Tracker Comparison

Froggitt

I received my annual statement this morning from Henderson where I have £15k in their UK Index fund. It was all free money originally from building society demutualisations, and has been through about 5 or 6 changes of ownership.

Anyway, I was gobsmacked to find today they are charging 0.7% for a tracker. I thought they were now obliged to offer a clean share class but they say not.

So, I'm going to move it into my Share Centre ISA, change to Frequent Investor tarriff for 3 months, sell it, and buy a cheaper tracker.

Is there a comparison of tracker funds performance anywhere, say over 5 years? Or are they much of a muchness, and I should go with the cheapest e.g. Fidelity or Vanguard?

InvestInPoker

0.7% is way too much for a tracker - you could get the Woodford fund for around that.

Fidelity's all share tracker is 0.07% through their platform, I think it is the cheapest but don't quote me on that. Other competitive ones are very very closely priced to that anyway. The other things to consider are the other fees (notably the platform fee you will pay) and the tracking error. It might be a bit rough but when judging tracking error of prospective passive funds I tend to pull up the respective graphs of the funds on Trustnet/Morningstar and overlay them with a graph of the index they track. Eyeballing that over a decent period of time will show any poor performance.

bowlhead99

Those comments above are pretty sound. Any difference in performance comes down to fees and tracking error ; or potentially timing differences if the fund is an international one and is calling a cut-off at close of business in one particular market versus another. If the fidelity fund beat your Henderson fund it will be mostly due to fees but of course when you look at historic charts Fidelity used to charge higher fees so the difference historically would not be as large as it is likely to be today.

For the UK index specifically, be aware that some funds like Vanguard will charge a 'dilution levy' when admitting new joiners to a fund which will then beef up the visible performance on a chart because that fund can spend the dilution levy money to settle its various expenses while other funds would not charge the entrance fees to new investors and therefore have to get the money for admin costs and stamp duties off their entire investor base over the course of a year. If you are going to be in the fund long enough it is probably worth paying a dilution levy and benefitting from the better underlying performance. But for the average investor it will wash out.

To recycle some previous comments to save me typing too much:

https://forums.moneysavingexpert.com/discussion/5167280

and, rather longer thread banging on about tracking error:
https://forums.moneysavingexpert.com/discussion/5095851