I'm thinking of investing in a FTSE 100 tracker fund but find
information difficult to come by.
Can anyone help with information and/or sites giving advice and
details of what funds are available.
I've a better option for you, one that you won't hear recommended by
IFAs, because half of them haven't heard of them, and the other half
wouldn't touch them, as they get no commission.
Exchange-Traded Funds. ETFs, for short.
They're traded like shares, so you get the spot price, not a price fixed
at the end of the day by some fund manager. Spreads are very narrow.
They don't attract stamp duty; the stamp duty in the underlying equities
is absorbed into the spread, I believe. They're based on, and track,
indices. You do get dividends, at a level appropriate to the underlying
equities. You can hold them in a self-select ISA.
Tracking errors are usually pretty small: they have to be, as
institutions holding big (£1m+) quantities can get them converted to the
underlyings, and that's not an option the operators much like them to take.
Basically, if you're after a tracker, I can't find a single reason to
invest in anything other than an ETF, but I'd love to be set right by
the wise heads here. The only thing I'd be concerned about is whether
the major indices are likely to move upwards over the next few months
and years. Intelligent stock-picking may yield better, if you've the
time to research.
for more details.
As with all such advice: it's just information. Don't rely on it: do
your own research. I don't want to be held responsible if things go
Jon (who has no vested interest in ETFs)
Wouldn't it be better to invest in a fund that aims to outperform the index
rather than one that just tracks it? In my view, if you are paying someone
to invest in the market for you, you should get something better than the
To answer your question, go to google and search for uk investment fund.
There are numerous sites with fund information.
The question is, can someone do better than chance? Can they do better
than the difference between the cost of a managed fund (5%??) and a
tracking fund (1%)? What are the chances of them doing worse than a
less if you use an ETF (0.1%?). Also if you use a discount broker like
Intelligent Money you can get all the commission refunded and pay a
flat fee instead.
I'm persuaded by the argument that income funds are better, as the
average income fund beats trackers over longer periods due to the
disipline imposed by the quest for higher yielding shares. But since
it's a game of averages you would require a portfolio of income funds.
Good judgement will beat chance. There are, of course, funds managed by
people who do not possess good judgement that rely on luck. If you see it
all as luck you may as well invest directly in footse companies yourself. A
typical managed fund might charge 5% on entry and 1% per year.
Which fund are you thinking about that only charges 1%? That sounds a good
deal if you get in and out easily.