Legal and General International Trust

Surreyboy

Hi all,

I was considering investing in the Legal & General International Index Trust Tracker (I class) but there are a couple of things I was a bit confused about. I would be very grateful for any guidance!

I am trying to work out whether it has any significant tracking error . It is intended to track the FTSE World (ex UK) Index, but for some reason no website I can find compares the fund's performance with that index.

The OCR is apparently 0.13% at present, but I saw an article on the Monevator website (which contains blogs about tracker funds) from September 2014 where they said the OCR then was 0.31%. Do OCRs on index funds usually swing this wildly? The reason for investing in this fund was as a replacement for the Fidelity Index World fund (the A class is the only one available on the III website and it has an OCR of 0.3%). There is no point in incurring the cost of replacing the Fidelity fund if the L & G fund's costs are liable to shoot up again.

Thanks!

Matt

bowlhead99

According to their annual report the tracking error is pretty small, at least for last year.

Manager’s Investment Report

During the year under review, the bid price of the Trust’s R-Class distribution units rose from 68.33p to 74.75p, an increase of 9.40%. FTSE, the Index compiler, calculates the benchmark Index at the end of the business day using closing prices and foreign exchange rates, whereas the Trust is valued using prevailing prices at 3pm. Therefore, for tracking purposes the Trust has been revalued using closing prices and foreign exchange rates. On this basis, over the review year from the close of business on 4 October 2013 (the last working day of the prior accounting year) to the close of business on 6 October 2014, the Trust rose by 8.93% on a capital only basis compared with the FTSE World (excluding UK) Index increase of 8.85% (Source: Bloomberg), producing a tracking difference of +0.08%

So, that would seem reasonable, at least for that one-off snapshot.

Also according to the report, the management fee for the I class was reduced effective November last year from 0.25% to 0.08%. That would stack up as the explanation for the reduction in OCF from what the article said to what current websites say.

You can get the annual report, prospectus etc from trustnet.com.

Surreyboy

Thank you for your help