Low-cost index funds UK

This is our list of low-cost index funds and ETFs that’s kept updated to enable investors to find the cheapest index trackers available in the UK.

You can select from these funds to build a diversified portfolio that – as part of a passive investing strategy – will help you achieve your investing objectives.

We focus on value and cost in this list because crushing charges is a core component of wise investing. Every pound you save in fees is a pound that snowballs over the years – speeding you towards your financial goals.

Our piece on management fees explains how even small savings add up to a big difference.

The growing recognition of the importance of investment fees has driven explosive growth in low-cost index funds and Exchange Traded Funds (ETFs) over the past 20 years.

We believe these two types of index tracker are the best value investment vehicles available in the UK and the right choice for passive investors.

Low-cost index funds UK – the Total Cost of Ownership

Our cheapest tracker fund UK list is divided into the key sub-asset classes you may wish to invest in.

The picks per asset class are ranked by their Total Cost of Ownership (TCO).

The TCO is the sum of a fund’s transaction costs and its Ongoing Charge Figure (OCF).

Many outlets will only highlight a fund’s OCF (or Total Expense Ratio). But that misses out a significant chunk of cost embodied by its less well-publicised transaction cost figure.

Transaction costs are the fees and taxes that all investment funds inevitably incur when trading their underlying assets.

We think it’s important to include transaction costs when considering your shortlist. Such charges can rival the OCF in some of the sub-asset classes.

Note: fund costs are a complex and confusing area so we’ve got a few more notes about fees after the main list below.

Note II: we’ve also included the cheapest ESG option for each asset class.

Let’s go hunt for bargains!

Global equity – developed world and emerging markets (All-World)

Cheapest

• SPDR MSCI ACWI ETF (ACWI) TCO 0.12% (OCF 0.12%, Transaction 0%)

Next best

• HSBC FTSE All-World Index Fund C (GB00BMJJJF91) TCO 0.15% (OCF 0.13%, Transaction 0.02%)

• SPDR MSCI ACWI IMI ETF (IMID) TCO 0.18% (OCF 0.17%, Transaction 0.01%)

• Invesco FTSE All-World ETF (FWRG) TCO 0.18% (OCF 0.15%, Transaction 0.03%)

• iShares MSCI ACWI ETF (SSAC) TCO 0.2% (OCF 0.2%, Transaction 0%)

• Vanguard ESG Global All Cap ETF (V3AB) TCO 0.26% (OCF 0.24%, Transaction 0.02%)

World equity – developed world only

Cheapest

• UBS (Irl) ETF – MSCI World (WRDA) TCO 0.1% (OCF 0.1%, Transaction 0%)

Next best

• iShares Developed World Index Fund D (IE00BD0NCL49) TCO 0.12% (OCF 0.12%, Transaction 0%)

• SPDR MSCI World ETF (SWLD) TCO 0.12% (OCF 0.12%, Transaction 0%)

• Fidelity Index World Fund P (GB00BJS8SJ34) TCO 0.12% (OCF 0.12%, Transaction 0%)

• Franklin FTSE Developed World ETF (DWLD) TCO 0.12% (OCF 0.09%, Transaction 0.03%)

• iShares Developed World Fossil Fuel Screened Index Fund (GB00BFK3MT61) TCO 0.13% (OCF 0.12%, Transaction 0.01%)

World ex-UK equity

Cheapest

• Vanguard FTSE Dev World ex-UK Equity Index Fund (GB00B59G4Q73) TCO 0.15% (OCF 0.14%, Transaction 0.01%)

Next best

• L&G International Index Trust I Fund (GB00B2Q6HW61) TCO 0.16% (OCF 0.13%, Transaction 0.03%)

• Aviva Investors International Index Tracking SC2 Fund (GB00B2NRNX53) TCO 0.25% (OCF 0.25%, Transaction 0%)

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

World ex-US equity

Cheapest

• Xtrackers MSCI World ex-USA ETF (XMWX) TCO 0.16% (OCF 0.15%, Transaction 0.01%)

World income equity

Cheapest

• Xtrackers MSCI World High Dividend Yield ESG ETF (XZDW) TCO 0.25% (OCF 0.25%, Transaction 0%)

Next best

• Vanguard FTSE All-World High Dividend Yield ETF (VHYG) TCO 0.32% (OCF 0.29%, Transaction 0.03%)

• iShares MSCI World Quality Dividend ESG ETF (WQDS) TCO 0.41% (OCF 0.38%, Transaction 0.03%)

• WisdomTree Global Quality Dividend Growth ETF (GGRG) TCO 0.42% (OCF 0.38%, Transaction 0.04%)

• Vanguard Global Equity Income Fund (GB00BZ82ZW98) TCO 0.56% (OCF 0.48%, Transaction 0.08%)

The Vanguard fund is active but gives you a non-ETF option.

World small cap equity

Cheapest

• UBS (Irl) ETF – MSCI World Small Cap Socially Responsible (WSCR) TCO 0.24% (OCF 0.23%, Transaction 0.01%)

Next best

• HSBC MSCI World Small Cap ESG ETF (HWSS) TCO 0.27% (OCF 0.25%, Transaction 0.02%)

• Vanguard Global Small-Cap Index Fund (IE00B3X1NT05) TCO 0.34% (OCF 0.3%, Transaction 0.04%)

• iShares MSCI World Small Cap ETF (WLDS) TCO 0.36% (OCF 0.35%, Transaction 0.01%)

US large cap equity

Cheapest

• SPDR S&P 500 ETF (SPXL) TCO 0.03% (OCF 0.03%, Transaction 0%)

Next best

• Lyxor Core US Equity ETF (LCUS) TCO 0.04% (OCF 0.04%, Transaction 0%)

• JPMorgan BetaBuilders US Equity ETF (BBSU) TCO 0.04% (OCF 0.04%, Transaction 0%)

• Amundi S&P 500 II ETF (SP5L) TCO 0.05% (OCF 0.05%, Transaction 0%)

• L&G US Equity ETF (LGUG) TCO 0.05% (OCF 0.05%, Transaction 0%)

• iShares S&P 500 ETF (I500) TCO 0.06% (OCF 0.06%, Transaction 0%)

• iShares US Equity Index Fund D (GB00B5VRGY09) TCO 0.06% (OCF 0.05%, Transaction 0.01%)

• HSBC American Index Fund C (GB00B80QG615) TCO 0.06% (OCF 0.06%, Transaction 0%)

• Fidelity Index US Fund P (GB00BJS8SH10) TCO 0.06% (OCF 0.06%, Transaction 0%)

• iShares US Equity ESG Index Fund D (GB00BN090C90) TCO 0.07% (OCF 0.05%, Transaction 0.02%)

The tax treatment of US equities gives synthetic ETFs a tax advantage over physical funds. Find out more in our Best S&P500 ETFs and index funds article.

UK large cap equity

Cheapest

• iShares UK Equity Index Fund D (GB00B7C44X99) TCO 0.08% (OCF 0.05%, Transaction 0.03%)

Next best

• Fidelity Index UK Fund P (GB00BJS8SF95) TCO 0.09% (OCF 0.06%, Transaction 0.03%)

• Vanguard FTSE UK All Share Index Unit Trust (GB00B3X7QG63) TCO 0.11% (OCF 0.06%, Transaction 0.05%)

• HSBC FTSE All Share Index Fund Institutional (GB0030334345) TCO 0.15% (OCF 0.1%, Transaction 0.05%)

• iShares UK Equity ESG Index Fund D (GB00BN08ZV03) TCO 0.18% (OCF 0.05%, Transaction 0.13%)

• SPDR FTSE UK All Share ETF (FTAL) TCO 0.23% (OCF 0.2%, Transaction 0.03%)

• Amundi UK Equity All Cap ETF (LCUK) TCO 0.25% (OCF 0.04%, Transaction 0.21%)

UK equity income

Cheapest

• Vanguard FTSE UK Equity Income Index Fund (GB00B59G4H82) TCO 0.26% (OCF 0.14%, Transaction 0.12%)

Next best

• L&G Quality Equity Dividends ESG Exclusions UK ETF (LDUK) TCO 0.43% (OCF 0.25%, Transaction 0.18%)

• SPDR S&P UK Dividend Aristocrats ETF (UKDV) TCO 0.48% (OCF 0.3%, Transaction 0.18%)

Emerging markets equity

Cheapest

• Amundi MSCI Emerging Markets ETF (LEMA) TCO 0.14% (OCF 0.14%, Transaction 0%)

Next best

• Northern Trust Emerging Markets Custom ESG Equity Index Fund (IE00BJ0X8418) TCO 0.19% (OCF 0.18%, Transaction 0.01%)

• HSBC MSCI Emerging Markets ETF (HMEC) TCO 0.19% (OCF 0.15%, Transaction 0.04%)

• Fidelity Index Emerging Markets Fund P (GB00BHZK8D21) TCO 0.21% (OCF 0.2%, Transaction 0.01%)

• Amundi Index MSCI Emerging Markets SRI PAB ETF (AMEG) TCO 0.24% (OCF 0.16%, Transaction 0.08%)

Property – global

Cheapest

• VanEck Global Real Estate ETF (TREG) TCO 0.25% (OCF 0.25%, Transaction 0%)

• L&G Global Real Estate Dividend Index Fund I (GB00BYW7CN38) TCO 0.25% (OCF 0.22%, Transaction 0.03%)

Next best

• HSBC ETF FTSE EPRA/NAREIT Developed ETF (HPRS) TCO 0.28% (OCF 0.24%, Transaction 0.04%)

• iShares Environment & Low Carbon Tilt Real Estate Index Fund D (GB00B5BFJG71) TCO 0.3% (OCF 0.18%, Transaction 0.12%)

• Amundi ETF FTSE EPRA/NAREIT Global ETF (EPRA) TCO 0.31% (OCF 0.24%, Transaction 0.07%)

Multi-factor – global

Cheapest

• JPMorgan Global Equity Multi-Factor ETF (JPLG) TCO 0.2% (OCF 0.19%, Transaction 0.01%)

Next best

• Invesco Global ex UK Enhanced Index Fund Z (GB00BZ8GWT74) TCO 0.31% (OCF 0.23%, Transaction 0.08%)

• Franklin Global Equity SRI ETF (FLXG) TCO 0.34% (OCF 0.32%, Transaction 0.02%)

• Invesco Quantitative Strategies ESG Global Equity Multi-Factor ETF (IQSA) TCO 0.38% (OCF 0.3%, Transaction 0.08%)

• HSBC Multi-Factor Worldwide Equity ETF (HWWA) TCO 0.4% (OCF 0.25%, Transaction 0.15%)

• Amundi ETF Global Equity Multi Smart Allocation Scientific Beta ETF (SMRU) TCO 0.42% (OCF 0.4%, Transaction 0.02%)

Factor investing is effectively straying into active management territory. You hope that your chosen subset of the market can outperform. The important thing is to choose products underpinned by sound financial theory, a verifiable set of rules, and a commitment to low costs.

Regional ETFs are available. But we’ve stuck to global multi-factor low-cost index funds for broad diversification.

Money market – GBP

Cheapest

• Lyxor Smart Overnight Return ETF (CSH2) TCO 0.09% (OCF 0.09%, Transaction 0%)

Next best

• BlackRock ICS Sterling Liquidity Fund (IE00B43FT809) TCO 0.1% (OCF 0.08%, Transaction 0.02%)

• Fidelity Cash Fund (GB00BQRGFD05) TCO 0.1% (OCF 0.1%, Transaction 0%)

• Royal London Short Term Money Market (GB00B8XYYQ86) TCO 0.1% (OCF 0.1%, Transaction 0%)

• Xtrackers GBP Overnight Rate Swap ETF (XSTR) TCO 0.1% (OCF 0.1%, Transaction 0%)

Money market funds are actively managed.

UK Government bonds – intermediate

Cheapest

• Invesco UK Gilts ETF (GLTA) TCO 0.06% (OCF 0.06%, Transaction 0%)

Next best

• iShares GiltTrak Index Fund (IE00BD0NC250) TCO 0.08% (OCF 0.08%, Transaction 0%)

• iShares Core UK Gilts ETF (IGLT) TCO 0.08% (OCF 0.07%, Transaction 0.01%)

• Fidelity Index UK Gilt Fund P (GB00BMQ57G79) TCO 0.1% (OCF 0.1%, Transaction 0%)

• Amundi UK Government Bond ETF (GILS) TCO 0.11% (OCF 0.05%, Transaction 0.06%)

UK Government bonds – long

Cheapest

• iShares Over 15 Years Gilts Index Fund (GB00BF338G29) TCO 0.15% (OCF 0.15%, Transaction 0%)

Next best

• SPDR Bloomberg Barclays 15+ Year Gilt ETF (GLTL) TCO 0.16% (OCF 0.15%, Transaction 0.01%)

• Vanguard UK Long-Duration Gilt Index Fund (GB00B4M89245) TCO 0.17% (OCF 0.12%, Transaction 0.05%)

UK Government bonds – short

Cheapest

• L&G UK Gilt 0-5 Year ETF (UKG5) TCO 0.06% (OCF 0.06%, Transaction 0%)

• Invesco UK Gilt 1-5 Year ETF (GLT5) TCO 0.06% (OCF 0.06%, Transaction 0%)

Next best

• iShares UK Gilts 0-5 ETF (IGLS) TCO 0.07% (OCF 0.07%, Transaction 0%)

• JPMorgan BetaBuilders UK Gilt 1-5 yr ETF (JG15) TCO 0.1% (OCF 0.07%, Transaction 0.03%)

• Amundi UK Government Bond 0-5Y ETF (GIL5) TCO 0.14% (OCF 0.05%, Transaction 0.09%)

• iShares Up to 10 Years Gilts Index Fund (GB00BN091C65) TCO 0.15% (OCF 0.15%, Transaction 0%)

UK Government bonds – index-linked

Cheapest

• L&G All Stocks Index Linked Gilt Index Trust C (GB00BG0QNY41) TCO 0.08% (OCF 0.08%, Transaction 0%)

Next best

• Amundi UK Government Inflation-Linked Bond ETF (GILI) TCO 0.11% (OCF 0.07%, Transaction 0.04%)

• iShares Index Linked Gilt Index Fund D (GB00B83RVT96) TCO 0.11% (OCF 0.11%, Transaction 0%)

• iShares Up to 10 Years Index Linked Gilt Index Fund D (GB00BN091H11) TCO 0.13% (OCF 0.13%, Transaction 0%)

UK index-linked funds may not be suitable for your portfolio due to embedded real interest risk. We switched in our Slow and Steady portfolio to a short duration global index-linked fund, hedged to GBP. For those, see below.

The iShares Up to 10 Years Index Linked Gilt Index Fund is relatively new but the best inflation-hedge from the selection above as it’s the shortest duration GBP linker fund available.

Global inflation-linked bonds hedged to £ – short

Cheapest

• Abrdn Short Dated Global Inflation-Linked Bond Tracker Fund B (GB00BGMK1733) TCO 0.12% (OCF 0.12%, Transaction 0%)

Next best

• Amundi Global Inflation-Linked 1-10Y Bond ETF (GISG) TCO 0.2% (OCF 0.2%, Transaction 0%)

• Royal London Short Duration Global Index Linked Fund M (GB00BD050F05) TCO 0.27% (OCF 0.27%, Transaction 0%)

The Royal London fund is actively managed.

Global government bonds hedged to £

Cheapest

• Abrdn Global Government Bond Tracker Fund B (GB00BK80KQ76) TCO 0.14% (OCF 0.14%, Transaction 0%)

Next best

• UBS JP Morgan Global Government ESG Liquid Bond ETF (EGOG) TCO 0.18% (OCF 0.18%, Transaction 0%)

• iShares Overseas Government Bond Index Fund D (GB00BN091P94) TCO 0.18% (OCF 0.13%, Transaction 0.05%)

• Amundi Index JP Morgan GBI Global Govies ETF (GOVG) TCO 0.21% (OCF 0.15%, Transaction 0.06%)

Gold

Cheapest

• Amundi Physical Gold ETC (GLDA) TCO 0.12% (OCF 0.12%, Transaction 0%)

• Invesco Physical Gold A ETC (SGLP) TCO 0.12% (OCF 0.12%, Transaction 0%)

• WisdomTree Core Physical Gold ETC (GLDW) TCO 0.12% (OCF 0.12%, Transaction 0%)

• Xtrackers IE Physical Gold ETC (XGDU) TCO 0.12% (OCF 0.12%, Transaction 0%)

• iShares Physical Gold ETC (SGLN) TCO 0.12% (OCF 0.12%, Transaction 0%)

Gold trackers are Exchange Traded Commodities (ETCs). These are functionally index trackers like ETFs, only they’re focused on commodities investing.

Broad commodities

Cheapest

• Xtrackers Bloomberg Commodity Swap ETF (XCMC) TCO 0.19% (OCF 0.19%, Transaction 0%)

Next best

• L&G All Commodities ETF (BCOM) TCO 0.21% (OCF 0.16%, Transaction 0.05%)

• iShares Diversified Commodity Swap ETF (COMM) TCO 0.25% (OCF 0.19%, Transaction 0.06%)

• WisdomTree Broad Commodities ETF (COMX) TCO 0.29% (OCF 0.19%, Transaction 0.1%)

• Invesco Bloomberg Commodity ETF (CMOP) TCO 0.34% (OCF 0.19%, Transaction 0.15%)

• L&G Longer Dated All Commodities ETF (CMFP) TCO 0.34% (OCF 0.3%, Transaction 0.04%)

• iShares Bloomberg Enhanced Roll Yield Commodity Swap ETF (ROLL) TCO 0.34% (OCF 0.28%, Transaction 0.06%)

• UBS (Irl) ETF CMCI Composite SF (UC15) TCO 0.34% (OCF 0.34%, Transaction 0%)

We’ve written a much more nuanced take on choosing a commodities ETF. Sometimes cheapest isn’t best.

Using our cheapest index funds UK list

You can precisely identify the low-cost index funds you want to research via the ISIN codes or ETF tickers shown in our list in brackets. (We’ve previously explained how fund names work.)

We’ve given the code for the GBP-priced accumulation fund flavour where available. Income distributing versions are also usually offered. Make sure you understand the ins and outs of accumulation vs income funds.

Also note:

• We’ve included an Environmental, Social, and Governance (ESG) index tracker option for each sub asset-class where available.
• Actively managed funds are featured when low-cost index funds are not available. Active funds are noted in the relevant sections.
• We don’t show platform exclusive index trackers. They’re generally not a good deal overall.

Cheap index trackers and costs – extra detail

The bid-offer spread is an additional cost you may incur that isn’t captured by the TCO figure above.

This charge shouldn’t be significant for most passive investors anyway1 but you can gauge it by using the estimated spread published by Hargreaves Lansdown on its fund pages.

The final significant investing cost you’ll need to pay are broker fees. We track those on our broker comparison table.

Watch out for FX fees charged by brokers on certain funds. This is a stealth cost that’s quite avoidable.

Some providers of synthetic ETFs publish a ‘swap fee’ on top of the TER. Just add the swap fee to the TER to get the Ongoing Charge Figure. This is how we’ve treated swap fees in the listing above.

It’s worth knowing that a fund’s transaction costs can fluctuate quite a lot from period to period, especially if there’s excessive turnover in the fund’s index. So don’t feel like you instantly need to switch if your fund’s transaction costs suddenly spike.

Keep your fund and its main rivals under review for up to a year before coming to any definitive conclusions about its competitiveness.

Some index trackers register negative transaction costs, but I’ve disregarded that from the TCO calculations above. That’s because negative transaction costs amount to an accounting technique that’s not sustainable over time.

Low-cost index funds UK – fees you can ignore

Don’t pay any attention to a fund’s Annual Management Charge (AMC). The AMC is an old-fashioned fee metric that excludes important fund costs. This is why a fund’s AMC is typically lower than its OCF or TER.

Do not add the AMC to the OCF or TER.

The OCF and TER are interchangeable, however, so choose one of those costs (the highest) and add it to the fund’s transaction cost to calculate its TCO.

Treat negative transaction costs as zero.

Ignore entry and exit charges for index trackers where you see them mentioned in fund literature such as Key Investor Information Documents. Such fees do not apply to ordinary investors like you and me. They are levied on institutional participants dealing directly with the fund provider.

The same thing goes if you see an eye-watering minimum purchase figure (such as £100,000) to buy into a fund.

Be guided by your broker’s minimum purchase amount.

Final thoughts on low-cost index funds and ETFs

There’s often little to distinguish index trackers that are closely matched in price. However we have written a few pieces to help you resolve tie-breaker situations:

• Comparing funds
• Why tracking difference is important
• How to choose index trackers
• Best global tracker funds
• How to choose a bond fund
• Best bond funds
• Choosing a commodities ETF
• Best S&P 500 ETFs and index funds

If you’re looking for the cheapest place to buy and hold your low-cost index funds then do take a gander at our broker comparison table.

Our article on designing your own asset allocation will help you construct your portfolio. If you want a quick shortcut, you could do a lot worse than checking out our best multi-asset fund picks for an instant portfolio solution.

We update this list periodically. Quoted TCOs may date, as fund groups fight their turf wars by undercutting each other (hurrah!) but this article should still prove an excellent starting point for your research.

If anyone comes across any better index tracker options then please shout in the comments below.

Take it steady,

The Accumulator

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

1. Wide spreads are more typically an issue with individual company shares. [↩]