Go global

The cheap­est funds for world shares

The Sunday Telegraph - Money & Business - - Money -

Many in­vestors pre­fer “tracker” funds that repli­cate a whole in­dex of stocks, rather than pay­ing a pre­mium price for an “ac­tive” fund run by a pro­fes­sional in­vestor where there are no guar­an­tees of su­pe­rior re­turns.

Track­ers al­low you to in­vest for a lower cost, al­though not all tracker funds are cheap. Some charge 1pc or more, an is­sue that Tele­graph Money has high­lighted on many oc­ca­sions. As a rule of thumb, the higher the charge the more hand­i­capped a tracker fund is from keep­ing pace with the stock mar­ket that it fol­lows.

To help in­vestors find the cheap­est op­tions, we have trawled through the hun­dreds of tracker funds avail­able for in­vest­ing in the most pop­u­lar global stock mar­kets. Bear in mind, that the fund charge is not all you pay – the charge for the bro­ker or fund plat­form is just as im­por­tant. Typ­i­cally, bro­ker fees re­duce on a slid­ing scale so fees fall as your port­fo­lio grows.

Some bro­kers, such as Har­g­reaves Lans­down (0.45pc on the first £250,000), Fidelity Per­sonal In­vest­ing (0.35pc on bal­ances between £7,500 to £249,999) and Cavendish On­line (0.2pc up to £200,000), have man­aged to se­cure spe­cial prices for cer­tain tracker funds. But when you add the bro­ker charge to the fund fee it may work out cheaper to buy else­where and pay for a slightly more ex­pen­sive ver­sion of the tracker.

It also de­pends on how much you have to in­vest. Cer­tain bro­kers, such as In­ter­ac­tive In­vestor and Al­liance Trust Sav­ings, charge a fixed fee rather than a per­cent­age of your in­vest­ment pot. These bro­kers, even with­out their spe­cial tracker fund deals, may work out cheaper for large in­vestors who have, say, £100,000 or more to in­vest.

You will also need to de­cide what type of tracker you want: an or­di­nary fund or an “ex­change-traded fund” (ETF). The lat­ter is es­sen­tially a share that you buy and sell like any other. If you buy it through the right bro­ker there will be no fee, or a capped fee, to pay on top of the fund com­pany’s charge, making this a po­ten­tially much cheaper way to own a tracker. But you will always pay to trade an ETF, whereas some fund shops will not charge when you buy or sell or­di­nary funds.

FTSE 100 tracker funds

Cheap­est fund: ishares UK Equity In­dex – 0.07pc charge Cheap­est ETF: ishares FTSE 100 Uc­its ETF, HSBC FTSE 100 Uc­its ETF – 0.07pc charge

Cheap­est fund shop spe­cific deal: L&G UK In­dex Trust – 0.06pc charge via Har­g­reaves Lans­down

FTSE All Share tracker funds

Cheap­est fund: ishares UK Equity In­dex, Fidelity In­dex UK – 0.06pc charge

Cheap­est ETF: SPDR FTSE UK All Share ETF – 0.2pc charge

Cheap­est fund shop spe­cific deal: L&G UK In­dex – 0.06pc via Har­g­reaves Lans­down

Global tracker funds

Cheap­est fund: L&G In­ter­na­tional In­dex Trust (tracks FTSE World ex UK in­dex), Fidelity In­dex World (tracks MSCI World in­dex) – 0.13pc charge

Cheap­est ETF: Van­guard FTSE

All World Uc­its ETF – 0.25pc charge

Cheap­est fund shop spe­cific deal: L&G In­ter­na­tional In­dex Trust – 0.08pc via Har­g­reaves Lans­down US tracker funds S&P 500 Cheap­est fund: Fidelity In­dex US, HSBC Amer­i­can In­dex – 0.07pc charge Cheap­est ETF: ishares S&P 500 Uc­its ETF, Van­guard S&P 500 Uc­its ETF – 0.07pc charge

FTSE USA

Cheap­est fund: ishares US Equity In­dex – 0.08pc charge Cheap­est fund shop spe­cific deal:

L&G US In­dex – 0.06pc charge via Har­g­reaves Lans­down

Euro­pean tracker funds

Cheap­est fund: ishares Con­ti­nen­tal Euro­pean Equity In­dex (tracks FTSE World Europe ex UK), Fidelity In­dex Europe ex UK (tracks MSCI Europe ex UK) – 0.1pc charge

Cheap­est ETF*: Van­guard FTSE Europe ETF, ishares Core MSCI Europe ETF – 0.1pc charge Cheap­est fund shop spe­cific deal:

L&G Euro­pean In­dex (tracks FTSE World Europe ex UK) – 0.09pc charge via Har­g­reaves Lans­down *The nar­rower HSBC Euro Stoxx 50 Uc­its ETF costs 0.05pc

Emerging mar­ket tracker funds

Cheap­est fund: Fidelity Emerging Mar­kets In­dex (tracks MSCI Emerging Mar­kets in­dex) – 0.21pc charge

Cheap­est ETF: Van­guard FTSE Emerging Mar­kets Uc­its ETF, ishares Core MSCI Emerging Mar­kets IMI Uc­its ETF – 0.25pc charge Cheap­est fund shop spe­cific

deal: ishares Emerging Mar­kets Equity In­dex (tracks FTSE All World Emerging in­dex) – 0.22pc via Har­g­reaves Lans­down

Ja­pan tracker funds

Cheap­est fund: Fidelity In­dex Ja­pan (tracks MSCI Ja­pan in­dex) – 0.1pc charge

Cheap­est ETF: Van­guard FTSE Ja­pan Equity ETF – 0.19pc charge Cheap­est fund shop spe­cific deal: ishares Ja­pan Equity In­dex (tracks FTSE Ja­pan in­dex) – 0.11pc charge via Har­g­reaves Lans­down Cheap­est multi-as­set tracker funds Van­guard’s five “Lifes­trat­egy” funds, bas­kets of dif­fer­ent track­ers, of­fer a low-cost way to out­source de­ci­sions to a pro­fes­sional. Each port­fo­lio in­vests a pro­por­tion, rang­ing from 20pc to 100pc, of in­vestors’ cash in shares from across the world, with any re­main­der in bonds and cash. The funds cost 0.22pc, and fea­ture on our

Tele­graph 25 list of favourite funds. Black­rock also has a multi-as­set of­fer­ing – its “Con­sen­sus” range is 35pc to 100pc in­vested in the stock mar­ket, and charges 0.22pc or 0.23pc. Dis­counts are avail­able via Har­g­reaves Lans­down, re­duc­ing the charge to as lit­tle as 0.09pc. L&G’S Multi-in­dex funds per­form a sim­i­lar job for a slightly higher fee.

Each fund fee stated is the “on­go­ing” charge fig­ure.

There are hun­dreds of tracker funds avail­able for in­vest­ing in pop­u­lar global stock mar­kets, such as the UK, the emerging mar­kets, Amer­ica and Ja­pan

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