI&S is warning that, despite the recent reshuffle in the index,

where several technology firms dropped out of the FTSE 100, there are still

a num-ber of vulnerable high-tech nology companies that have remained in

the index.

Almost half of those surveyed believed firms such as NatWest and Power-gen

were in the FTSE 100 while only 16 per cent believed that internet service

provider Freeserve was in the index.

Friends Ivory & Sime marketing director John Yule says: “This research

highlights the fact that UK investors are generally una-ware of the

changing characteristics of the FTSE 100 and some of the weaknesses

inherent in passively managed tracker funds.

“In the recent past, many traditional companies have been ousted by more

vola-tile media and tech stocks, which could come as an unpleasant surprise

to those investors who seek an investment in the UK&#39s traditional blue-chip

industries and companies.”

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