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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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{ 697 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.

  • 671 DB January 7, 2020, 1:33 am

    It seems that the costs for “HSBC FTSE All-World Index Fund C” are currently incorrect. According to this charges documents there is a 0.19% ongoing charge for the product costs AND a 0.25% ongoing charge for the account fee, i.e. 0.44% in total!

    http://doc.morningstar.com/Document/407f825631224e05f41082b45e3c997a.msdoc/?key=6d3ad7cced83e966eb033a99485759465b00047aee79de5f

  • 672 The Accumulator January 7, 2020, 10:02 pm

    Hi DB, the cost doc you’ve linked to assumes you’re investing in the fund through HSBC’s Global Investment Centre platform. That’s the 0.25% account fee bit. But you could invest in the fund using a different platform and then you’d pay their account fee instead. Platform fees are covered on our broker table, and we stick to fund Ongoing Charge Fees (OCFs) for this page.

    The OCF for this fund is currently listed as 0.19% in the factsheet, which is within a gnat’s whisker of the 0.18% on our page – which I do need to update soon!

  • 673 DB January 8, 2020, 8:10 pm

    @The Accumulator. Thanks for clarifying. How is one supposed to know what is a platform cost and what is not? In the document I linked both are labelled as “Ongoing Charges”. Would be good to know if there’s a definitive way to determine this, instead of as a nasty surprise a few years down the line.

    Does the transaction cost (0.04%) also only apply if using the HSBC platform?

  • 674 Rob January 17, 2020, 3:30 pm

    Hi – is it possible to get this updated for 2020? Appreciate your time!

  • 675 FIRE'd before I was fired February 21, 2020, 2:28 pm

    @MB & @DB – this page has some detail on transaction costs:
    https://www.thisismoney.co.uk/money/diyinvesting/article-5298879/How-funds-hidden-fees-Heres-check.html
    In short, it appears you do have to add OCF to transaction cost to get the total cost.

  • 676 John F March 30, 2020, 4:29 pm

    Please can anyone advise on if there are S&P 500 index tracker funds in the UK that charge a fee of below 0.05% that can be held through and stocks and shares ISA?

    I am new to investing, so unsure of the correct terms, but from watching education videos it is advised to find an index tracker fund with low expense ratio’s in the US.

    I’ve looked at Vanguard and Fidelity, but they charge fees called ongoing charges and transaction costs, plus annual fees. Is this the same as an expense ratio fee, just different names here in the UK?

    I am presuming you add all these fees to get your total fee amount from the investment, which will then be hard find a fund below 0.05%?

    Any help for this novice investor would be greatly appreciated!

  • 677 John F March 30, 2020, 4:51 pm

    Apologies, forgot to add from my post…would a more global index fund be better to benefit from more diversification across all of the developed world’s stock markets?

    Thanks

  • 678 Spaghetti March 30, 2020, 8:17 pm

    @John F
    Yes, a developed world or total (developed + undeveloped) world fund would offer far more diversification than putting all your eggs in a US basket. Pick one of the funds under the “World equity – developed world and emerging markets (total world)” category.

    You will struggle to find funds below 0.05%, that is very low. Be happy with 0.1x%

  • 679 John F March 31, 2020, 5:41 pm

    Hi Spaghetti
    Thanks for the feedback.

    Are you saying keep the ongoing charges fee to 0.1% or the total costs for the whole fund?

    I understand that investing in funds that invest overseas are affected by foreign currency rates. So if the £ drops in value, so would the fund. How does that affect your decision in investing in global funds?

    This is one fund that I have been looking at – the Fidelity Index World Fund:

    https://www.fidelity.co.uk/factsheets/Fidelity-Index-World-Fund/GB00BJS8SJ34-GBP/?id=GB00BJS8SJ34&idType=isin&marketCode=&idCurrencyId=

    This is on the list above. I am presuming it is not just the lowest fee that dictates the best fund, but other factors too?

    Is it worth seeking advice from an IFA about the best fund for my circumstances? Any recommendations if so please?

    Thanks

    John

  • 680 Spaghetti March 31, 2020, 9:14 pm

    @John The ongoing charge fee IS the total cost for the fund. Maybe you’re talking about transaction costs and such?

    If the pound drops, the value of your overseas investments is unaffected. Imagine USD:GBP rate is 1:1, you buy a unit of a fund for 100GBP (= 100 USD). Sterling then drops to half of USD. You’re still holding an asset worth 100 USD. If you sold it to a UK investor, they would have to pay you 200GBP for the unit now.

    It’s different if you’re investing in a fund whose underlying assets are in GBP, rather than other currencies. For example, if you invest in a FTSE100 fund and Sterling plummets the result depends on these 2 cases:

    1) If you live in the UK and use GBP you’re largely unaffected since everything that you buy (except what you import) will have cost the same before the GBP weakened against the dollar as after.
    2) If you’re based outside the UK, and you don’t use GBP, if you decide to sell your shares, you now get far fewer of your host currency out of it. Therefore those shares provide less purchasing power should you sell them.

    The Fidelity fund is good, but it’s developed world only: that’s less diversification. That said, I’m drip feeding into that fund over the coming months to profit on the short term. It’s my belief that undeveloped countries would be hit much harder by the virus than the undeveloped so I don’t want them dragging down shares. If if you’re horizon is long-term it shouldn’t matter: you should diversify total world.

    IMHO IFA is for if you’re a millionaire or grossing 300k+ annually. Better to educate yourself than have some biased kook tell you to put money in some UK-biased fund.

  • 681 John F April 1, 2020, 12:35 pm

    Hi Spaghetti

    Thanks again for your reply.

    Yes, I talking about all the other costs including transaction costs, one off costs, platform fees, plus the ongoing charge. Would you aim to keep all these combined around 0.1% or is that a figure you aim to keep just for the ongoing charge?

    Are the fees the primary indicators for you choosing a fund to invest in, or are there other indicators or variables that drive your reasoning for choosing a fund that I am not considering here?

    Did you purchase your Fidelity fund through Fidelity, or another platform please?

    My thinking is that if the funds can be held in a general platform in an ISA, then the ISA can be used to buy individual company stocks as well if needed.

    What fund do you recommend looking at that is a total world fund and not just covering the developed world?

    Lastly you mention drip feeding into the fund for the short term. What is your timeline in regards to short-term? As I was considering to open the fund and just leave the money invested, and then drip feed funds in on a monthly basis over a long-term period of 10-20 years.

    Many thanks

  • 682 cj122 April 8, 2020, 10:36 am

    I’m looking at “Fidelity Index Emerging Markets Fund P (GB00BHZK8D21) OCF” on the Fidelity website and although the ongoing charge is 0.2% as shown on this page, it says the transaction cost is 0.34%. Am I right in thinking that this should probably be removed from the list of best buys? The Vanguard Emerging Markets Stock Index Fund has a total charge of 0.24% on the other hand

  • 683 John Fairhurst April 28, 2020, 8:00 pm

    Can I please ask if it is worth having just one fund to invest in, or more than one?

    Thanks

    John

  • 684 Steven May 5, 2020, 10:01 am

    Hi Monevator,

    I have been thoroughly enjoying working through the various links and articles you have created over the years whilst I have been furloughed this last month. It is really appreciated for you to provide such thorough, honest and clear information and advice and I am sure you have set up many readers over the years by pointing them in the right direction and providing structure to their finances.

    I have decided on my equity allocation to go into the Vanguard FTSE Global All Cap Index Fund (GB00BD3RZ582) OCF 0.24% (which you included above) simplicity, low tracking error were among the key factors for me.

    Now before I make the step I wanted to ask if there is any disadvantage to holding just one Equity component. Aside from perhaps a lower average OCF from 2-4 funds combined to make up the global market is there any other benefit/ things I should be considering. It seems to be the case in all the example portfolios from yourself (that I have seen) that you have multiple funds making up the portions of the developed market and emerging markets (fragmented even further on multiple occasions). There doesn’t seem to be any articles that I can find from either yourself or other parties directly explaining this so would really appreciate your thoughts and guidance on this.

    I have been reading up the last month on everything I can and am looking to make my first investment this week, with regular automated monthly investments from my salary going forward.

    Thanks again and I look forward to hearing your thoughts.

    All the best
    Peter

  • 685 John Fairhurst May 6, 2020, 7:01 pm

    @ Peter
    Can I please ask, for my learning and guidance in choosing an investment fund, what guided your decision in choosing this fund over the other two funds rated as having cheaper OCF’s in the total world category by Monevator?

    HSBC FTSE All-World Index Fund C (GB00BMJJJG09) OCF 0.18%
    Vanguard Lifestrategy 100% Equity Fund (GB00B41XG308) OCF 0.22%

    Will you be buying this fund through Vanguard Investor, or another platform?

    Thanks
    John

  • 686 Peter May 7, 2020, 10:10 am

    Hi John,

    Firstly the HSBC fund had a highly varying tracking difference between the fund and the index of 0.4% to around 1.4% if I recall (if not read yet I would read through Monevators articles of tracking error, tracking difference and how to read a fund fact sheet). The Vanguard fund I am going for was within 0.12%-0.35%, so the extra 0.05% cost per year is significantly less than the 1% you could lose per year going with the HSBC one. Also my confidence in the fund given the fact this gap was so large is undermined as there is no reasoning given.

    Also the Vanguard fund I am going for holds considerably more holdings as is based on the FTSE Global All Cap vs the FTSE All World index and thus more diversified as covers not just large and mid cap but small cap as well across the world. On the negatives side it is much smaller in asset size as is newer so there are potential risks on that side but offset with the pros this for me is the strong favourite and also I expect the fund to grow in size considerably the next 5 or so years so stability should be found in that.

    Regarding who through, I am likely to be going via Lloyds as already have a share dealing account and ISA there and they offer competitive rates and the regular investing automation etc that fit within my current needs.

    All the best

  • 687 northshore May 7, 2020, 10:45 am

    HSBC FTSE All-world Index C OCF is now 0.13%
    (“change to charges on 1 April 2020” according to prospectus via morningstar)

  • 688 John Fairhurst May 7, 2020, 1:45 pm

    Hi Peter

    Thanks for the reply, and explanation.
    I now see the Vanguard LifeStyle 100% has more UK weighting, which I’ve been told has caused it to underperform against other world trackers. Is this fund also based on large and mid cap?

    I’ll read up them articles you mention.

    Thanks

    John

  • 689 Peter May 8, 2020, 12:35 pm

    Hi John,

    I’ve just revisited and yes the UK proportion is much too large for my liking and doesn’t represent the actual worlds markets equally. Given this it’s not comparable to one specific index and so tracking error harder to track.

    People often have home bias e.g. towards the UK and so is best avoided.

    Cheers

  • 690 John Fairhurst May 8, 2020, 12:50 pm

    Hi Peter
    Thanks. One of my concerns of going with a total world fund at present is that the emerging markets may struggle more with Covid-19 as they do not have healthcare systems in place – though this too could be said for some parts of Europe. As such, they may have a negative effect on the fund.

    Two very interesting BBC doc I listened to last night kind of reflect this:

    https://www.bbc.co.uk/sounds/play/m000hvtj

    https://www.bbc.co.uk/sounds/play/m000hvtl

    Thanks

  • 691 Peter May 8, 2020, 1:15 pm

    Hi John,

    I wouldn’t want to get into a back on fourth debating your selection of funds etc as I don’t think this is the medium Monevator would prefer it to be discussed. The premise of buying these globally well diversified index tracker funds is that you are accepting the concept and supported idea that we cant beat the markets and are not smarter than the markets and so do not aim to time the markets. Any act to postpone or withhold investments (as easy as it is to do) is going against that. You may time it right once or twice but over 30 years you are statistically going to get it wrong most of the time and negatively impact your investments.

    Potentially yes emerging markets may suffer but these aren’t frontier markets, if you look at the breakdowns of the countries e.g China. They have been tremendously better than the UK’s hesitant government in bringing in measures to reduce the impact of COVID 19. They could face fines for concealing information delaying global knowledge or for the repeated instance of a virus from stemming from a known issue being the wet markets that could impact them. But again this is all engaged with whats going on and not abiding by the accepted behavioural habits for this passive investing.

    And anyway, if the emerging markets do go down, the money you are investing is going further and buying “more”.

    If you are thinking of investing in this sort of way I would encourage reading further articles from Monevator or the Maven Money podcast as they go into detail on behavioural habits and its importance. So you have the knowledge and resilience when such a market dip happens that you don’t react and sell sell sell or time the dip etc.

    All the best

    Peter

  • 692 John Fairhurst May 9, 2020, 10:16 pm

    Thanks again for you thoughts Peter – much appreciated.

  • 693 Eagleuk August 1, 2020, 5:51 pm

    Hi
    I have noticed that Dow Global titans 50 etf is available from two ETF providers in the SIPP and LISA account.The providers are lyxor(MGTU LON) and Ishares ( EXI2).The domicile of these etfs is in France and Germany .Does anyone have info or experience of French and German withholding tax in the UK SIPP?
    Thanks

  • 694 Matt August 17, 2020, 11:14 am

    Thank you for providing such a valuable resource.

    From what I can see, Vanguard UK Investment Grade Bond Index (IE00B1S74Q32) OCF has an annual charge of 0.12% not 0.15%. Also has the advantage of zero bid/offer spread.

  • 695 gavin harvey August 20, 2020, 9:17 am

    Vanguard FTSE All-World ETF (VWRL) OCF 0.25%
    is now only 0.22%

    Great piece of work you have done here

  • 696 Matthias August 25, 2020, 6:53 pm

    Is there a reason Vanguard FTSE Developed World UCITS ETF (VEVE/IE00BKX55T58) is not listed under “World equity – developed world only”? It has an OCF of 0.12% if I understand correctly. In particular, VEVE and HMWO are nice as they do not reinvest dividends, which helps for the self-assessment when investing outside of a wrapper (ISA/SIPP). This may be something worth noting in these listings.

  • 697 The Accumulator September 12, 2020, 2:54 pm

    Hi Matthias, it’ll only have been because VEVE was more expensive last time I updated this piece. Hope to revisit the list again very soon.

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