Stocks Section

Here's An Even Cheaper Tracker Fund at 0.25%

October 2005

Following on from the recent article on Tracker Funds - Tracker Funds Can Now Be Run For Just 0.1% Costs.

It now appears that the Fidelity funds are not the cheapest on the market. Hargreaves Lansdown have a fund with fees of just 0.25% beating Fidelity's fees of 0.3%. Yes, Fidelity will advertise at 0.1% but other fees actually bump this level up to 0.3%. The key is to look for the TER (Total Expenses Ratio) then you can easily compare like with like on any fund.

FTSE 100 Weightings Should Be Considered

• Remember with trackers that fees are THE most important factor as the fund manager is not paid to think, all they do is invest in the shares of the underlying index with their relevant weightings
• Therefore the performance (excluding fees) of all trackers will be almost the same, so why get ripped off and pay even more than 0.5%, some even charge 1% or more!
• However, remember that indexes such as the FTSE 100 are heavily dominant to certain industries such as the oil and gas sector
• It's therefore possible for the majority of companies to go higher but the index actually moves lower because Oil shares go down
• This is why some suggest that it's better to use tracker funds in smaller indexes such as the FTSE 250 or 350

Don't Forget The Fund Supermarkets - They Can Save You Money

• Fund management companies love to overcharge especially when it comes to charging a 'load'
• A 'load' is where they skim a percentage of your initial investment on, for example invest £10,000 in ABC fund with a 5% load and on day 1 your total investment in the fund now becomes £9,500
• A high 'load' is basically a liberty especially when you look at the performance of most of the funds
• But a 'load' still has to be paid on many funds, so the trick is to get it as cheap as possible
• This is where Fund Supermarkets come in, you can buy the same funds with heavily discounted fees
• No financial advice is given so you have to know what you want to buy
• Fund supermarkets are a real money saver and well worth visiting
• Check out the links below

Summary

The ONLY thing to consider with a Tracker Fund is fees, or better yet the TER as this gives you the whole picture of what's charged. So if you're thinking of investing in a Tracker Fund then look seriously at both Fidelity and Hargreaves Lansdown.

See Also

Fidelity Website
Hargreaves Lansdown
Discount Fund Providers & Supermarkets
Fund Management Company websites