Should I sell my FTSE All-Share index fund and buy an S&P 500 tracker instead?

Most of my portfolio is invested in individual UK stocks but I also have exposure to the US through Vanguard S&P 500 UCITS ETF.

I buy individually FTSE 100 companies with the hope of generating more profits and growth than I can achieve by simply tracking the index, but I don’t feel that confident about buying individual US stocks. Hence the tracker.

I caught one UK tracker, i Vanguard UK All-Share Index Unit Trustwhich I bought after transferring some of the company’s legacy personal pension (SIPP) schemes.

This gave me immediate stock market exposure while I was working on top-up my SIPP with UK stocks. My timing was good as the FTSE All-Share tanked when I bought my tracker on July 7th. So far I’m up 16.45%.

Should I continue to track FTSE All-Share?

I’m happy about that, but I’m even more happy about Vanguard S&P 500 UCITS ETFwhich I bought on the 22nd of September last year. increased by 33.24%.

As a benchmark, the FTSE All-Share is up 9.03% over 12 months while the S&P 500 is up 35.54% over the same period.

This is not surprising. The US stock market contains some of the most exciting companies in the world, led by the Magnificent Seven tech giants like an apple, Nvidiaagain Microsoft. Yet this extraordinary performance makes me wary.

Today, the S&P 500 trades at a whopping price-to-earnings ratio of 38.16. That’s more than double the FTSE All-Share’s modest P/E of 14.2.

Making this trade will involve selling low and buying high, where I usually try to do the opposite. So here’s what I’ll do instead.

I am yet to sell my FTSE All-Share tracker. Why? Because I am fully invested and need cash. And the last 18 months have shown that my biggest success has not come from trackers but individual UK stocks.

As an example, you participate in Just Group (LSE: JNE) is up 70.25% since I bought the FTSE 250 insurance about one year ago. I found that very interesting because I applied the law carefully to the stock before buying it.

Just Group’s share price fell in July 2018 after the Prudential Regulation Authority’s consultation on the equity market forced the board to set aside more money to cover its annuity products.

Just Group shares outperformed the US index

The consultation broke down, as consultations often do. However, the Just share price failed to revive. So I took my chance.

In August it posted a first half with a 44% increase in operating profit to £249m, amid strong new business sales, continued profit growth, and improved efficiency. Just’s balance sheet looks strong with a cash flow ratio of 196%.

Like all stocks, there are risks. The Just Group sells annuities, and sales have increased as rising interest rates mean they pay more income. If prices fall, sales may be postponed. The stock has a low trailing yield of just 1.51% and dividends are unchanged, as this chart shows.

Chart with TradingView

It still looks incredibly cheap, with a price-to-earnings ratio of just 4.88. I’d rather use the proceeds from my FTSE All-Share tracker auction to buy great value UK stocks like this, rather than a potentially overpriced S&P 500 tracker.