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What credit cards should I get? Everything you need to know about the different types of credit card post image

Credit cards can punish those who spend recklessly by sinking their finances into the red. But deployed in the right way, a credit card can equally be a powerful financial tool.

Consider a sharp knife. You wouldn’t be without out one in the kitchen – but you also have to respect the risk of causing yourself an injury.

In my early 20s I wouldn’t touch our allegedly flexible friends with a barge-pole. I thought they were for spendthrifts, or for those careless with their money. 

I’ve since changed my tune. I now believe anyone who is confident they can responsibly handle credit (i.e. debt) should consider getting a credit card.

Let’s find out why.

Why use a credit card?

Stick with cash or debit cards and you’ll be missing out on the many advantages of using a credit card.

Perhaps the biggest benefit that comes with spending on a credit card is the free Section 75 protection you get when making purchases (which I’ve raved about before).

Put simply, buy something on a credit card costing between £100 and £30,000 and your card provider becomes equally liable for the purchase. So, if something goes wrong, you’ve another party to go to in order to seek a refund.

This can be a huge boon if the item you buy is defective and you come across a retailer reluctant to pay up. It can also turn out to be powerful protection if you buy from a company that later falls into administration. 

Another advantage of credit cards is they can boost your credit score.

Lenders determine your creditworthiness based on your previous behaviour. If you’ve got little in the way of a credit history, you can use a credit card responsibly – paying back what you owe and not exceeding your credit limit – to reassure lenders by building up a solid credit record.

How else can lenders know you’re not just looking to borrow to bet on the 15:30 at Kempton?

Depending on the type of credit card you have, putting your spending on plastic can also allow you to earn cashback, rewards, borrow at 0%, or spend overseas at no cost. More on all that below.

How to choose a credit card?

The number one rule is that there’s no ‘best’ credit card for everyone. That’s because there are a number of different types of credit card.

For example, if you’re after cheap borrowing then a 0% purchase credit card will do the trick.

Patchy credit history? A specialist ‘credit card for bad credit’ is your best option.

Alternatively, if you’re paying interest on existing credit card debt then you could look for a 0% balance transfer credit card (with the aim of getting your borrowing under control, not to increase your debt further!)

How many credit cards should you have?

There’s no set answer to how many credit cards you should have. You’re allowed to hold as many as you wish, though some providers will limit how many of its cards you can hold at any one time. 

However, while you can technically have as many credit cards as you like, it’s often a bad idea to apply for them like there’s no tomorrow.

Every application you make is recorded on your credit file, whether or not you’re accepted. Make lots of credit card applications, especially in a short amount of time, and you may be giving lenders the impression you’re desperate. This could – reasonably enough – harm your credit score.

There’s also ‘credit utilisation’ to keep in mind. This refers to the ratio of credit you use.

For example, if you’re given a £5,000 credit limit and you only utilise £3,000 (60%), it will probably be seen as healthy. In contrast, make use of the full £5,000 and you could be giving lenders the impression you’re struggling. That could impact your chances of getting accepted for other cards. 

So while there’s nothing inherently wrong with holding more than one card, first consider why you want multiple cards.

For example, you may wish to spread out the cost of a planned and budgeted-for purchase. Then, later on down the line, you may wish to earn cashback on your everyday spending.

In this case, having both 0% purchase and cashback options in your wallet wouldn’t be reckless.  

What are the different types of credit card?

Now I’ve touched on their benefits, let’s take a closer look at the different type of credit cards.

What is a money transfer credit card?

With a money transfer credit card you’ll have the power to shift cold, hard cash to your bank account.

In the past, these types of cards were crucial for those wishing to stooze.

Stoozing involved exploiting 0% deals, and then stashing the borrowed cash into a high-interest savings account.

Nowadays money transfer deals typically come with a hefty fee, and so they’re no longer as attractive as they one were. (That’s even before considering the fact that interest rates on savings accounts are pitiful right now.)

What is a 0% purchase credit card?

A 0% purchase credit card allows you to undertake interest-free spending. Spend on a 0% purchase card and you needn’t repay your balance until the end of the interest-free period.

You will however have to pay back at least the minimum payment and stick to your credit limit to keep the 0% deal.

What is a cashback credit card?

A cashback credit card will – clue’s in the name – pay you cashback for any purchases you make on it.

The most generous are typically issued by American Express. Some of its cards offer an introductory 5% cashback bonus. If you get one it’s worth setting up a direct debit to repay your balance in full each month.

Cashback cards rarely come with any sort of 0% deal.

If you’re a particularly big-spender, you might consider paying a fee to get your hands on the most generous cards. But with these cards it really pays to do the maths.

What is a reward credit card?

Reward cards work in much the same way as their cashback close cousins. The difference is here you typically earn rewards – such as Nectar or Avios points – as opposed to cash.

If you shop a lot at a particular supermarket or you’re an Avios collector, say, then they are worth considering. The rewards may well be more generous than the cash equivalent.

What is a 0% balance transfer card?

If you’re paying interest on an existing credit card debt, then a 0% balance transfer card can be the ace up your sleeve.

These cards enable you to shift debt to them. You then don’t have to pay interest for the duration of your new 0% deal.

In other words, when applying for one of these cards, anything you owe is transferred to your new card. This gives you a new 0% period in which to clear your debt.

To keep the 0% deal on these cards you have to pay at least the minimum monthly payment.

What is a ‘dual use’ credit card?

Spend on a balance transfer card and you’ll probably face high interest on new purchases. At the same time most 0% purchase credit cards won’t let you shift debt to them at all.

So if you want to borrow AND shift existing debt, you might consider getting one of each type.

If you’d rather not have two cards, though, then a ‘dual use’ card may be for you. These cards allow you to spend at 0% and move existing debt to them, so they’re a sort of ‘hybrid’.

Beware: the interest-free periods on these cards are rarely market-leading.

What is a travel credit card?

A travel credit card enables you to spend abroad without you having to pay extra for the privilege. Some travel credit cards also allow you to withdraw cash overseas at no cost.

If you’re looking to save money on travel, one of these cards should be at the top of your list.

What is a ‘credit card for bad credit’?

Credit cards for bad credit – also known as a ‘credit repair’ cards – are for those with poor credit scores. For this reason the bar for acceptance is typically low.

If you are rejected when you apply for a market-leading ‘normal’ credit card deal, a credit repair card offers a way to boost your creditworthiness.

Get one, use it responsibly, and you’ll have a better chance of being accepted for more competitive options in future.

Cards on the table

Perhaps you’re surprised at the number of different kinds of cards there are out there?

That’s probably a good thing!

It’s safest to assume the financial services industry creates products for its own benefit first and ours second. The proliferation of card varieties over the past few decades is no different.

But provided your guard is up, you can find useful financial tools here. Just avoid going into long-term debt – or if you must, definitely don’t do it by spending on a high-interest credit card!

Have I missed out anything important? Let us know in the comments below.


Accumulation units – tax on reinvested dividends UK

Accumulation units – tax on reinvested dividends UK post image

Are reinvested dividends taxable in the UK? Sadly, yes. Fund accumulation units attract income tax on dividends and interest at the same rates as their more transparent ‘income unit’ cousins.

You owe dividend income tax (or income tax on interest in the case of bond funds) even though you don’t physically receive a payout to your bank account. 

And the taxman still wants his cut despite many accumulation class funds showing zero dividend distributions on their webpages. 

But it gets worse. Some investors are probably paying tax twice on their accumulation unit income, because they don’t properly account for the effect of dividends on their capital gains tax bill. 

Let’s sort this mess out with a quick summary of the reinvested dividend tax rules. 

++ Monevator minefield warning ++ Everything below applies equally to dividends and interest but we’ll mostly only refer to dividends because life is short. It also equally applies to accumulating / capitalising ETFs, as well as the accumulation units of OEIC and Unit Trust funds. We’ll pick out the occasional exception where it exists. 

What are accumulation units again? And how do they reinvest dividends?

Many investment funds come in two varieties (or share classes) that differ only in the way they treat dividend payments:

  • Accumulation units are the share class that automatically reinvests dividends or interest straight back into your investment fund.
  • In contrast, income units cough up dividends directly, paying you cash like three cherries on a fruit machine.

You can tell how a fund reinvests dividends by checking its name:

  • A fund name that includes the abbreviation Acc indicates the use of accumulation units. 
  • A fund that features Inc in its name sports income units. 

Reinvested dividends increase the capital value of a fund composed of accumulation units. That has implications for capital gains tax. We’ll show you how to work this out below. 

Meanwhile, dividends reinvested in your fund’s accumulation units are known as a ‘notional distribution’. This notional distribution is taxable – in just the same way as income units.

Tax on accumulation funds – when do you not have to pay?

You owe income tax on ‘accumulated’ dividends unless:

  • Your (notional) dividend income is covered by your tax-free dividend allowance. Any dividend earnings above the allowance are subject to dividend income tax, regardless of the fact they’re rolling up in an ‘Acc’ fund.
  • Dividend income is also tax-free where you have spare personal allowance – the level before you must pay tax on income. (Perhaps you’re a FIRE-ee who no longer pulls down a salary?)
  • Interest income can be sheltered by your personal allowance, your ‘starting rate for savings’ and your ‘personal savings allowance’. (Ever wondered why accountants like our convoluted tax code?)
  • If your accumulation unit funds are held within an ISA or SIPP then they’re legally off the taxman’s radar.

Do you pay capital gains tax on reinvested dividends in the UK?

You do not have to pay capital gains tax on reinvested dividends in accumulation units. You’re already paying income tax on those. 

So when you come to fathom the capital gain on your accumulation funds (and as your resultant psychic scream reverberates around the universe), make sure you deduct any notional distributions from the total gain. Otherwise, the reinvested dividends inflate the value of your fund and you’ll overpay CGT.

Here’s the formula to correctly calculate capital gains tax on accumulation funds:

Capital gain = Net proceeds1 minus original acquisition cost minus accumulation income2 plus equalisation payments

Here’s a worked example for an acc fund sold for £20,000. It’s accumulated £500 income over the years since it was purchased for £10,000:

Net proceeds: £20,000

Less acquisition cost: £10,000

Less accumulation income: £500

Plus equalisation payments: £100

Capital gain = £9,600

If you haven’t received any equalisation payments from your fund then ignore that step. See below for more on equalisation. 

You can also reduce capital gains if you owe excess reportable income

Incidentally, if you switch from accumulation to income units then that is a chargeable event and may incur capital gains tax. 

Equalisation payment effect on accumulation units 

You’ll notice in the example above that accumulation income reduces your capital gains tax bill. Meanwhile, equalisation payments raise it. 

Equalisation payments may be made by your fund when you purchase units between dividend payment dates.

They’re paid because part of your purchase price included dividends that inflated the capital value of the fund – before those dividends were distributed (or reinvested). 

You weren’t entitled to the dividends that accrued before you invested. The equalisation payment is effectively a return of your capital. It cancels out the extra you paid on the purchase price due to the embedded dividends.  

You don’t owe income tax on equalisation payments.

With accumulation units, treat equalisation as per the capital gains tax formula above.

The effect of dividends you weren’t entitled to is then cancelled out from your fund’s capital value. 

Equalisation payments should show up on your fund’s dividend statements via your broker – after the distribution or at the end of the tax year. 

You’ll receive multiple equalisation payments if you invest regularly in a fund with an equalisation policy.

Note: not all funds make equalisation payments. 

Vanguard has published a guide on how to work out equalisation payments on its funds

Accumulation unit dividends – how to find them

Of course, you can only make the necessary accumulation fund tax calculations if you’ve been recording the dividends you’ve received over the years.

And who doesn’t do that…?

The problem is accumulation unit distributions are more stealthy than income unit payouts. You don’t get to do a little dance every time those divis turn up in your trading account.

So where can you find out about them?

  • In your dividend statements from your broker, if you receive them.
  • Trustnet keeps a good account of accumulation unit distributions. Put your accumulation fund’s name in the ‘Find A Fund’ search box. Then click the dividends tab.
  • In your fund’s annual report.
  • Using Investegate’s advanced search. Set categories to ‘dividends’. Set the timespan to ‘six months’ or whatever suits you. Search for the company name of your fund. Enjoy!

Are accumulation units worth the hassle?

The main advantage of accumulation funds is to skip the cost and effort of reinvesting dividends.

This cost saving is rendered superfluous if your fund isn’t saddled with trading fees or a high regular investing minimum. 

On the other hand, accumulating funds mean that your income is reinvested straightaway, without time out of the market or you having to lift a finger. That’s a godsend if you prefer the hands-off approach. 

Some people prefer to hold income units when investing outside of a tax shelter. The dividend payouts can be used to rebalance, or to pay tax bills without you having to sell units and trigger capital gains woes if you breach your exemption allowance.

Whichever way you go, just remember that any accumulation units in your portfolio are not immune to income tax.

As (nearly) always, making full use of tax shelters – by investing within your ISAs and pension – saves you hassle as well as money, by enabling you to sidestep all the above malarkey.

But where that’s not possible, start recording those reinvested dividends.

You could do it just for the fun of seeing what you’re earning in income, even if you don’t have to pay tax on them!

Take it steady,

The Accumulator

  1. The amount you sold for. []
  2. i.e. dividends or interest. []

Weekend reading: Bonfire of the vanities

Weekend reading: Bonfire of the vanities post image

What caught my eye this week.

The Litquidity video below is in horribly bad taste. I believe the Normandy landing scene in Saving Private Ryan is a truth-bomb for humanity. Every Twitter keyboard warrior should watch it a dozen times before venturing more views on Ukraine, Russia, and NATO.

On the other hand even my saintly co-blogger The Accumulator found it funny.

And as the ‘boomer PM’ you’ll spot 59 seconds in, I found it cathartic:

(Follow those links to watch the video if you can’t see it embedded here.)

Talking of The Accumulator, he’s been even more of a rubbish trench buddy than usual in 2022.

Don’t get me wrong, he’s exactly the sort of comrade-in-arms you should really want.

The Accumulator ignores the market. Doesn’t sell. Barely knows whether shares are trading today.

But for an active investing junkie like me, his ignorance of the gyrations can be infuriating.

The Accumulator hasn’t even been spooked by his starting FIRE a year ago.

Sequence of returns risk might as well be a 1970s prog rock band for all he cares.

Pump up the volume

Besides his eternally doughty disinterest in short-term market movements, the other reason for The Accumulator’s stoicism is probably that he’s a British investor.

Because one thing missing from Litquidity’s meme-fest video is the weakness of the pound1.

More than 60% of a global tracker is in US assets. So UK investors have been cushioned from some of the slide that kicked off six months ago – even if their portfolios are free of home bias.

Here’s a chart crime graph plotting USD/GBP against UK and US flavours of Vanguard’s global tracker fund (as of my writing this on Thursday afternoon):

As you can see, UK investors in Vanguard’s All-World tracker (yellow) have been superficially spared much of the pain, thanks to sterling’s fall.

I say ‘superficially spared’ because our spending power really has shrunk – compared to our American cousins – over the period. We’re poorer on the global stage.

The cost of living crisis will be made worse by our weaker currency.

But I’d still take superficially over definitely any day.

Always on my mind

Where I do see many Monevator readers getting angst-y is with their bond portfolios.

UK government bonds are sterling-based, obviously. No cushioning here as yields have risen with higher inflation and rate expectations.

Further, investment grade and higher-yield bonds losses have lately been compounded by recession worries. (An economic downturn is bad news for indebted companies.)

Below we can see how bonds have sold off this year:

Prior to a sharp bounce this week, the picture was even worse. And people really hate seeing their bonds go down. Much more so than stocks.

Understandable. For years no long-term investor has bought bonds expecting much in the way of a return (even though that’s actually what they got, at least until recently).

Rather, bonds were for buoyancy in the bad times. Yet now they’ve been taking on water – just when we’d want them to float.

Unfortunately this was pretty inevitable.

Global yields hit multi-century lows after the financial crisis. Sooner or later they were likely to rise.

The snag was everyone who ever said ‘sooner’ was wrong – up until the past six months. Now we have to pay the piper.

Worse, the same issues roiling the bond market are also what’s pulling at least some of the strings of the stock market. Hence shares and bonds falling together.

The good news is lower bond prices mean higher yields, and hence higher future returns.

That’s little comfort if you already own a bunch down big. But the declines are starting to make government bonds half-attractive again, and reinvesting your bond income will help eventually.

All presuming, of course, that central banks get inflation back under control.

You win again

Anyway if your biggest problem in 2022 is that your bond fund has fallen, pat yourself on the back.

It suggests you’ve probably been doing everything right.

Because nearly everything riskier you could have bought has gone down – bar some value, commodity, and energy plays.

The video above wasn’t exaggerating.

Please note: nobody need hurry to the comments to tell me I’m overreacting and everything is calm in their mill pond.

If you’re a passive investor feeling unruffled, I get it. That’s the whole counterpoint to this article!

In contrast every active investor I know – including the UK-based ones who invariably fish in the mid and small cap arena – has been dragged through a hedge backwards.

(Important exception being the faultless Monevator house troll who will tell us in the comments he sold everything and put it all into shares of BP on 3 January and who can doubt him?)

For most of 2020, picking stocks was like shooting fish in a barrel.

In 2022 it’s been like being the barrel.

It’s a sin

The sell-off began with the raciest growth stocks, as I flagged up in December. Even the best of these have continued to fall.

Many of the highest-fliers are now priced below where they started 2020 – despite having doubled or tripled their revenues over the past couple of years.

Winning the pandemic turned out to be a curse:

Source: AWOCS

More recently the tech behemoths were pulled into the vortex. Apple, Amazon, Google and Facebook – the engines of global markets for a decade – are down around 20-30% or more.2

Cryptocurrencies have been hit for six. A leading (so-called) ‘stablecoin’ came apart, evaporating billions. (See the links in Crypt-o-Crypto below).

As for the frothiest shares – almost anything floated via a ‘SPAC’ in the mania of 2021 – it’s becoming a case of “dude where’s my decimal point?”

Falls of 80-90% are widespread.

The blue chip Nasdaq 100 was down nearly 30% by the worst of the midweek sell-off. The US S&P 500 was only a few tenths of a percent from the definition of a bear market, at least until stocks bounced on Friday.

Unusually though, UK large caps have held firm.

The FTSE 100 comprises long-despised value dinosaurs. Having survived the growth investing meteor strike – for now – they’re finally having their moment.

Stand by me

As the self-styled Tom Hanks wannabe on this metaphorical battlefield, I’d love to say I saw all this coming and I dodged all the pain.

Unfortunately like him I’m here getting shot up too.

By luck or judgement I got some things right. I saw the big and little clouds in 2021. I later sensed regime change and took fairly decisive action (not least with an eye on my interest-only mortgage.)

But as usual I also started buying apparent bargains too early.

Some of the cheap growth stocks I picked up in what I thought were the Christmas sales have since been cut in half or worse.

I almost always buy too soon. But I usually also buy ‘too good’ – I invest in higher-quality defensive companies at the bottom of bear markets.

In time they bounce, but they are far outpaced as the riskiest firms left for dead rise like a phoenix.

It’s hard to avoid fighting the last war as an investor.

So this time I deliberately looked to buy back into fallen angels like Shopify and PayPal and Square, after what seemed like decent declines.

Yet they just kept spiraling down.

Never gonna give you up

I blame the autocrats.

In late 2021 I expected inflation to have peaked by now. But China and Russia threw a spanner into that forecast, albeit in different ways.

Hence the bottom was just a trapdoor.

Is there further to go?

If we see a recession without an easing of inflation and rate expectations, then who knows when the wider market will stabilise.

Plenty of cyclical and value stocks that have done well could suffer in a stagflationary environment. The last prop would be kicked away from the indices.

That said, I’d like to believe we’re closer to the end than the beginning, at least for the better growth firms. Perhaps I’ll do a naughty active investing post about it. (Bring on our membership area so I don’t have to worry about inflicting such views on sensible passive investors!)

But wherever we go from here, we knew the pandemic market party had to end.

And end it has – with a bang.

The most important thing is to keep pushing on. Just keep buying, as the man said.

Long-term sensible investing is nearly-always rewarded eventually, whether you do it passively or via a coherent active strategy.

Short-term meme stock pump-and-dump traders can win for a while. But eventually most pay for their ride.

Indeed a lot of newer investors are getting off the rollercoaster feeling a bit sick and wondering where they lost their wallets.

I hope they’re not put off investing for life.

As I said the other week, I also wonder when all this will reach the real economy.

We’ve seen a hint with rate rises and the cost of living squeeze.

I suspect central banks have been talking especially tough because they want to scare the markets into tightening conditions for them, to try to avoid excessive real-world pain. Jawboning up tighter market conditions may reduce the direct discipline they need to mete out via actual rate rises, or even forcing a recession to choke off demand. (Not that the latter will help with borked supply chains.)

But usually something big blows up in the real-world anyway.

We’ll see. Enjoy the weekend!

p.s. Alas we didn’t win in the British Bank Awards, although apparently it was close. However the organizers were kind enough to send me some of the comments (without names) you submitted in support of your votes. And they made our week! Far better than any prize to hear such generous reviews of Monevator and its impact on your life. Thanks so much to everyone who took the time.

[continue reading…]

  1. And indeed the Euro. []
  2. I’m using their common names for familiarity, stock ticker sticklers! []

Low-cost index funds and ETFs that will save you money

Low-cost index funds and ETFs that will save you money post image

This is our updated list of low-cost index funds and ETFs that can help UK investors crush their portfolio costs.

Every pound you save in management fees is a pound that snowballs over the years and speeds you towards your financial goals.

Hammering down charges is therefore absolutely vital. Our piece on management fees explains how even small savings add up to a big difference.

A growing recognition of the central importance of investment fees has driven explosive growth in low-cost index funds and Exchange Traded Funds (ETFs) over the past decade or so. These funds are the best value investment vehicles available and the right choice for passive investors.

Low-cost index funds and ETFs – how we choose them

Our list is broken down into the main sub-asset classes you may wish to invest in.

The picks per asset class are ordered purely by cost, as measured by the Ongoing Charge Figure (OCF).

There are other factors to consider when buying a low-cost index fund. So it’s always worth reading any documentation to make sure a given fund fits your bill.

You can precisely identify the fund you’re after by using the ISIN codes or ETF tickers we give in brackets.

We’ve occasionally included actively managed options when low-cost index funds are not available. We don’t include platform exclusive funds as they’re generally not a good deal overall.

Right, let’s go grab some bargains!

UK large cap equity


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

Next best

  • L&G UK Equity ETF (IE00BFXR5R48) OCF 0.05%
  • iShares UK Equity Index Fund D (GB00B7C44X99) OCF 0.05%
  • Fidelity Index UK Fund P (GB00BJS8SF95) OCF 0.06%
  • HSBC FTSE All Share Index Fund C (GB00B80QFX11) OCF 0.06%
  • Vanguard FTSE UK All Share Index Unit Trust (GB00B3X7QG63) OCF 0.06%

The L&G ETF has a socially responsible investing (SRI) remit.

UK mid cap equity


  • Amundi Prime UK Mid and Small Cap ETF (PRUK) OCF 0.05%

Next best

  • Vanguard FTSE 250 ETF (VMIG) OCF 0.1%
  • HSBC FTSE 250 Index Fund C (GB00B80QG052) OCF 0.12%

UK small cap equity

There are no good low-cost index funds available for the UK small cap asset class. The iShares ETF listed below is more an expensive FTSE 250 tracker. Our other suggestions are active funds and are shown as a selection of what’s available rather than a comprehensive survey.


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

Next best

  • JP Morgan UK Smaller Companies Fund (GB0031835001) OCF 0.6%
  • Baillie Gifford British Smaller Companies B Fund (GB0005931356) OCF 0.67%

UK equity income


  • Vanguard FTSE UK Equity Income Index Fund (GB00B59G4H82) OCF 0.14%

Next best

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

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


  • HSBC FTSE All-World Index Fund C (GB00BMJJJF91) OCF 0.13%

Next best

  • Fidelity Allocator World Fund W (GB00B9777B62) OCF 0.20%
  • iShares MSCI ACWI ETF (SSAC) OCF 0.20%
  • Vanguard FTSE All-World ETF (VWRP) OCF 0.22%
  • Vanguard LifeStrategy 100% Equity Fund (GB00B41XG308) OCF 0.22%
  • Vanguard FTSE Global All Cap Index Fund (GB00BD3RZ582) OCF 0.23%

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

World equity – developed world only


  • Amundi Prime Global ETF (PRWU) OCF 0.05%

Next best

  • L&G Global Equity ETF (LGGG) OCF 0.1%
  • Lyxor Core MSCI World ETF (LCWL) OCF 0.12%
  • Vanguard FTSE Developed World ETF (VHVG) OCF 0.12%
  • SPDR MSCI World ETF (SWLD) OCF 0.12%
  • iShares Developed World Index Fund D (IE00BD0NCL49) OCF 0.12%
  • Fidelity Index World Fund P (GB00BJS8SJ34) OCF 0.12%

The L&G ETF has an SRI remit.

World ex-UK equity


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

Next best

  • Vanguard FTSE Dev World ex-UK Equity Index Fund (GB00B59G4Q73) OCF 0.14%
  • Aviva Investors International Index Tracking SC2 Fund (GB00B2NRNX53) OCF 0.25%

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

World income equity


  • Vanguard FTSE All-World High Dividend Yield ETF (VHYG) OCF 0.29%

Next best

  • Xtrackers MSCI World High Dividend Yield ETF (XDWY) OCF 0.29%
  • iShares MSCI World Quality Dividend ETF (WQDS) OCF 0.38%
  • Vanguard Global Equity Income Fund (GB00BZ82ZW98) OCF 0.48%

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

World small cap equity


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

Next best

  • UBS (Irl) ETF – MSCI World Small Cap Socially Responsible (WSCR) OCF 0.23%
  • Vanguard Global Small-Cap Index Fund (IE00B3X1NT05) OCF 0.29%
  • iShares MSCI World Small Cap ETF (WSML) OCF 0.35%

Emerging markets equity


  • Amundi Prime Emerging Markets ETF (PRAM) OCF 0.1%

Next best

  • Lyxor MSCI Emerging Markets ETF (LEMA) OCF 0.14%
  • HSBC MSCI Emerging Markets Index ETF (HMEF) OCF 0.15%
  • iShares Emerging Markets Equity Index Fund (GB00B84DY642) OCF 0.19%

Socially responsible investing


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

Next best

  • L&G Global Equity ETF (LGGG) OCF 0.1%
  • HSBC Emerging Market Sustainable Equity ETF (HSEF) OCF 0.18%
  • Vanguard ESG Developed World All Cap Equity Index Fund (IE00B76VTN11) OCF 0.2%

The SRI (or ESG) options above are meant to enable you to build a complete SRI portfolio, as opposed to us just listing the top three our four funds with the lowest OCF from any old category.

Multi-factor – Global


  • JPMorgan Global Equity Multi-Factor ETF (JPLG) OCF 0.2%

Next best

  • Invesco Global ex UK Enhanced Index Fund Y (GB00BZ8GWR50) 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%
  • iShares Edge MSCI World Multifactor ETF (FSWD) OCF 0.5%

All factor investing is effectively straying into active management territory. Essentially, 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 multifactor products for simplicity.

Property – UK


  • 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


  • iShares Global Property Securities Equity Index Fund D (GB00B5BFJG71) OCF 0.17% 

Next best

  • L&G Global Real Estate Dividend Index Fund I (GB00BYW7CN38) OCF 0.2
  • Amundi ETF FTSE EPRA/NAREIT Global ETF (EPRA) OCF 0.24%
  • SPDR Dow Jones Global Real Estate ETF (GLRA) OCF 0.4%

The SPDR ETF includes emerging markets exposure.



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

Next best

  • Invesco Bloomberg Commodity ETF (CMOD) OCF 0.19%
  • iShares Diversified Commodity Swap ETF (COMM) OCF 0.19%
  • WisdomTree Broad Commodities ETF (COMX) OCF 0.19%



  • Invesco Physical Gold A ETC (SGLP) OCF 0.12%
  • WisdomTree Core Physical Gold ETC (GLDW) OCF 0.12%
  • Xtrackers IE Physical Gold ETC (XGDU) OCF 0.12%

Gold trackers are Exchange Traded Commodities (ETCs).

UK Government bonds – intermediate duration


  • Lyxor Core FTSE Actuaries UK Gilts ETF (GILS) OCF 0.05%

Next best

  • Invesco UK Gilts ETF (GLTA) OCF 0.06%
  • Vanguard UK Gilt ETF (VGVA) OCF 0.07%
  • iShares Core UK Gilts ETF (IGLT) OCF 0.07%
  • Fidelity Index UK Gilt Fund P (GB00BMQ57G79) OCF 0.1%
  • iShares GiltTrak Index Fund (IE00BD0NC250) OCF 0.1%

UK Government bonds – long


  • Vanguard UK Long-Duration Gilt Index fund (GB00B4M89245) OCF 0.12%

Next best

  • SPDR Bloomberg Barclays 15+ Year Gilt ETF (GLTL) OCF 0.15%
  • iShares Over 15 Years Gilts Index Fund (GB00BF338G29) OCF 0.16%

UK Government bonds – short


  • Lyxor FTSE Actuaries UK Gilts 0-5Y ETF (GIL5) OCF 0.05%

Next best

  • Invesco UK Gilt 1-5 Year ETF (GLT5) OCF 0.06% 
  • L&G UK Gilt 0-5 Year ETF (UKG5) OCF 0.06% 
  • iShares UK Gilts 0-5 ETF (IGLS) OCF 0.07%

UK Government bonds – index-linked


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

Next best

  • iShares £ Index-Linked Gilts ETF (INXG) OCF 0.1%
  • iShares Index Linked Gilt Index Fund D (GB00B83RVT96) OCF 0.11%
  • Vanguard UK Inflation Linked Gilt Index Fund (GB00B45Q9038) OCF 0.12%

Total global bonds hedged to £ (government and corporate)


  • iShares Core Global Aggregate Bond ETF (AGBP) OCF 0.1% 
  • SPDR Bloomberg Global Aggregate Bond ETF (GLAB) OCF 0.1%
  • Vanguard Global Aggregate Bond ETF (VAGS) OCF 0.1%

Next best

  • Vanguard Global Short Term Bond Index Fund (IE00BH65QG55) OCF 0.15%
  • Vanguard Global Bond Index Fund (IE00B50W2R13) OCF 0.15% 

All hedged back to Sterling.

Global inflation-linked bonds hedged to £


  • Lyxor Core Global Inflation-Linked 1-10Y Bond ETF (GISG) OCF 0.2%
  • iShares Global Inflation Linked Government Bond ETF (GILG) OCF 0.2%

Next best

  • L&G Global Inflation Linked Bond Index Fund I (GB00BBHXNN27) OCF 0.23%
  • Xtrackers Global Inflation Linked Bond ETF (XGIG) OCF 0.25% 
  • Sanlam Global Inflation Linked Bond Fund X (IE00B7VQTF30) OCF 0.26%
  • Royal London Short Duration Global Index Linked Fund M (GB00BD050F05) OCF 0.27%

All are short and intermediate options, hedged back to Sterling. Royal London and Sanlam funds are active.

UK corporate bonds


  • iShares UK Credit Bond Index Fund (IE00BD0NC474) OCF 0.1%

Next best

  • iShares Corporate Bond Index Fund (GB00B84DSW83) OCF 0.11%
  • Vanguard UK Investment Grade Bond Index Fund (IE00B1S74Q32) OCF 0.12%
  • iShares Core £ Corporate Bond ETF (SLXX) OCF 0.2%

Concluding 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 previously written two pieces to help you resolve tie-breaker situations:

If you’re looking for the cheapest place to buy and hold these funds then take a look at our cheapest broker comparison table.

Our article on designing your own asset allocation will help you construct your own portfolio. If you want a quick shortcut, you can do a lot worse than picking a fund-of-funds for an instant portfolio solution.

We update this list periodically. Quoted OCFs 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 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.