Low charge FTSE ISA tracker?

stevetodd

Hi, at the moment I have a FTSE 100 ISA tracker with the Halifax and the charges are:

initial charge 0 and annual charge 1%.

I wondered if anyone knew of a provider with lower charges?

dunstonh

Yes you can get lower charges than that fairly easily. However, are you sure you want a FTSE100 tracker? Whilst past performance is no guide to future returns, the FTSE100 trackers have spent most of the last 15 years at the bottom of their sector. They have been awful performers. Partly because large caps were out of favour (something that usually changes when recession comes) and partly as the FTSE100 is an awful index to track as its not very diverse and too heavily weighted to just a few companies and the UK stockmarket has been a very poor performer compared to global stockmarkets. With you going medium/high risk with a FTSE tracker, you have scope to diversify rather than just sit on one fund. Single fund investing is also old fashioned and will result in lower returns over the long run. Diversification is more important than 0.5% a year in charges.

stevetodd

dunstonh wrote: »

Yes you can get lower charges than that fairly easily. However, are you sure you want a FTSE100 tracker? Whilst past performance is no guide to future returns, the FTSE100 trackers have spent most of the last 15 years at the bottom of their sector. They have been awful performers. Partly because large caps were out of favour (something that usually changes when recession comes) and partly as the FTSE100 is an awful index to track as its not very diverse and too heavily weighted to just a few companies and the UK stockmarket has been a very poor performer compared to global stockmarkets. With you going medium/high risk with a FTSE tracker, you have scope to diversify rather than just sit on one fund. Single fund investing is also old fashioned and will result in lower returns over the long run. Diversification is more important than 0.5% a year in charges.

Thanks, I don't actually necessarily want to track the FTSE 100 I was thinking more of the FTSE all share, as you are saying I don't need to track just one index. I haven't got a lot in my FTSE 100 tracker, however I would still move it, if it was as you say not in the best index. I would consider moving it to another index and/or provider in the pursuit of better value. If you were investing in a tracker right now which one would you go for? and with which provider?

dunstonh

If you were investing in a tracker right now which one would you go for?

I wouldnt. Assuming you are sticking to just one fund, I would look for higher yielding funds as dividends are important at a time like this. If you are going to stick with a "UK All companies sector" fund then a FTSE all share tracker giving you mid-table consistency is fine but dividends and value is likely to be important in the future and I would go with those. If it was monthly, rather than lump, I would probably go with a property share fund.

stevetodd

dunstonh wrote: »

I wouldnt. Assuming you are sticking to just one fund, I would look for higher yielding funds as dividends are important at a time like this. If you are going to stick with a "UK All companies sector" fund then a FTSE all share tracker giving you mid-table consistency is fine but dividends and value is likely to be important in the future and I would go with those. If it was monthly, rather than lump, I would probably go with a property share fund.

Thanks, I think at some point I will switch from the FTSE 100 tracker to the All Share tracker, although not at the moment as I am going to change provider which means that I would be out of the index for a few days. So I think it wise to do this at a less turblenent time.

My provider Halifax actually charges more at 1.5% for the all share tracker whereas Fidelity Int (0.1%) M&G (0.3%) and legal & Genaral (0.52%) are all much cheaper.

dunstonh

My provider Halifax actually charges more at 1.5% for the all share tracker whereas Fidelity Int (0.1%) M&G (0.3%) and legal & Genaral (0.52%) are all much cheaper.

Banks dont really treat trackers as cheap products. They still put a margin in there.