Index Tracker

Ximian

I'm in the process of researching S&S ISAs and I'm looking at the following providers and funds:

Virgin Money FTSE all Share ISA (annual management charge of 1% a year.There are no additional charges)

Legal & General UK 100 Index (AMF 0.82% [0.65% + 0.17%])

I have also visited the H&L website and had a quick look around at the various funds and fees available.

I'd appreciate any comments and opinions about the providers listed above regarding satisfaction or recommendations, or any other suggestions regarding using a different provider.

I'm looking at the S&S ISA as I have already maxed my cash ISA for this financial year and I'm looking to get a better return on some cash that I have in a savings account which is currently earning 2.8% (tax deductible)

TIA

Reaper

The Virgin one sounds a bit expensive.

Here is a Fool article about the cheapest trackers for each index:
http://www.fool.co.uk/news/investing/investing-strategy/2009/04/28/the-cheapest-index-trackers.aspx

However note it is over a year old, so check out HSBC's ETFs too which have been coming in recently at low prices. Likewise Vanguard.

wriggly

Ximian wrote: »

I'm in the process of researching S&S ISAs and I'm looking at the following providers and funds:

Virgin Money FTSE all Share ISA (annual management charge of 1% a year.There are no additional charges)

Legal & General UK 100 Index (AMF 0.82% [0.65% + 0.17%])

I have also visited the H&L website and had a quick look around at the various funds and fees available.

1% is way too much to pay for a UK index tracker!

For a start, you'd be better off with the L&G UK All-share, which is equivalent to the Virgin fund and almost identical to the L&G UK 100, but with the next 500 companies added as a bonus. Performance is almost identical, but its TER is 0.55%.

Fidelity Moneybuilder UK Tracker has TER of 0.3%
HSBC UK Index has TER of 0.25% (not available directly through the bank, as far as I know)
Vanguard FTSE UK has a TER of 0.15% (but also has a 0.5% up-front fee to cover the Stamp Duty - the others cover that from their higher TER).

Note that H&L generally charge an extra fee for index trackers, although I believe the HSBC ones do not have this fee.

dunstonh

Virgin Money FTSE all Share ISA (annual management charge of 1% a year.There are no additional charges)

Legal & General UK 100 Index (AMF 0.82% [0.65% + 0.17%])

Virgin is damned expensive (like most of their financial products).
L&G is a lot better but not the cheapest. I think the order now (in UT/OEIC universe) is Vanguard, Dimensional, Blackrock, HSBC, then L&G.

Not sure limiting yourself to the FTSE100 though is a good idea unless it is a small amount and dont mind medium/high risk in a limited area.

edinburgher

Fidelity Moneybuilder UK Tracker has TER of 0.3%

One of the ones I invest in (although its performance doesn't look so hot). Still, you don't invest in trackers expecting to get rich quick (unless the stock market is booming!)

Lower_North

Dont let annual fees be your only driver for buying into something. Look at its past performance too (but only as a guide)

Something could have an annual management fee of 0.1%, but if it doesnt perform, you would lose more money than paying a 1% management fee in somehthing that is performing well.

dunstonh

Lower_North wrote: »

Dont let annual fees be your only driver for buying into something. Look at its past performance too (but only as a guide)

Something could have an annual management fee of 0.1%, but if it doesnt perform, you would lose more money than paying a 1% management fee in somehthing that is performing well.

You are right but I would qualify the statement more.

Charges should not be the driver. Trackers will not typically underperform or over perform. What you get with a tracker is typically mid table consistency. So, it shouldnt perform badly.

You then need to decide if you want to pay more for the potential of outperformance with the possibility of underperformance. That is very much a personal decision and where things tend to get polarised.

mac2008

I agree Virgin are much too expensive.

If you only want to invest in a single FTSE tracker, why not open an ISA with, say iii.co.uk and invest in the HSBC FTSE ASX. TER is 0.27%. No other charges. I've found their online service good and their customer service excellent.

Mac