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Low cost index trackers that will save you money

This is our latest update on the best low cost index trackers available to UK Investors. Note: We don’t include platform exclusive funds – they’re generally not a good deal overall. 

Low costs – that’s the name of the game for passive investors. Performance is unpredictable and elusive, but costs are nailed on. They nibble away at your returns like a satanic mouse – harmless enough at first, until you realise all your cheese has gone.

As Morningstar puts it:

If there’s anything in the whole world of mutual funds that you can take to the bank, it’s that expense ratios help you make a better decision.

That’s why I try to leave no penny un-pinched when searching for cheap funds.

High cost funds gobble returns

As a passive investor, I concentrate mostly on index funds and Exchange Traded Funds (ETFs). That’s because they are the simplest cut-price vehicles available. However, some asset classes aren’t well served by index trackers, so I’m happy to use low cost active funds to fill the breach.

My picks are based purely on price as measured by the Ongoing Charge Figure (OCF). There are other factors to consider when buying a fund (like tracking error, liquidity, and size) so it’s always worth reading any documentation to make sure it fits your bill.

Identifying tickers or ISIN codes are given in brackets. If there are any other wrinkles worth mentioning, I’ll throw them in along the way.

Finally, if you’re looking for the cheapest place to buy and hold these funds then take a butcher’s at our online broker comparison table.

The UK’s best low cost index trackers

Right, let’s grab some bargains!

Note: Anything not labelled ETF or ETC will be an index fund. Codes are given for accumulation funds variants where available.

UK large cap equity

Cheapest

  • HSBC FTSE All Share Index Fund Institutional (GB0030334345) OCF 0.02%

Next best

  • Fidelity Index UK Fund P (GB00BJS8SF95) OCF 0.06%
  • HSBC FTSE All Share Index C (GB00B80QFX11) OCF 0.06%

UK mid cap equity

Cheapest

  • Vanguard FTSE 250 ETF (VMID) OCF 0.1%

Next best

  • L&G UK MID Cap Index Fund I (GB00BQ1JYX87) OCF 0.14%
  • Xtrackers FTSE 250 ETF (LU0292097317) OCF 0.15%

UK small cap equity

There are no good tracker options in the UK small cap asset class for DIY investors. Of the funds listed below, the iShares ETF is more of an expensive FTSE 250 tracker, and the rest are active funds.

Cheapest

  • Schroder Institutional UK Smaller Companies (GB0007893984) OCF 0.52%

Next best

  • Cavendish Opportunities Fund C (GB00B9F9Z985) OCF 0.65%
  • Baillie Gifford British Smaller Companies B (GB0005931356) OCF 0.67%

UK value equity

Cheapest

  • 7IM UK Equity Value Fund C (GB00BWBSHV64) OCF 0.35%

Next best

  • Vanguard FTSE UK Equity Income Index (GB00B59G4H82) OCF 0.22%
  • WisdomTree UK Equity Income ETF (WUKD) OCF 0.29%
  • SPDR S&P UK Dividend Aristocrats ETF (UKDV) OCF 0.3%

The 7IM fund takes the top spot because it’s the one UK tracker that explicitly follows a value methodology. The remainder are high-yielding funds, not true value funds. A high-yielding fund is a distant cousin of value and not always a pretty one at that. Pure value funds are available in the UK through Dimensional Fund Advisors, but only via an associated IFA who will charge you fees.

World equity – developed world and emerging markets (total world)

Cheapest

  • HSBC FTSE All-World Index Fund C (GB00BMJJJG09) OCF 0.18%

Next best

  • Vanguard Lifestrategy 100% Equity Fund (GB00B41XG308) OCF 0.22%
  • Vanguard FTSE Global All Cap Index Fund (GB00BD3RZ582) OCF 0.24%
  • Fidelity Allocator World Fund Y (GB00B9777B62) OCF 0.25%
  • Vanguard FTSE All-World ETF (VWRL) OCF 0.25%

Vanguard Lifestrategy and Fidelity Allocator invest in other index trackers. Fidelity invests in REITs and small caps.

World equity – developed world only

Cheapest

  • Fidelity Index World Fund P (GB00BJS8SJ34) OCF 0.12%

Next best

  • Lyxor Core MSCI World ETF (LCWL) OCF 0.12%
  • L&G Global 100 Index Trust I (GB00B0CNH056) OCF 0.14%
  • HSBC MSCI World ETF (HMWO) OCF 0.15%

World ex-UK equity

Cheapest

  • L&G International Index Trust I (GB00B2Q6HW61) OCF 0.13%

Next best

  • Vanguard FTSE Dev World ex-UK Equity Index (GB00B59G4Q73) OCF 0.15%
  • Aviva Investors International Index Tracking SC2 (GB00B2NRNX53) OCF 0.31%
  • Xtrackers FTSE All-World ex-UK (XWXU) OCF 0.4%

You can also pick ‘n’ mix using individual US, Europe ex-UK, Japan, and Pacific ex-Japan trackers.

World value equity

Cheapest

  • Vanguard Global Value Factor ETF (VVAL) OCF 0.22%

Next best

  • Xtrackers MSCI World Value Factor ETF (XDEV) OCF 0.25%
  • iShares Edge MSCI World Value Factor ETF (IWVL) OCF 0.3%
  • Lyxor SG Global Value Beta ETF (SGVL) OCF 0.4%

All factor based investing is effectively straying into active management territory – you hope that a subset of the market can outperform – the key is to choose products underpinned by sound financial theory, a verifiable set of rules and a commitment to low costs.

World small cap equity

Cheapest

  • L&G Global Small Cap Index Fund (IE00BG0VVG79) OCF 0.2%

Next best

  • iShares MSCI World Small Cap ETF (WSML) OCF 0.35%
  • Vanguard Global Small-Cap Index Fund (VIGSCA) OCF 0.38%

Emerging markets equity

Cheapest

  • iShares Cores MSCI Emerging Markets IMI ETF (EMIM) OCF 0.18%

Next best

  • Fidelity Index Emerging Markets Fund P (GB00BHZK8D21) OCF 0.2%
  • Xtrackers MSCI Emerging Markets Index ETF (XMME) OCF 0.2%
  • Amundi ETF MSCI Emerging Markets ETF (AUEG) OCF 0.2%

Socially responsible investing

Cheapest

  • L&G UK Equity ETF (IE00BFXR5R48) OCF 0.05%

Next best

  • Xtrackers ESG MSCI World ETF (XZW0) OCF 0.2%
  • Royal London Emerging Markets ESG Leaders Equity Tracker (GB00BZ8FWL65) OCF 0.3%
  • iShares Sustainable MSCI Emerging Markets SRI ETF (SUSM) OCF 0.35%

Multi-factor

Cheapest

  • Lyxor FTSE UK Quality Low Vol Dividend (DOSH) OCF 0.19%

Next best

  • Invesco Global ex UK Enhanced Index Fund Y (GB00BZ8GWR50) OCF 0.23%
  • Invesco UK Enhanced Index Fund Y (GB00BZ8GWW04) OCF 0.23%
  • HSBC Multi Factor Worldwide Equity ETF (HWWA) OCF 0.25%
  • Amundi ETF Global Equity Multi Smart Allocation Scientific Beta ETF (SMRU) OCF 0.4%
  • Lyxor JP Morgan Multi-Factor World Index ETF (LYXW) OCF 0.4%

All factor based investing is effectively straying into active management territory – you hope that a subset of the market can outperform – the key is to choose products underpinned by sound financial theory, a verifiable set of rules and a commitment to low costs.

Property – UK

Cheapest

  • iShares UK Property ETF (IUKP) OCF 0.4%
  • iShares MSCI Target UK Real Estate ETF (UKRE) OCF 0.4%

Next best

  • No index fund alternative

Property – global

Cheapest

  • L&G Global Real Estate Dividend Index I (GB00BYW7CN38) OCF 0.2

Next best

  • iShares Global Property Securities Equity Index Fund D (GB00B5BFJG71) OCF 0.22
  • Amundi ETF FTSE EPRA/NAREIT Global ETF (EPRA) OCF 0.24%
  • SPDR Dow Jones Global Real Estate ETF (GBRE) OCF 0.4%

The SPDR ETF includes emerging markets exposure.

All-commodities

Cheapest

  • L&G All Commodities ETF (BCOM) OCF 0.15%

Next best

  • Invesco Bloomberg Commodity ETF (CMOD) OCF 0.19%
  • Lyxor Commodities Thomson Reuters/CoreCommodity CRB TR ETF (CRBL) OCF 0.35%

Gold

Cheapest

  • iShares Physical Gold ETC (SGLN) OCF 0.25%
  • ETFS Physical Swiss Gold ETC (SGBS) OCF 0.25%
  • db Physical Gold ETC (XGLD) OCF 0.25%

Gold trackers are Exchange Traded Commodities (ETCs).

UK Government bonds – intermediate duration

Cheapest

  • Lyxor Core FTSE Actuaries UK Gilts (GILS) OCF 0.07

Next best

  • Vanguard UK Government Bond ETF (VGOV) OCF 0.12%
  • SPDR Barclays UK Gilt ETF (GLTY) OCF 0.15%
  • Vanguard UK Gov Bond Index (IE00B1S75374) OCF 0.15%
  • L&G All Stocks Gilt Index Trust I (GB00B8344798) OCF 0.15%

UK Government bonds – long

Cheapest

  • SPDR Barclays Capital 15+ Year Gilt ETF (GLTL) OCF 0.15
  • Vanguard UK Long-Duration Gilt Index fund (GB00B4M89245) OCF 0.15%

UK Government bonds – short

Cheapest

  • Lyxor FTSE Actuaries UK Gilts 0-5Y ETF (GIL5) OCF 0.07

Next best

  • JPMorgan BetaBuilders UK Gilt 1-5 ETF (JG15) OCF 0.1%
  • SPDR Barclays Capital 1-5 Year Gilt ETF (GLTS) OCF 0.15
  • iShares UK Gilts 0-5 ETF (IGLS) OCF 0.2%

UK Government bonds – index-linked

Cheapest

  • Lyxor FTSE Actuaries UK Gilts Inflation-Linked (GILI) OCF 0.07

Next best

  • Vanguard UK Inflation Linked Gilt Index fund (GB00B45Q9038) OCF 0.15%
  • L&G All Stocks Index Linked Gilt Index Trust I (GB00B84QXT94)  OCF 0.15%
  • iShares Index Linked Gilt Index Fund D (GB00B83RVT96) OCF 0.16% 

International bonds hedged to £ (government and corporate)

Cheapest

  • iShares Core Global Aggregate Bond ETF (AGBP) OCF 0.1% 

Next best

  • Vanguard Global Short Term Bond Index (IE00BH65QG55) OCF 0.15%
  • Vanguard Global Bond Index (IE00B50W2R13) OCF 0.15% 
  • iShares Global Government Bond ETF (IGLH) OCF 0.25%
  • Xtrackers Global Sovereign ETF (XGSG) OCF 0.25%

All hedged back to Sterling.

International inflation-linked bonds hedged to £

Cheapest

  • Xtrackers Global Inflation Linked Bond ETF (XGIG) OCF 0.25% 
  • Royal London Short Duration Global Index Linked Fund M (GB00BD050F05) OCF 0.25%

Next best

  • L&G Global Inflation Linked Bond Index I (GB00BBHXNN27) OCF 0.27%
  • Smith & Williamson Global Inflation Linked Bond Fund X (IE00B7RG6563) OCF 0.32%
  • Royal London Global Index Linked Fund Z (GB00B53R4H74) OCF 0.39%

All hedged back to Sterling. Royal London and Smith & Williamson funds are active.

UK Corporate bonds

Cheapest

  • L&G Sterling Corporate Bond Index Fund I (GB00B4M01C47) OCF 0.14%

Next best

  • L&G Short Dated Sterling Corporate Bond Index Fund I (GB00BKGR3H21) OCF 0.14%
  • Vanguard UK Investment Grade Bond Index (IE00B1S74Q32) OCF 0.15%
  • iShares £ Ultrashort Bond ETF (ERNS) OCF 0.09%

The iShares ETF doesn’t take top spot because it’s a specialist ultrashort bond tracker with a duration of a third of a year. Not for general use but could be handy for deaccumulators.

Concluding thoughts on low cost trackers

If you’re new to passive investing then it might seem like you now have a lot of decisions to make after reading that lot.

This piece on designing your own asset allocation will help you construct your own portfolio. If you want a quick short-cut then you can do a lot worse than picking a fund-of-funds instant portfolio solution.

We only update this post periodically. Please bear in mind the quoted OCFs may date as fund groups fight their turf wars by undercutting each other (hurrah). But this list should still prove an excellent starting point for your research.

And if anyone comes across any better index tracker options I’d love to hear about them in the comments below.

Take it steady,

The Accumulator

Note: Some comments below may refer to an older collection of low cost index trackers. Scroll down for the latest thoughts.

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{ 670 comments… add one }
  • 649 Kwakil March 1, 2019, 12:58 am

    @Peter Re: “Does anyone know which platforms actually carry L&G Global Small Cap Index Fund (IE00BG0VVG79)? I’ve looked on HL, AJ Bell, Fidelity, IWeb, II and can’t find it anywhere?”

    It is not available on Charles Stanley Direct either.

    I’ve emailed fundsales@lgim.com, fundsales@lgim.co.uk and asked if and when it will be available on a retail platform.

  • 650 Kwakil March 1, 2019, 11:19 pm

    @Peter “re: L&G Global Small Cap Index Fund (IE00BG0VVG79)”
    Reply from legal and general:
    “The L&G Global Small Cap Equity Index Fund is an ICAV so domiciled in Ireland. I [=L&G] am not certain that all of these platforms can hold Irish funds. I know that Hargreaves Lansdown is able to offer Irish domiciled funds but Hargreaves Lansdown has not requested for us to add this fund. If you would like to have the fund added, the best way to do this is to approach the platforms and request for the fund to be added as they need to see customer demand before agreeing to add funds. When the platform approaches us we will be more than happy to help facilitate adding the fund to the various platforms.”

    I would like to invest in this fund too, so I will get onto ATS and AJBell next week and see what happens. (iWeb have added two UK funds for me in the past on two occasions but I don’t have an ISA with iWeb and there is no way I am buying an offshore fund outside a tax wrapper for tax return reasons)

  • 651 MrOptimistic March 3, 2019, 8:55 am

    @Kwakil. Don’t believe Irish domicile us relevant. The fund was established only in 2017 and it seems to take more than a year before platforms consider them. From what I have read here, the platforms need to do due diligence which takes time and I suppose they take a view as to whether demand justifies the effort. ETFs are more easily added I read on this blog sometime back.

  • 652 Vanguardfan March 3, 2019, 9:35 am

    I agree that from the holder’s perspective the fund domicile doesn’t seem relevant. I hold Irish domiciled funds in a taxable account and there seems no issue apart from the income gets put in a different place in the tax return. (There may be nuances I’m not aware of, and i don’t know if brexit will be an issue, I assume not at present as I haven’t picked up any info about it). We’re not talking about foreign listed shares here, which I know do have more significant tax issues.

  • 653 Kwakil March 3, 2019, 11:43 am

    @Vanguardfan
    I’m paranoid about “Excess Reportable Income”. Its a nightmare to calculate so I just avoid offshore funds/etfs in taxable accounts. (I had to try to do it for one Irish ETF and its a nightmare IMO so I’ve avoided it ever since)
    E.g. from
    https://home.kpmg/uk/en/home/insights/2018/04/pp-15-offshore-funds-a-double-sting-in-the-tail.html

    “The upshot is that investors in funds with ERI may have:
    An income tax liability on any undistributed profits dating back to 2009 – even though they never received the income in question;
    and
    A duty to report these profits in their tax returns, in the same way they do with actual cash distributions from their offshore reporting funds. “

  • 654 Vanguardfan March 3, 2019, 12:01 pm

    Ah yes, that could be an issue. Although as long as you have the data it’s not too difficult to add to the tax return? I use an accountant, so don’t have to worry too much about whether I’m missing tax details – equalisation is another little quirk that can trip up the unwary.

  • 655 MB March 17, 2019, 1:43 pm

    Regarding costs, please can someone explain whether “transaction costs” are relevant in this comparison? For example, the following:

    HSBC FTSE All-World Index Fund C (GB00BMJJJG09) OCF 0.18%
    Vanguard FTSE Global All Cap Index Fund (GB00BD3RZ582) OCF 0.24%

    The first has a Transaction Fee of 0.15% (to total 0.31%) but the second has a Transaction Fee of 0.03% (to total 0.27%).

    Does this not make the Vanguard “cheaper”, or is this the wrong method of comparing these costs?

  • 656 Adrian March 19, 2019, 10:44 pm

    Are we sure Royal London Short Duration Global Index Linked Fund M (GB00BD050F05) OCF 0.25% is hedged back to sterling? I’m not sure it is.

  • 657 Kwakil March 28, 2019, 6:17 pm

    @Adrian https://www.rlam.co.uk/Home/Intermediaries/Products/Fixed-Income/OEICs/Short-Duration-Global-Index-Linked-Fund/ “Fund overview …. Non– sterling assets will be hedged back into sterling…” BUT its the only place this is mentioned, I’ve been through the other documents relating to the fund and I have found nothing. Pretty shoddy!

    @all&sundry Re: L&G Global Small Cap Index Fund (IE00BG0VVG79) OCF 0.2%
    I contacted iWeb: they said “our intermediary fund provider is Cofunds/Aegon and they do not have it. If they ever do, then I can request it.” As iWeb and Halifax and Lloyds are bascially all the same I assume none of those platforms have it.

  • 658 DavidC May 17, 2019, 6:10 pm

    Just had a letter from my platform:
    “Vanguard have changed the index that the [Vanguard Global Short-Term Bond Index Fund] tracks from the Bloomberg Barclays Global Aggregate Ex US MBS 1-5 Year Float Adjusted Index to the Bloomberg Barclays Global Aggregate Ex US MBS 1-5 Year Float Adjusted and Scaled Index. They have explained that the percentage of the previous index represented by certain types of bonds issued in China was set to rise significantly in the next 20 months. In contrast, tracking the new index will allow the fund to keep the proportion of these bonds at its current, relatively low level. Vanguard believe this gives investors the benefit of diversification while limiting risk.”
    The only difference I can see is that “and Scaled”. Should I care?

  • 659 Charlie May 19, 2019, 12:30 pm

    @DavidC

    I had the same correspondence (another Cavendish or Fidelity customer, perchance?) and did a bit of digging.

    From what I can gather Bloomberg Barclays are expanding the index to include domestic Chinese bonds, which at market value would form 6% of the index, and hence by extension, any fund tracking the index. Vanguard objected on the basis that this would be too difficult to hedge, risky, and expensive, and therefore changed index to effectively cap these Chinese bonds at a lower proportion – about 1.5% ish if I remember rightly. Frustratingly I wasn’t able to find anything on Vanguard’s website – this came second hand, so may not be accurate.

    Do I care? Not greatly, so long as the average credit rating doesn’t change (which it won’t).

  • 660 Len May 20, 2019, 5:13 pm

    Hello there,

    I was wondering if anyone could recommend the equivalent to the World equity – developed world and emerging markets (total world) suggestions below but from a US perspective as looks like I can’t invest in any of those from here, unless I’m missing something (highly likely)?

    Cheapest
    HSBC FTSE All-World Index Fund C (GB00BMJJJG09) OCF 0.18%

    Next best
    Vanguard Lifestrategy 100% Equity Fund (GB00B41XG308) OCF 0.22%
    Vanguard FTSE Global All Cap Index Fund (GB00BD3RZ582) OCF 0.24%
    Fidelity Allocator World Fund Y (GB00B9777B62) OCF 0.25%
    Vanguard FTSE All-World ETF (VWRL) OCF 0.25%

    Many thanks…

  • 661 David P June 23, 2019, 12:53 pm

    Hi all,

    Just found out that iShares have dropped the OCFs on their UK Gilt ETFs. IGLT and IGLS are now 0.07%, and IXNG is 0.1%.

  • 662 The Accumulator June 23, 2019, 3:56 pm

    Thank you David!

  • 663 Denim June 24, 2019, 10:25 pm

    Vanguard have recently added a global aggregate bond etf (VAGP) with an ocf of 0.10%

  • 664 Paul knigh June 28, 2019, 11:28 am

    Has anyone bought any of : Amundi ETF Global Equity Multi Smart Allocation Scientific Beta ETF (SMRU) OCF 0.4%

    I pretty much decided to use it as my property allocation but you can only telephone trade at AJ Bell – that caused me to worry about liquidity. Any thoughts / comments welcome. Thanks

  • 665 Charlie August 8, 2019, 8:26 pm

    I just came across the following ETF:
    SPDR MSCI World UCITS ETF (SWLD) 0.12% TER

  • 666 stephen watson August 26, 2019, 3:59 pm

    I have the following all world etf VWRL with charges at 0.25%. I see the new Amundi Prime PRIW all developed world etf charges only 0.05% – a considerable saving. However I can’t find a platform that deals in it. I use AJBell, HL and iWeb. Anyone bought PRIW and on what platform please?

  • 667 Cornelious August 31, 2019, 1:49 pm

    Hello, Im new to this and have a question for you please:
    If you invest £1000 in a UK large cap index fund when the FTSE All Ahare is at, say 4000, how much would your investment be worth if a year later the FTSE All Share was back to 4000? Would it still be worth £1000 or would you have made some money through dividends from the FTSE All Share companies?
    Thank you

  • 668 The Rhino November 12, 2019, 3:12 pm

    Reading the Key Investor Information for HMWO, page 2 Charges section suggests a 3% entry and 3% exit fee. But then just on from that ‘No entry or exit charge is payable where shares are purchased/sold on a stock exchange. Investors need only pay any relevant broker and stock exchange fees and commissions’. Seems a little confusing? 3% in and out is a hefty whack. You’d want to be absolutely crystal clear whether you were paying it or not.

  • 669 The Rhino November 15, 2019, 3:13 pm

    Re: above comment, have now received confirmation from HL that there is no 3% entry or exit fee payable on this ETF (not when buying through them anyway, but almost certainly not broker specific), which is the expected outcome – but better to be safe than sorry..

  • 670 BGV November 18, 2019, 7:09 pm

    Hi all.
    In my research for my minimum risk asset I see this fund from iShares –

    iShares UK Gilts All Stks Idx (UK) D Acc

    It has a quoted OCF 0.11% on Interactive Investor though performance looks marginally poorer than:

    Vanguard UK Gov Bond Index (IE00B1S75374) OCF 0.15%

    If the lower charges are correct is this performance difference down to tracking error or am I not comparing apples with apples?

    Thanks in advance.

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