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When are fund fees low enough?

by The Accumulator on September 2, 2025

When do fund fees drop so low that it’s not worth the hassle of switching to a cheaper fund?

Naturally that’s a personal decision. But there does come a point when sweating the difference between two cut-rate options has a vanishingly small impact on your future wealth.

That point arrives when the cost of a fund in pounds falls so low that even moving to a rival that’s half the price makes little material difference.

The numbers bear out this apparent heresy – and I say this as someone who had it drilled into them that investment costs were to be crushed like infidels on the wrong side of a holy war.

What’s the cost in raw cash money?

To see how the diminishing returns of fee-relief set in, we have to assess fund costs in cash terms, as opposed to comparing the relative difference in their ongoing charge figure (OCF) percentages.

For example, let’s compare the fate of £10,000 invested in three funds for 30 years. I assume each fund returns 8% a year before these fees:

Fund A’s OCF is 0.05%
Fund B charges 0.25%
Fund C whacks its investors for 1.25% per year

Fund B is fives times cheaper than fund C.

Similarly, fund A is five times cheaper than fund B.

However switching from fund B to fund A matters much less to your final investment outcome than making the leap from fund C to fund B would.

The Final investment pot line in the table below shows this clearly:

Fund	A	B	C
Fund OCF (%)	0.05	0.25%	1.25%
Fees paid year one (£)	5	25	125
Final investment pot (£)	99,238	93,868	70,963
Total fees paid (£)	1,388	6,758	29,663

Your final pot is 32.3% bigger if you invest in fund B not fund C. That’s huge!

But your final pot is only 5.7% bigger if you invest in fund A instead of fund B. Not so huge.

That 5.7% extra is useful for sure. But it’s probably not worth Force-choking your fund manager like Darth Vader whenever a competitor undercuts them by a basis point.

The fund fee drag factor

Ultimately, it’s the high cost in pounds of fund C that exacts an extreme toll, relative to the 8% per year earning power of your investment.

For example, all three funds above earn £800 on the £10,000 invested in year one.

But the proportional amount of that return trousered by the fund managers is very different as the fees scale:

Fund	A	B	C
Fees paid year one (£)	5	25	125
Fee deduction from £800 year one return (%)	0.63	3.13	15.63

Fund C swipes nearly 16% of your return in year one! That clearly hurts, and so reducing that loss to just 3% by running into the arms of fund B is well worth it.

However jumping ship again to fund A is much less of a win as the charges rush towards zero.

That’s because it’s the absolute difference in pounds that we care about. Not, ultimately, whether one fund is half the price of the other.

Metaphorically-speaking, you might be incentivised to drive an extra mile down the road to save £10 on filling up your car. But you may not bother for a quid off. Especially if there are plenty of other ‘to dos’ in your life that are screaming for attention.

I guess that the point of indifference to savings is related to the gallingly minor happiness boosts we feel when spending on upgrades.

For instance, having a phone is a very useful thing. But buying a new phone with a slightly better screen resolution? Who cares?

The absolute difference is barely detectable.

Running the numbers

Next time you want to see what difference fund fees could make, you could try using an investment fee calculator like the one offered by Dinky Town.

Play around and you will find that:

The lower your returns, the more fees matter.
The longer your time horizon, the more fees matter.
Fees matter less the more your outcome relies on future monthly contributions, as opposed to your current investment balance. That’s because negative compounding has less time to do its dirty work.

More mathematics

Do a breakeven analysis when selling an unsheltered fund exposes you to capital gains tax.

Transaction costs and time out of the market can also potentially swamp tiny savings. (That’s much less of a consideration if you’re just switching between ETFs with minimal spreads.)

Once index tracker fees shrink low enough, tracking difference and variations in underlying holdings may become more decisive factors when weighing up two alternatives.

Spot the difference

You can get a grip on tracking difference by plotting a fund against its comparison index using Trustnet’s multi-plot charting tool.

Our fund comparison post explains how to add the correct index to your chart. (See The impact of the index section of the article.)

Tracking difference is a useful gauge of management efficiency. It’s a positive sign if a fund provider’s trackers typically cling tightly to the index. That’s what we want, so sometimes I’ll check a sample of a provider’s products to help me decide if that’s something they’re good at.

By contrast, the future variation in returns caused by rival funds’ divergent holdings is a crapshoot. The difference can be wild in sectors like gold miners or commodities, or marginal in categories like global tracker funds.

Past returns may tell us that a particular index configuration is flawed, or it could just be that some component suffered a losing streak that might flip into a hot hand at anytime.

Sometimes, if you dig deep enough, you can uncover reasons to believe that certain indexes or products contain inherent weaknesses.

Vanguard LifeStrategy 100’s home bias counts against it so long as the US stock market reigns supreme over the UK’s, for example.

Meanwhile, synthetic S&P 500 ETFs consistently outperform their physical counterparts due to an in-built tax advantage.

A cost of doing business

Transaction costs are another factor to investigate if you want a fuller picture. They can be as large as the OCF in some markets.

However these fees tend to fluctuate a lot and are hard to pin down.

Hargreaves Lansdown is a good source to research transaction costs. Navigate to a fund’s web page on the Hargreaves’ site. Go to the Costs section and you’ll find transaction fees nestling in the Investment Charges dropdown menu.

Your mileage may vary

Costs do matter. The difference between a 0.25% and 1% OCF fund is significant. But the wealth leakage from a 0.25% fund versus cheaper models is much less of a biggie.

After all there’s only so much time in the day. Beyond a certain point, relentlessly chasing fee reductions is more Captain Ahab than Martin Lewis.

By all means keep optimising until you’ve had your fill.

But if you’re losing the will, then take heart. If you’re passively invested in a portfolio of low-cost index funds and ETFs then you’re already well ahead of the game.

Take it steady,

The Accumulator

{ 9 comments }

Weekend reading: No credit for switching a bank account

by The Investor on August 30, 2025

Weekend Reading regular image: a bundle of newspapers

What caught my eye this week.

I used the Current Account Switch Service (CASS) for the first time a few weeks ago.

As the founder of a financial blog, I guess this might make me sound like one of those presenters who sheepishly admits in the middle of a TV makeover show that they’ve never held a paintbrush.

It’s not quite that bad. While I confess I still have my student bank account – for all the good such loyalty did me when I needed a chunky mortgage – I’ve always had a couple of other accounts on the go for their higher rates or perks.

There must have been a dozen since the Egg days. It’s just I’ve always done any switching between them for myself.

I’d read enough to know the CASS would probably work fine. But it was still nice to hear my girlfriend’s confidence as a several times user of the service.

Sure enough, the cash and scheduled payments appeared to be transferred away from my dying Santander 123 Lite account in good time, like those diplomats being airlifted off the roof of the US embassy in Saigon in 1975.

And as best I can tell a month later, they were. Everything seems to have gone super smoothly.

The snag

What was surprising though was to get a ping from Monzo this week saying my credit rating was down with one of the reference agencies.

Quite the plunge, too. From nearly 1000 to a good-for-normies 800.

Huh. Nothing else has changed with my personal finances recently except for this switch. And as I say it wasn’t even from my oldest bank account.

The move did see me close down the account that has handled the lion’s share of my direct debits for years though, due to it once touting excellent cashback. So I presume the agency’s computer was alerted to this and cried “shenanigans!”

It’s no biggie. The downgrade doesn’t hurt anything except my sense of perfectionism. The other agencies haven’t raised an eyebrow, and I presume this one will come good soon enough, too.

That said our recent post on stoozing did get me thinking I should ramp up my interest-chasing efforts again, just for the fun of it.

Also now I’ve used the CASS, it’s easy to envisage swapping around a dedicated switching account with a couple of non-core direct debits attached, just to collect the bonuses.

Such cash freebies would be welcome enough. But to be honest they wouldn’t move the dial much at my stage of the game compared to the faff involved.

However this whole episode has been a good reminder of how useful hands-on experience is. I write much more about investing than money matters, but still – perhaps I should keep a toe in these waters? Just like those TV presenters might want to have a bash at doing up their spare room.

Whether the credit agencies would endorse such resurgent vigour is another question!

Have a great weekend.

[continue reading…]

{ 29 comments }

Catastrophe bonds for UK investors: getting paid to weather risks [Members]

For MOGULS by Finumus on August 28, 2025

Given the many threats seemingly on the cusp of sending humanity the way of the dinosaurs – from climate change to an AI takeover to political polarisation to that president – you’d think ‘catastrophe bonds’ wouldn’t need too much selling.

That’s true too if you’re worried about the high valuation of the US equity market. A NASDAQ bubble bursting wouldn’t blow-up the gene pool. But it would do a number on most US equity-heavy portfolios.

This article can be read by selected Monevator members. Please see our membership plans and consider joining! Already a member? Sign in here.

{ 9 comments }

Low-cost index funds UK

Updated by The Accumulator on August 26, 2025

Low-cost index funds will help you save money

This updated list of low-cost index funds and Exchange Trade Funds (ETFs) will help you to find the cheapest index trackers available in the UK.

Pick from these funds to build a diversified portfolio that – as part of a passive investing strategy – will enable you to achieve your investing goals.

Keeping charges low is a core tenet of wise investing, and so our selections are largely determined by cost and value. Every pound you save in fees is a pound that instead snowballs in your portfolio over the years.

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

The growing recognition of the importance of investment fees has hugely boosted the popularity of low-cost index funds and ETFs over the past 20 years.

We too believe that these fund types are the best value investment vehicles on offer 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 divvied up 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).

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

Many outlets only highlight a fund’s OCF (or Total Expense Ratio). But that misses out a significant chunk of cost that is captured by the less well-known 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 because such charges can be of similar size to the OCF in some sub-asset classes.

Note: fund costs are a complex and confusing area. We’ve added 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.

Alright, let’s go hunting for bargains!

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

Cheapest

Amundi Prime All Country World ETF (PACW) TCO 0.07% (OCF 0.07%, Transaction 0%)

Next best

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

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

Invesco FTSE All-World ETF (FWRG) TCO 0.17% (OCF 0.15%, Transaction 0.02%)

Scalable MSCI AC World Xtrackers ETF (SCXW) TCO 0.18% (OCF 0.17%, Transaction 0.01%)

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

SPDR MSCI ACWI Climate Paris Aligned ETF (SAPA) TCO 0.22% (OCF 0.2%, Transaction 0.02%)

World equity – developed world only

Cheapest

Amundi Prime Global ETF (MWOZ) TCO 0.05% (OCF 0.05%, Transaction 0%)

Next best

UBS Core MSCI World ETF (WRDA) TCO 0.06% (OCF 0.06%, Transaction 0%)

Franklin FTSE Developed World ETF (DWLD) TCO 0.11% (OCF 0.09%, Transaction 0.02%)

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

iShares Developed World Fossil Fuel Screened Index Fund (GB00BFK3MT61) TCO 0.12% (OCF 0.11%, Transaction 0.01%)

World ex-US equity

Cheapest

iShares MSCI World ex-USA ETF (XUSE) TCO 0.15% (OCF 0.15%, Transaction 0%)

Next best

Amundi MSCI World ex-USA ETF (WEXU) TCO 0.16% (OCF 0.15%, Transaction 0.01%)

Xtrackers MSCI World ex-USA ETF (XMWX) TCO 0.17% (OCF 0.15%, Transaction 0.02%)

World ex-UK equity

Cheapest

Vanguard FTSE Dev World ex-UK Equity Index Fund (GB00B59G4Q73) TCO 0.16% (OCF 0.14%, Transaction 0.02%)

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 income equity

Cheapest

Xtrackers MSCI World High Dividend Yield ESG ETF (XZDW) TCO 0.29% (OCF 0.25%, Transaction 0.04%)

Next best

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

iShares World Equity High Income Active ETF (WINC) TCO 0.35% (OCF 0.35%, Transaction 0%)

UBS S&P Dividend Aristocrats ESG Elite ETF (UBUM) TCO 0.35% (OCF 0.3%, Transaction 0.05%)

Franklin Global Quality Dividend ETF (FLXX) TCO 0.36% (OCF 0.3%, Transaction 0.06%)

Vanguard Global Equity Income Fund (GB00BZ82ZW98) TCO 0.67% (OCF 0.48%, Transaction 0.19%)

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

World small cap equity

Cheapest

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

Next best

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

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

Vanguard Global Small-Cap Index Fund (IE00B3X1NT05) TCO 0.38% (OCF 0.29%, Transaction 0.09%)

Avantis Global Small Cap Value ETF (AVSG) TCO 0.48% (OCF 0.39%, Transaction 0.09%)

The Avantis ETF is specifically small cap value, not just small cap.

US large cap equity

Cheapest

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

Amundi MSCI USA ETF (MSCU) TCO 0.03% (OCF 0.03%, Transaction 0%)

UBS Core S&P 500 ETF (S5UA) TCO 0.03% (OCF 0.03%, Transaction 0%)

Next best

iShares US Equity Index Fund D (GB00B5VRGY09) TCO 0.06% (OCF 0.05%, Transaction 0%)

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%)

Amundi S&P 500 Climate Paris Aligned ETF (CLMT) TCO 0.08% (OCF 0.07%, Transaction 0.01%)

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 0.05% (OCF 0.05%, Transaction 0%)

Next best

abrdn UK All Share Tracker Fund B (GB00B76B9Y24) TCO 0.06% (OCF 0.05%, Transaction 0.01%)

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

HSBC FTSE All Share Index Fund Institutional (GB0030334345) TCO 0.1% (OCF 0.03%, Transaction 0.07%)

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

L&G UK Equity ETF (LGUK) TCO 0.13% (OCF 0.05%, Transaction 0.8%)

iShares UK Equity ESG Screened and Optimised Index Fund D (GB00BN08ZV03) TCO 0.19% (OCF 0.05%, Transaction 0.14%)

Emerging markets equity

Cheapest

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

Next best

Franklin FTSE Emerging Markets ETF (EMER) TCO 0.15% (OCF 0.11%, Transaction 0.04%))

HSBC MSCI Emerging Markets ETF (HMEC) TCO 0.17% (OCF 0.15%, Transaction 0.02%)

iShares Emerging Markets Index Fund D (GB00B84DY642) TCO 0.19% (OCF 0.19%, Transaction 0%)

iShares Emerging Markets Equity ESG Screened and Optimised Index Fund D (GB00BN090307) TCO 0.21% (OCF 0.19%, Transaction 0.02%)

Property – global

Cheapest

Xtrackers Developed Green Real Estate ESG ETF (XDRE) TCO 0.23% (OCF 0.18%, Transaction 0.05%)

Next best

L&G Global Real Estate Dividend Index Fund I (GB00BYW7CN38) TCO 0.25% (OCF 0.21%, Transaction 0.04%)

HSBC ETF FTSE EPRA/NAREIT Developed ETF (HPRS) TCO 0.26% (OCF 0.24%, Transaction 0.02%)

VanEck Global Real Estate ETF (TREG) TCO 0.26% (OCF 0.25%, Transaction 0.01%)

Amundi ETF FTSE EPRA/NAREIT Global ETF (EPRA) TCO 0.27% (OCF 0.24%, Transaction 0.03%)

Multi-factor – global

Cheapest

JPMorgan Global Equity Multi-Factor ETF (JPLG) TCO 0.21% (OCF 0.19%, Transaction 0.02%)

Next best

Invesco Global ex UK Enhanced Index Fund Z (GB00BZ8GWT74) TCO 0.28% (OCF 0.23%, Transaction 0.05%)

iShares STOXX World Equity Multifactor ETF (FSWD) TCO 0.37% (OCF 0.3%, Transaction 0.07%)

Invesco Quantitative Strategies ESG Global Equity Multi-Factor ETF (IQSA) TCO 0.39% (OCF 0.3%, Transaction 0.09%)

HSBC Multi-Factor Worldwide Equity ETF (HWWA) TCO 0.39% (OCF 0.25%, Transaction 0.14%)

Factor investing strays into active management territory. You are hoping your chosen subset of the market will outperform. Select funds underpinned by sound financial theory, a verifiable set of rules, and a commitment to low costs.

Regional factor 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 0.1% (OCF 0.1%, Transaction 0%)

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

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

UBS GBP Overnight Rate SF ETF (GBPO) TCO 0.1% (OCF 0.1%, Transaction 0%)

Money market funds are actively managed.

UK Government bonds – intermediate

Cheapest

Amundi UK Government Bond ETF (GILS) TCO 0.06% (OCF 0.05%, Transaction 0.01%)

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

Next best

iShares Core UK Gilts ETF (IGLT) TCO 0.09% (OCF 0.07%, Transaction 0.02%)

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

iShares GiltTrak Index Fund (IE00BD0NC250) TCO 0.1% (OCF 0.1%, Transaction 0%)

UK Government bonds – long

Cheapest

iShares Over 15 Years Gilts Index Fund (GB00BF338G29) TCO 0.11% (OCF 0.11%, Transaction 0%)

Next best

Vanguard UK Long-Duration Gilt Index Fund (GB00B4M89245) TCO 0.12% (OCF 0.12%, Transaction 0%)

SPDR Bloomberg Barclays 15+ Year Gilt ETF (GLTL) TCO 0.15% (OCF 0.15%, Transaction 0%)

UK Government bonds – short

Cheapest

L&G UK Gilt 0-5 Year ETF (UKG5) TCO 0.07% (OCF 0.06%, Transaction 0.01%)

Invesco UK Gilt 1-5 Year ETF (GLT5) TCO 0.07% (OCF 0.06%, Transaction 0.01%)

Amundi UK Government Bond 0-5Y ETF (GIL5) TCO 0.07% (OCF 0.05%, Transaction 0.02%)

Next best

Goldman Sachs Access UK Gilts 1-10 Years ETF (GBPG) TCO 0.09% (OCF 0.07%, Transaction 0.02%)

iShares Up to 10 Years Gilts Index Fund (GB00BN091C65) TCO 0.14% (OCF 0.13%, Transaction 0.01%)

The 1-10 years funds have a longer bond duration than the other short-dated funds in this section, but are significantly shorter duration than standard UK all-stocks or intermediate funds.

UK Government bonds – index-linked

Cheapest

Amundi UK Government Inflation-Linked Bond ETF (GILI) TCO 0.07% (OCF 0.07%, Transaction 0%)

Next best

L&G All Stocks Index Linked Gilt Index Trust C (GB00BG0QNY41) TCO 0.08% (OCF 0.08%, 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. In our Slow and Steady portfolio we’ve switched 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 we think it’s 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 0.14% (OCF 0.14%, 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

Amundi Prime Global Government Bond ETF (PRHG) TCO 0.09% (OCF 0.07%, Transaction 0.02%)

Next best

Abrdn Global Government Bond Tracker Fund B (GB00BK80KQ76) TCO 0.13% (OCF 0.13%, Transaction 0%)

iShares Broad Global Government Bond ETF (IGBS) TCO 0.13% (OCF 0.13%, Transaction 0%)

Amundi Index JP Morgan GBI Global Govies ETF (GOVG) TCO 0.16% (OCF 0.15%, Transaction 0.01%)

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

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

iShares Diversified Commodity Swap ETF (COMM) TCO 0.29% (OCF 0.19%, Transaction 0.1%)

WisdomTree Broad Commodities ETF (COMX) TCO 0.29% (OCF 0.29%, Transaction 0%)

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

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

L&G Longer Dated All Commodities ETF (CMFP) TCO 0.73% (OCF 0.3%, Transaction 0.43%)

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 figures quoted 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 you can avoid.

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 need to instantly 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 conclusion 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’ve written a few pieces to help you resolve tie-breaker situations:

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

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

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

If anyone comes across any better index tracker options then please let us know 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.

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

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