[On :freetrade:] LSE Group (LSE)

What exactly is the LSE Group and hypothetically is this a better play than the FTSE 100?

The London Stock Exchange itself, the actual mechanism the trades are made on. it holds no stock


One of my favourites on my watchlist!

It’s the owner-operator of the infrastructure that keeps our UK financial markets running.

Consequently, the LSE is the closest thing to monopoly profits we, retail investors, will likely find in the UK market.

Revenue sources:

  1. Data, e.g. real-time price data and benchmarks
  2. Clearing services for derivatives traders
  3. Capital markets activity e.g. the stock exchange.

What put this firm onto the top of my watchlist is its dominance and hence, its pricing power in combination with being an asset-light business. Compare what it does, e.g. providing data that no one else or almost no one else can, with e.g. a housebuilding or manufacturing company that has high fixed costs and a lot of assets.

As Freetrade becomes a force to reckon with and a new generation of investors come to the fore, demand for the LSE Group’s services will only grow.

(This is only my personal opinion and none of this is investment advice.)

They are two completely different investments.

If you invest in LSE:LSE, you invest in a singular company. It will be volatile. Yes, I personally think it’s a good company, but do you have an ability to stomach the ups and downs? In the unlikely scenario that something terribly bad happens to LSE, you might lose all your investment.

Investing in a FTSE 100 tracker means your risk is diversified across many companies. There will be still ups and downs, but the turbulence will be potentially milder. It is also unlikely that the 100 largest public companies in the UK will all fail at the same time (and if they do, we’ll all wish we would have invested our time and money into prepping).

I hope that helps PJ.

1 Like