FTSE 100 ETFs

Mark1717

Hi,

I'm interested in buying a FTSE 100 ETF tracker. I was looking at Barclays ishares, and am thinking of putting in a lump sum of a couple of thousand at first. I was also going to do a direct debit each month, but at £12.95 per trade, this seems a very expensive way to add money each month.

Is this the only way of doing things or is there a cheaper way? I first looked into ETFs because of the supposedly low commission charges, but if Im paying £13 a month just to add some more money to the ETF, I wont have much of a return left! Am I missing something?!

Cheeeeeers

Mark

:beer:

Aegis

If you're drip feeding you should be able to find a broker that will go as low as £1.50 per month for the investment. There's no point in paying £13 for a real-time trade that you don't need in real time.

SeanW

Mark1717 wrote: »

Hi,
Is this the only way of doing things or is there a cheaper way? I first looked into ETFs because of the supposedly low commission charges, but if Im paying £13 a month just to add some more money to the ETF, I wont have much of a return left! Am I missing something?!

I use III's sharebuilder, provided by Halifax.

You pay £1.50 to buy, £10 to sell.

Simple enough to use. Not had any issues but only used them since December.

hebawom

What about buying into a fund that tracks the FTSE. It might be worth looking at the Cazenove UK Absolute Target Fund which is recommended by http://www.thisismoney.co.uk/investing/article.html?in_article_id=460670&in_page_id=166

If you buy it through your ISA allowance, the innitial commission is 2% then 1.5% per year.
I don't fully understand these things, but I think a fund is less risk as the investment is spread over various areas - cash, bonds, shares etc.

lpgm

hebawom wrote: »

What about buying into a fund that tracks the FTSE.

But a FTSE 100 ETF is a fund that tracks the FTSE. And it's not necessary to put it in an ISA. The question is about reducing drip-feeding costs.

hebawom wrote: »

I don't fully understand these things, but I think a fund is less risk as the investment is spread over various areas - cash, bonds, shares etc.

You can't track the FTSE 100 by holding cash and bonds. The OP wants risk.

Dooooooooooooooonut

Yes, but the transaction costs for this small an investment will be cheaper with the fund - and by the way the funds have lower management charges and spread as well - I know Fidelity do one with either 0.1 or 0.3% management charge.

The advantages of this kind of ETF over the fund come from it being exchange traded, and I can't think of ANY of said advantages that would apply to the OP.

purch

if Im paying £13 a month just to add some more money to the ETF, I wont have much of a return left! Am I missing something?!

ETF's are not really the suitable vehicle for small(ish) sums, and especially not for monthly savings.

Whilst the Funds do not track quite as accurately, and sometimes have slightly higher AMC's the lower transaction costs will make a big difference.

The main significant advantage of using an ETF to track is the fact that you can enter and exit in real time, quickly and easily without being subject to the opaque dealing structure that surrounds most funds.

As for the post above, I concur. You should really have a good solid reason to invest a lump sum currently in any equity based investment.

tradetime

Would have to agree with the previous two posters, ETF's are not really suitable for what you appear to want to do, you are basically paying for a feature that you are not going to use, that being the liquidity and tradability on a normal exchange.

Another suggestion, just for consideration, I'm not sure if I was going to drip feed an account in this market, that I would front load it with a lump sum at the current juncture, at the very least we will retest the lows from November imho, and I actually think we have new lows to see yet, so I'd keep some powder dry for when it really looks like we may have hit a bottom. As I say, just something t consider, you'll obviously have to make your own decision on that one.

sabretoothtigger

Just a normal tracker index fund will let you leave the market with about 24 or 48hr notice. No entrance or exit fees, dont think there would be a minimum term exactly

etf sounds good for day trading or a couple days. I wonder how the costs compare to a normal unit trust with 0.5% charges

tradetime

[ etf sounds good for day trading or a couple days. I wonder how the costs compare to a normal unit trust with 0.5% charges

ETF's are fine for more active traders, even investors who like to mix and match their own sectors etc, fees vary with something like SPY the S&P500 tracker at 0.08% (I think) up to about 0.75% for something like the specialized commodity trackers.

Mark1717

Thank to all for your responses, clearly a tracker fund is the way to go. Any other recommendations other than the Fidelity one?