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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

  • Vanguard Global Bond Index (IE00B50W2R13) OCF 0.15% 

Next best

  • Vanguard Global Short Term Bond Index (IE00BH65QG55) 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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{ 645 comments… add one }
  • 599 Craig January 15, 2019, 11:07 pm

    @Accumulator – Many thanks for signposting the extra reading, this has really clarified things and helped firm up my thoughts! Thank you.

    I’ve also dug deeper into the site and have now spent many hours reading and following links. Apologies for been so hasty jumping in asking questions so quickly without fully taking the time to look what had already been written. This really is an amazing resource I can’t thank you enough for all the time and effort you put into your research, articles and taking the time to personally respond to questions.

    I noticed a reference to Bridlington in one of your posts, I’m from East Yorkshire myself and have spent many weekend there as a kid stuffing my face with doughnuts and lemon tops! 🙂 (I not found any information about the authors so it looks like you post anonymously) I just wondered if that was your neck of the woods.

    Thanks again for your prompt reply!

  • 600 Kwakil January 17, 2019, 10:35 pm

    Scary hidden charges on ETFs? Check the KIID!

    Looking at “World equity”, you list one ETF: “HSBC MSCI World ETF (HMWO) OCF 0.15%”

    I am looking at ETFs only because my platform AJ Bell Youinvest does not charge for ETFs but does for OEIC funds. At first sight the 0.15% compares favourably with Vanguards similar ETF “Vanguard FTSE Developed World UCITS ETF” which charges 0.18% but lets have a glance at the KIID like we are supposed to eh?

    “One-off charges taken before or after you invest: Entry charge 3.00% Exit charge 3.00%”
    OUCH! WTF!

    Seriously! This is HSBCs own KIID for this ETF! (The Vanguard ETF KIID says 0% and 0% entry and exit)

    So why does this MASSIVE THREE PERCENT INITIAL CHARGE not appear on the morning star’s fees page for this HSBC ETF?
    http://www.morningstar.co.uk/uk/etf/snapshot/snapshot.aspx?id=0P0000RYLW&tab=5&InvestmentType=FE

    So why does this MASSIVE THREE PERCENT INITIAL CHARGE not appear on the FT fees page for the for this HSBC ETF?:
    https://markets.ft.com/data/etfs/tearsheet/summary?s=HMWO:LSE:GBX

    So why does this MASSIVE THREE PERCENT INITIAL CHARGE not appear on the Hargreaves Landsdown page for for this HSBC ETF?:
    https://www.hl.co.uk/shares/shares-search-results/h/hsbc-etf-plc-msci-world-etf-gbp/costs

    So if the FT, Hargreaves Landsdown and Morning star are all saying “initial charge 0%” but HSBCs KIID for the fund is saying a MASSIVE THREE PERCENT INITIAL CHARGE. What the F is going on? How is this 3% being taken??????????????????????????????????????????????????????????????????????????????????
    As an ETF is traded like a stock, perhaps it comes from the bid offer spread from the market maker?
    No apparently not. HL reports HSBC ETFS PLC MSCI WORLD ETF GBP (HMWO) Sell:1,515.50p Buy:1,517.00p for Prices as at close on 17 January 2019 .
    So what is obliging HSBC to report 3% entry and exit in there own KIID that is so widely being ignored by FT HL and morning*? I’m sure HSBC would much rather leave it out.

    You can get the KIID direct from HSBC here: https://www.etf.hsbc.com/etf/uk/professional?fundid=HETF017

    Anybody know whats going on here?

  • 601 Kwakil January 17, 2019, 10:40 pm

    (Click the “ETF Literature” tab on the link in my previous post and the KIID is in the list)

  • 602 The Investor January 17, 2019, 11:02 pm

    @Kwakil — Evening! I appreciate you’re concerned, but please don’t shout, and one question mark will suffice. 🙂

    One won’t pay that 3% charge when one buys or sells that ETF. I forget the specific reason it’s listed in the KIID — one of our amazingly informed readers will hopefully pop along and remind us — but anyway, as a retail investor buying mainstream ETFs on retail platforms, there are no such explicit exit or entry fees to be paid.

    Good news I hope! 🙂

  • 603 Kwakil January 17, 2019, 11:02 pm

    I should have read the KIID properly:
    “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.”
    “Investors buying and selling shares on stock exchanges can obtain the actual charges from their financial adviser, stock broker, share dealing service or third party administrator.
    So (my) panic over!

  • 604 Jack February 6, 2019, 5:31 am

    Hi
    Thanks for this great post!
    You say
    “A high-yielding fund is a distant cousin of value and not always a pretty one at that”
    Could you please explain it more in detail? The meaning of value, high yielding, and why they are non equivalent investment tools. Or simply, share some sources where this is already explained (I couldn’t find any myself)
    Thanks again and keep up the great work.

  • 605 The Investor February 6, 2019, 12:53 pm

    @Jack — There’s been lots of discussion over the past few years about whether dividend shares are just value stocks in disguise, and poor ones at that. Keep in mind when researching all this stuff though that the goalposts are constantly moving (e.g. The old king of value, price-to-book, has been terrible in the more recent times.)

    The quant Meb Faber has written a fair bit about it:

    https://mebfaber.com/2017/01/09/high-dividend-stocks-worst/

  • 606 Julie February 10, 2019, 6:24 am

    Morning everyone
    I’m interested to understand fully the difference between L&G International Index and HSBC Ftse All World Index – I’ve looked at the fund fact sheets and Google but am still a bit confused!
    Q:- Does L&G contain small cap and emerging markets?
    Q:- Is the only difference that L&G doesn’t include the UK?
    Current investments:-
    L&G Int index 0.08% chg, L&G Uk index fund 0.04% chg & Ishares emerging markets equity index 0.24% chg- all with Hargreaves Lansdown. Split – 6% in UK 10% EM & rest in Int Index
    Aim:-
    World coverage including Emerging Markets with the cheapest funds possible. I would prefer one fund that does everything but not at the expense of charges. Would the HSBC fund be better even though fund chg is more expensive @ 0.16% with HL? Currently I’m guessing at the correct % split allocations in my 3 funds hence being curious in the HSBC fund?

    Thanks

  • 607 Nigel February 10, 2019, 10:59 am

    Hi,

    You say that the iShares Ultrashort Bond ETF could be handy for deaccumulators. Could you explain in what way or point to some articles about deaccumulation?

    Thanks

  • 608 Algernond February 10, 2019, 11:47 am

    Hi,

    For the Vangaurd All World ETF, you’ve given it the Lyxor ticker (LCWL) instead of VWRL.

  • 609 MrOptimistic February 10, 2019, 11:56 am

    I guess the SPDR Global Dividend Aristocrats ETF just fails to make the cut with its 0.45% charge. I hold this, it will be interesting to see how it behaves in a major downturn. Still have memories of the iShares UK Dividend Plus fund which was all the race up to 2008. Recall it was a bloodbath.
    Thanks for this list: excellent starting point.
    Wasn’t there some careless talk about a book in the near future 🙂

  • 610 Vanguardfan February 10, 2019, 12:24 pm

    I’ve been pondering currency risk recently, and wanted to understand why many global bond funds are currency hedged, unlike most equity funds. Specifically the Vanguard Lifestrategy funds bond element comprises currency hedged global bonds, and I therefore hold rather a lot of this kind of asset.
    Are there any Monevator articles that cover this?
    My own gut feeling is that I don’t really feel comfortable with a mix of global bonds which are currency hedged, because it’s the sort of complication that I don’t fully understand. I’d rather hold mainly UK government bond funds, which I think I do understand, and allocate a small portion of my bonds to unhedged euro and dollar government bonds to diversify currency risk. This doesn’t seem to be an easy or low cost thing to do – I’ve had a quick look for unhedged euro and dollar bond funds – plus I wonder what charges I might be incurring converting back to sterling. What am I missing here? Is my idea misguided?

  • 611 The Investor February 10, 2019, 12:42 pm

    @Vanguardfan — That’s one of my long promised and unfinished articles. It’s basically down to a mix of theory (return profile/time horizon of lower return bonds and lack of natural hedging) and evidence (from memory on a risk adjusted basis hedged bond funds proved better). Finally there’s the role of bonds — to add stability. Currency moves can knock 10% or more off valuations very short term (even overnight — like EU Referendum). Experts debate relative importance of all the points, but all told it’s much more consensus position to hedge then with equities. Will try to finish article!

  • 612 MrOptimistic February 10, 2019, 12:53 pm

    @vanguardfan. That’s odd, I would have said it is harder to find hedged than unhedged bonds, eg
    https://www.ishares.com/uk/individual/en/products/251736/ishares-euro-government-bond-35yr-ucits-etf
    However, isn’t using unhedged bond funds mixing bond allocation with currency speculation? If you think the pound is overvalued now then ok I guess. Hedging with equity funds I have seen discussed much.

  • 613 Vanguardfan February 10, 2019, 2:39 pm

    @TI, MrO, thanks.
    Yes, I recognise that buying unhedged bonds in foreign currency will result in high levels of volatility and really it is not what the bond allocation of the PF is for. I also recognise that this is partly a cognitive bias in response to the pound weakening – I suddenly wonder if I should have some cash or cash-like exposure to haven currencies (if one would describe the euro as such – I suppose I really mean widely used currencies from countries I do actually travel to). And I am aware that moving into these currencies now would be falling into the usual psychological trap of buying low…
    So I’m pondering rather than acting at the moment. My problem is this. I am FI, so at capital preservation/decumulating stage rather than accumulating. I have about 50 year time horizon, and my asset allocation is 50% equities (probably about 1/3 UK, I really should check that properly…), and the other 50% is split roughly 17% bonds and 33% cash. (Yes I know it’s a lot of cash, but it’s what helps me put the rest at greater risk). Anyway, that seems to me a lot of sterling, and I was wondering about whether I could find a way of holding some of that in non sterling.
    It’s probably just unnecessary tinkering, and the most likely result of my pondering will be…nothing. But I’d welcome any thoughts. And I still instinctively don’t like holding those hedged global bond funds.

  • 614 Vanguardfan February 10, 2019, 2:41 pm

    Edit – sorry I meant buying high, ie when the pound is weak.

  • 615 MrOptimistic February 10, 2019, 5:32 pm

    I bought unhedged US treasuries to limit any annoyance if brexit causes GBP to sink. This one I think

    https://www.ishares.com/uk/individual/en/products/253744/ishares-usd-government-bond-37-ucits-etf-acc-fund
    However, a rising pound is what I really need to hedge as this will knock all overseas assets and ftse100.
    I have too much cash too but am moving it to short dated bonds, hedged 🙂
    A falling pound will boost overseas assets so don’t all the overseas stocks you hold provide effective foreign currency exposure?

  • 616 aubrace February 10, 2019, 5:52 pm

    Very surprised that MINV doesn’t get a mention

  • 617 Grislybear February 10, 2019, 6:13 pm

    “Vanguard FTSE All-World ETF (LCWL) OCF 0.25% ” slight error here methinks.

  • 618 The Accumulator February 10, 2019, 6:39 pm

    Oops, thanks Algernond and Grislybear. Fixed.

    @ Julie – you can work out your costs using the info on this piece:
    https://monevator.com/how-to-work-out-your-portfolios-cost/

    L&G International Index Trust follows FTSE World ex UK index. Doesn’t contain small cap or emerging markets whereas the All-World index contains a smidge of both. It’s not going to amount to a whole hill of beans either way. Unless you love investing and are certain you’ll rebalance wisely no matter what, then it’s tough to beat the convenience of a one-stop fund.

  • 619 Vanguardfan February 10, 2019, 6:43 pm

    @MrO I was persuaded to buy some hedged global short dated bonds (the Vanguard fund, natch) as a cash substitute, but I’m not convinced, I think I prefer the real thing. My cash holdings include a rolling ladder of 5 year fixed rate deposits (reinvesting into the best rate each year), ILSCs which will stay untouched as long as possible and premium bonds (which are instant access low return – but at least the interest is tax free), and I think I get a better return than the bond fund after expenses. So I’ll probably stick with that hefty allocation. The idea is that we’re supposed to be spending the stuff anyway…
    But yes you are right that the overseas equities are probably enough currency diversification. So, back to sleep

  • 620 Charlie February 10, 2019, 7:04 pm

    I realise there’s a limit on how many sectors this guide should cover, but I’ve found these global aggregate bond trackers useful and cheap (‘aggregate’ here means it combines government and corporate bonds):

    iShares Global Aggregate Bond UCITS ETF GBP Hedged (Dist) (ticker:AGBP) 0.10%
    iShares Global Aggregate Bond UCITS ETF USD (Dist) GBP (ticker:SAGG) 0.10%
    SPDR® Bloomberg Barclays Global Aggregate Bond UCITS ETF USD unhedged (GBP) (ticker:GLBL) 0.10%
    SPDR® Bloomberg Barclays Global Aggregate Bond UCITS ETF GBP Hedged (GBP) (ticker:GLAB) 0.10%

    Something like VWRL+AGBP or HMWO+EMIM+GLAB might be a reasonable ETF approximation of a LifeStrategy fund (albeit not automatically rebalancing). For some portfolio sizes, sticking to ETFs rather than funds can reduce broker fees.

    Side note: I use Chrome browser on iPad and I’ve lost all styling on content again. I can clear cookies to fix but then I lose cookies for all sites which is inconvenient (no option to clear cookies for a single site on the iPad version of Chrome). This happened to me about month ago also.

  • 621 Onedrew February 10, 2019, 7:40 pm

    IShares Global Bond Index GBP Hedged (AGBP) looks like a good alternative to, and follows the same Barclays Bloomberg index as, the Vanguard Global Bond Index Fund, and has an OCF of .1%.

  • 622 tom_grlla February 10, 2019, 8:58 pm

    I was looking at Unhedged Global Bond ETFs recently to use as a benchmark (as I’m a heretical Active Investor). The two I found were the iShares and SPDR ones that Charlie has helpfully mentioned a couple of comments above.

    What I’m confused by is that in the past 9 months (when one of them started) the performance of the two has been unexpectedly different (iShares has done better) – I’d love to hear if anyone can explain this, as they’re tracking the same index.

  • 623 Steve the Lurker February 10, 2019, 9:13 pm

    Does anyone know of any tracker funds for short duration index-linked government bonds? I’ve only been able to find actively managed funds. Thanks in advance if you can help.
    P.S. I’m looking because it doesn’t look like ILSCs are ever coming back, so I’m being forced into index-linked bonds. But most index linked bonds are long duration, which I don’t fancy when interest rates will presumably be rising sometime in the future (maybe).

  • 624 Passive Investor February 10, 2019, 9:30 pm

    There is an issue with ETFs denominated in US dollars paying dividends in dollars. The forex charge for converting back to GBP can make a modest difference to the cost of investing.

    By way of example if you invest in VWRL (Vanguard World ETF) the current OCF is 0.25%, the current yield is 2.31% and the cost of a single forex transaction on my platform is 1.5%. If you run the figures the additional cost of exchanging dollar dividends to sterling is 0.035%. So the effective OCF is 0.285 not 0.25%.

  • 625 MrOptimistic February 10, 2019, 9:41 pm

    @stl. Yes the royal London fund in the list!

  • 626 Passive Investor February 10, 2019, 9:50 pm

    @ vanguardfan – this is a Vanguard paper on the rationale for hedging international fixed income (in brief: you get same long-term return with lower volatility)

    https://www.vanguard.co.uk/documents/adv/literature/going-global-with-bonds-tlor.pdf

  • 627 Fremantle February 10, 2019, 11:18 pm

    Thanks for the update. I too keep revisiting global investment grade inflation linked bond funds, the short duration Royal London offering may need revisiting

  • 628 MrOptimistic February 11, 2019, 9:07 am

    @Fremantle. I wasn’t sure about that short duration but in any case my ISA and SIPP providers don’t offer it. I settled on the Royal London and L&G funds, the L&G fund being slightly cheaper. They are both GBP hedged as I recall, the L&G fund definitely so. The effective duration of the L&G fund is reported as 7.99 years ( love the precision).
    In as much that I feel the duration should in some way align with the reason for choosing the asset and the associationed timescale, and I worry about value in 10 years time ( for my lucky widow in case if the SIPP 🙂 ), the duration of the fund seemed ok. The RL fund ( not the short duration one), was similar except it’s duration is about 11 years. Morningstar says it’s hedged.

    https://fundcentres.lgim.com/uk/ad/fund-centre/Unit-Trust/Global-Inflation-Linked-Bond-Index-Fund
    http://www.morningstar.co.uk/uk/funds/snapshot/snapshot.aspx?id=F00000GVA4

  • 629 Glenn February 11, 2019, 10:42 am

    It has always annoyed me that WSML isn’t available on HL. WLDS is available, which I think might be the same thing?… but the volume is absolutely tiny.

  • 630 The Weasel February 11, 2019, 2:05 pm

    Anyone aware of taxes being charged based on the domicile of the ETF despite it being held in an ISA wrapper?

    Specifically, I hold VGOV in an ISA with AJ Bell Youinvest. In the last dividend payment I noticed they have taken 20% from the gross amount. When I contacted customer service they said it was because the ETF was domiciled in the Republc of Ireland. The strange thing is it’s the first time I see tax deducted on these dividends.

    Was anyone aware of this? I thought having them in an ISA it meant not taxes charged at all!

  • 631 The Weasel February 11, 2019, 2:22 pm

    Please ignore my latest. Seems to have been a glitch. I checked the document again and the full untaxed amount was paid into my cash account.

  • 632 Ric February 11, 2019, 5:31 pm

    Thanks for all the lovely research!
    I may be wrong, but should EMIM actually be EIMI?
    www(dot)ishares(dot)com/uk/individual/en/products/264659/ishares-msci-emerging-markets-imi-ucits-etf

  • 633 Charlie February 11, 2019, 5:37 pm

    @Ric scroll to the bottom of that link and you’ll see that EMIM is listed as the ticker for the GBP variant of that ETF.

    This tripped me up too. And of course I would never admit that I actually bought the USD flavour by mistake once upon a time!

  • 634 Ric February 11, 2019, 6:44 pm

    @Charlie
    Opps. Thanks!

  • 635 Fremantle February 11, 2019, 7:51 pm

    @MrOptimistic

    Short duration to protect capital in the event of successive rate rises – not so much scope for depreciation as you get to the top of the ladder more quickly and reset.

    Matching assets to liabilities also works.

  • 636 Steve the Lurker February 11, 2019, 10:39 pm

    @MrOptimistic
    Thanks, but if I’ve understood the documentation for this fund correctly, it’s actively managed “using a combination of top-down analysis, based on our macroeconomic views overlaid with bottom-up security selection”. So I don’t think it’s a tracker.

  • 637 MrOptimistic February 11, 2019, 10:55 pm

    @stl. True but ok by me. IL durations are huge.

  • 638 shaz M February 12, 2019, 9:37 am

    I am new to this site but have been investing for a number of years now. I see recently a big push for passive investing as low charges etc but I wonder if I am missing something. I have investments in global funds and trusts- Fundsmith, lindsell train global fund, Scottish Mortgage investment trust are my main global holdings and all their returns easily beat the returns listed over 5 years on Hargreaves Lansdown research pages despite their higher charges. Is it that I am not looking over a long enough period?

  • 639 The Investor February 12, 2019, 10:31 am

    @shaz M — Some few funds do beat the market. The three you mention are among the three best performing retail funds in the entire universe (of several thousand) of retail funds out there. 🙂

    If you bought them — and put most of your investment money into them — five years ago, say, before they did so well, then congratulations. Perhaps you have a knack of picking great funds, or perhaps you were lucky. Time will tell! 🙂

    However if you bought them after most of their great run, then the question is will they do as well over the next 5-10 years?

    I like Nick Train and Terry Smith’s approach and think they have a chance, but the former would admit the market has been kind to his kind of shares over the past 5-10 years, and the latter is intellectually honest enough to admit there will be down periods for his style of investing, albeit he’s yet to see one. The Scottish Mortgage Trust guys are really growth/momentum investors. Nothing wrong with that, but again it’s been probably the best period for large cap tech since the late 1990s.

    Bottom line: Some funds will beat passives, and if you own them in advance, and with enough of your investment pot to make up for those funds you pick that do worse, then that’s a winning strategy.

    But the odds are against it, and for most people it’s not worth the bother of trying since they don’t need to beat the market to achieve their goals, and losing to the market would only hold them back.

  • 640 Beancounter February 12, 2019, 2:31 pm

    Thanks for all your helpful tips and hints. I have set up a public watchlist on JustETF.com which summarises the LSE listed ETFs that track the FTSE All-World or MSCI World Indeces, along with their TERs and returns . Hopefully it will be useful to you too.

    https://www.justetf.com/uk/watchlist.html?listId=4953c

  • 641 Nicholas Stone February 14, 2019, 10:21 am

    You mention in the piece that one can slice and dice an ‘all world’ ETF by buying up the constituent parts. If I wanted to do this, (for example because I want to buy N America separately because I think it’s overvalued)… what would I buy to represent the UK? The FTSE 250? VMID? Or would it be the FTSE 100 and 250?

    So something like:

    Asia ex-Japan (VAPX)
    Japan (VJPN)
    Europe ex-UK (VERX)
    UK (VMID)?
    N America (VNRT)

    I know it is extra hassle but I have a spreadsheet that calculates for me exactly how I need to rebalance so it isn’t really hassle. And I feel that buying the sectors independently offers more chance of dollar cost averaging.

  • 642 Adrian February 14, 2019, 4:53 pm

    If you want unhedged global sovereign bonds in OEIC form then iShares Overseas Government Bond Index Class H is worth a mention. Only 0.11% OCF. Arguably would do very well in a UK recession.

  • 643 The Accumulator February 14, 2019, 9:55 pm

    @ Nicholas Stone – if you want to own companies more exposed to the UK economy then FTSE 250. If you want companies representative of UK stock market then FTSE All-Share or you could achieve much the same with FTSE 100 + FTSE 250.

  • 644 Peter February 15, 2019, 11:55 am

    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?

  • 645 Ste February 16, 2019, 6:32 am

    @Adrian
    Thanks for the tip re iShares Overseas Government Bond Index Fund. I was wondering why you recommend the Class H version instead of Class D? Class H has a lower OCF than Class D (0.11 vs 0.16) however it comes with a buy/sell spread which Class D does not have. I hold Class D since I do not understand how the two versions work out cost-wise and am more comfortable with a fixed price. But am wondering whether I’m overpaying on the OCF out of ignorance!

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