How about an FTSE tracker?

d712

Hello

Would this be a good option as the FTSE is so low at the moment?

How do they work? Do you buy a set of shares that are intended to represent the FTSE as a whole? If so, does that mean that there will be a lot of expenditure on commissions if you need to have shares in many different companies?

Thanks

tradetime

One way would be to use an ETF such as iShares FTSE 100 or iShares FTSE 250
They trade like a single stock, in the case of those two on the LSE, you just buy and sell them like a normal company stock, although there is no stamp duty.

turbobob

If you want exposure to the FTSE indices then yes they are a good option. Whether that's what you want is up to you to decide You don't say which FTSE index - there are a few. The FTSE All Share is probably the broadest UK one, being made up of FTSE100 (top 100 companies), FTSE250 (next 250 biggest) and the FTSE Small Cap index, and weighted by the size of each company. By its nature, its heavily dominated by the largest FTSE100 companies, but offers some exposure to mid and small caps.

Common ways of tracking the index are through unit trusts/OEIC's. Investors money is pooled together and used to buy shares which aim to replicate the makeup of the index. There are costs involved - look for the "Total Expense Ratio" which is basically the running cost of the fund including its dealing costs. They are fairly low on most UK trackers though (one I looked up is as low as 0.3% a year).

ETF's (exchange traded funds) are another option. They are effectively shares that track various indices and are traded on the stockmarket. If you decided you wanted to "trade" more actively these might be something to go for.