Investing in the FTSE 100 question

moneysaver_joe

Hi All,

Just wanted a quick Sanity check. I've a £1,000 to invest and already filled my ISA. I wanted to invest £1,000 into a share ISA that tracks the FTSE 100. I've read the articles and Best Invest seems to allow £1,000.

I need to choose a fund and wanted to check that this is the correct one:
HALIFAX UK FTSE 100 INDEX TRACKING A

(I can't post the link due to spam restrictions, but Google goes right there)

There seem to be funds out there with Managers but I'm just looking to track the rate. I think this fund is what I'm after - but just wanted to check

TIA for any help,
Joe

dunstonh

Why would you want the Halifax fund? I'm not even sure you can buy it from a fund supermarket as bank funds tend to be branch/direct only.

Its not a cheap tracker and you can get better if thats what you want. Also, why do you want to track such a limited index? Or do you plan to diversify later?

moneysaver_joe

Ah ok, thanks for letting me know.

I have a £1,000 to invest and so planned £500 for tracking the FTSE 100 and £500 for another fund.

I was struggling to find the trackers on the best invest site. From what you've said it sounds like a better idea to go to the banks direct then.

dunstonh

From what you've said it sounds like a better idea to go to the banks direct then.

Good God no. Thats they worst way to buy.

If you want to DIY, then use a fund supermarket like HL. If you intend to stick to trackers only though then you probably need to stop looking at unit trust/OEICs and look to ETFs instead. ETFs are usually better value for trackers.

ses6jwg

The FTSE 100 is weighed to a number of volatile sectors such as mining and banks.

Generally FTSE250 or All-Shares give better returns and less volatility.

Rollinghome

moneysaver_joe wrote: »

I need to choose a fund and wanted to check that this is the correct one:HALIFAX UK FTSE 100 INDEX TRACKING A

Halifax charge up to 1.5% AMCs on some of their trackers so you need to be sure of what it is on that one. Tracker funds generally charge less than 0.5% and any more than that wipes out the advantage of a tracker. Check of the trackers from HSBC, L&G, F&C etc. Below that the important factor becomes tracking error, i.e. how closely they track.

Most of those offer trackers for the FTSE 100, All-share, and 250. The FTSE 100 makes up 81% of the UK stockmarket capitalisation. The All-share includes the FTSE 100, FTSE 250 and FTSE SmallCap and makes up about 98% of the market capitalisation. The All share has done better in the past though the bigger companies of FTSE 100 are more likely to be internationals with large overseas earnings which could do better if you see the pound deteriorating.

moneysaver_joe

Ah sounds like that was my problem then! I'll have a look at the ETFs

Thanks for the info, much appreciated. There is so much information, its tricky to take it all in at first.

tradetime

If you want to track the FTSE100 passively just buy something like the iShares FTSE100 (ISF)

But don't rush in, take your time to understand what exactly it is you hope to achieve and whether this is the the best way to do it.

Rollinghome

dunstonh wrote: »

If you want to DIY, then use a fund supermarket like HL.

For trackers there's often no advantage in buying from a fund-supermarket rather than direct from the fund manager.

For example if he bought an L&G tracker there's no front end charge so nothing for H-L to rebate and no difference in the amc. If he buys direct L&G were offering £50 cashback through Quidco http://www.quidco.com/legal-general-isas. (It seems to be for just £500 lump sum but would need to read the small print as that sounds ridiculously genorous.)

Additionally it used to be much quicker and easier to buy direct. Rather having to place an order the day before it is (or was) possible to buy just before the price fix at noon.

.

Rollinghome

moneysaver_joe wrote: »

Ah sounds like that was my problem then! I'll have a look at the ETFs.

ETFs are better suited to large amounts because you have trading costs. If you pay £10 to buy and £10 to sell that's 4% of a £500 investment which would pay a 0.5% AMC for eight years.

tradetime

True, but if you choose to buy through iii portfolio builder (assuming they allow ETF's in that offer) then it will be free to buy until June.