FTSE 100 Vs FTSE all shares tracker.. and an ETF - advice please

fimonkey

Hi,

I'm 'doing my own research and having just educated myself on where I want to put £100 per month, I have decided to go for an tracker fund. The cheapeast I have found so far is HSBC with a TER of 0.27% for either all shares tracker or FTSE 100, and I intend to hold this in an ISA.

Are these OEIC's or unit trusts, and where would be the best place to buy these? (Hargreaves and Lansdown?)

Obviously the goal is to make better money than a regular savings account, but I'm struggling to find anything which compares them (All shares with FTSE 100) - anyone got any ideas on this, or point me in the right direction please? - I'm wondering whether its worth putting £50p.m into both, or whether this would make the overall charges/TER not worth it?

Also, is £1000 too little to invest in an ETF?

Thanks in advance

turbobob

The FTSE 100 is a large cap index. The FTSE All Share index is more diversified, including mid and small caps, as well as the FTSE100. It is market cap weighted though so a high percentage of an All Share tracker will be made up by a few of the largest companies. Personally, for long term investment purposes I would go with an All Share tracker over an FTSE100 tracker. I think historically mid and small cap indices tended to outperform, but won't necessarily do so always..

Based on dealing costs of £10 a trade, an investment of £1000 into an ETF is equivalent to about a 1% initial charge. There is also a bid/offer spread on ETF's which varies. On liquid, highly traded ETF's e.g the iShares FTSE100 (ISF) the spread is normally low (around 0.03% at this moment) but on the less liquid ones it can be a lot higher.

fimonkey

Thanks turbo.

Is it worth going for both FTSE 100 and All shares tracker? i.e 50pm in both as opposed to 100pm in just one of them?

LeeSouthEast

I use ISF.L (Barclays iShares FTSE 100) in an Interactive Investor ISA. If that helps

artha

turbobob wrote: »

The FTSE 100 is a large cap index. The FTSE All Share index is more diversified, including mid and small caps, as well as the FTSE100. It is market cap weighted though so a high percentage of an All Share tracker will be made up by a few of the largest companies. Personally, for long term investment purposes I would go with an All Share tracker over an FTSE100 tracker. I think historically mid and small cap indices tended to outperform, but won't necessarily do so always..

Based on dealing costs of £10 a trade, an investment of £1000 into an ETF is equivalent to about a 1% initial charge. There is also a bid/offer spread on ETF's which varies. On liquid, highly traded ETF's e.g the iShares FTSE100 (ISF) the spread is normally low (around 0.03% at this moment) but on the less liquid ones it can be a lot higher.

Doesn't the 100 and all share generally run together? At least in recent times. If I was to go for a tracker in the current climate I would prefer a 250 tracker

turbobob

artha wrote: »

Doesn't the 100 and all share generally run together? At least in recent times. If I was to go for a tracker in the current climate I would prefer a 250 tracker

Yes they are pretty close as you would expect. Over time you will see some differences. The All Share is made up of the companies of the FTSE100, the FTSE250 and the FTSE Small Cap. Due to it being weighted by market capitalisation the FTSE100 makes up the largest part of it, with 40% of it being accounted for by just 10 companies. This explains more about it - http://www.ftse.com/Indices/UK_Indices/Downloads/FTSE_All-Share_Index_Factsheet.pdf

Is it worth going for both FTSE 100 and All shares tracker? i.e 50pm in both as opposed to 100pm in just one of them?

Not sure about that. An All Share tracker already contains the FTSE100. If you wanted to diversify with something different maybe look at non UK trackers or other asset classes?

fimonkey

OK so a google search of FTSE all share index gave me this page http://uk.biz.yahoo.com/mutualfunds/specialist/index_ftse_all_share.html


But if look on Hargreaves Lansdown and choose UK All companies as a search term I get a bewlidering array. Are they all FTSE all share trackers? How do I choose which one to go with (I'm looking for low TER, but should I choose one I've heard of? - I see H&L don't sell all of the ones in the yahoo list, only 2 of them).

Then finally... how do I go about putting my £100 a month into them and keeping it within an ISA?

Thanks again

fimonkey

.. Still doing my own research and have now found the Halifax all shares tracker which I can hold in a Halifax S&S ISA,.. however the TER is apparently between 1-1.5% depending on how much you invest,... what would it be for an initial investment of £1000 then topped up monthly with £100? Would it be worth it or better looking for a tracker with a much lower TER (some of them are about 0.27%).

Thanks

Rollinghome

The reason that most trackers outperform the majority of managed funds is the low charges. To get that benefit you need to use those trackers that have TERs of around 0.5% or less.

Be aware that H-L charge an additional 0.5% for funds within an ISA that pay them no trail commission so would suggest you look at HSBC trackers if using them. All TERs on their trackers were reduced to around 0.27% last autumn and they don't incur H-L's extra charge.

Dr_Eye

Hi,

I was in a similar quandary a number of years ago. I took the plunge and applied for an L&G UK Index Trust which tracks the FTSE All Share, investing the minimum of £50 a month. I have increased the monthly payment every year and now invest £110 which I appreciate is still a very small amount. However I have watched the amount grow and its now in 5 figures. I have now diversified slightly by adding the Pacific Index Trust and the European Index Trust, all of which are wrapped up in an ISA. I intend to invest for another 15-20 years so providing a lump sum near retirement.

I am certainly no expert and decided to invest only after reading a Motley Fool book about trackers versus managed funds. Anyway in my opinion and based on personal experience I would invest the £100 a month in a FTSE All Share Tracker and increase the amount, even if in small increments, every year. Its lazy investing but it has certainly provided me with a better return than any savings account.

Regards

Dave

fimonkey

Rollinghome: You say "Be aware that H-L charge an additional 0.5% for funds within an ISA that pay them no trail commission so would suggest you look at HSBC trackers if using them. All TERs on their trackers were reduced to around 0.27% last autumn and they don't incur H-L's extra charge".

What do you mean by that and how do I know whether H&L are going to charge trail commission or not? Or do they cahrge it on ALL their trackers?

Re: the HSBC tracker, is that free to set up? The reason I'm attracted to H&L is that they waive the initial commision charge.

Also, how come the Halifax tracker with a TER of 1-1.5% manage to do well in the performance tables?

Thanks in advance.