UK tracker funds

Amarone

I'm wanting exposure to UK companies to balance my portfolio and intend to drip feed a tracker fund , leave for the long term with minimal annual charges.
I'm looking at BlackRock UK equity tracker , AXA Framlington UK select ops , Vanguard ftse UK , fidelity index UK and L@G tracker trust , all ACC.

They all have the same holdings albeit at different percentages. I'm uneasy about the amount held in the oil companies. I'm wondering if anyone can recommend one over the other ( I know this can be subjective) but based on what.

Many Thanks

jimjames

For tracker I go for cheapest.

Are you aware the axa uk select isn't a tracker?

zolablue25

Unfortunately the oil companies make up a significant slice of the UK equities indexes so if you want to track the index then you need to have funds that include them - otherwise you aren't tracking.

bowlhead99

1) If you're uneasy about having more in one sector than another, then don't allocate your investments based on the size of the companies that make up the UK stock market. The $100bn giants like BP and Shell and hsbc will all have massive allocations meaning over 10% of your money is in oil and over 10% banks. While only a quarter of a percent is in car manufacturers and 1.6% is in technology because unlike the EU and U.S. indices, we don't have many of those types of firms listed here. If you don't want that mix, a tracker is not for you.

2) as the name suggest, axa "UK select opportunities" is a managed fund, selecting opportunities... It's not a tracker. So the performance and mix of holdings will be different. The other funds are trackers so should all hold roughly the same stuff. The top holdings might be different percentages if for example one of the lists you are looking at is the holdings at January and another is February and another December. They all change daily but only tell us once a month on a delay.

3) You can graph the tracker funds over time and see they are all very close to each other. The main difference is fees. With many of them, fees have come down over time so their relative performance over next five years could be better than last five years when fees held them back. There are some quirks, e.g. Vanguard has a dilution levy for people joining and leaving which is good for buy-and-hold-ers because the people holding the fund get a contribution towards the total expenses from those that join and leave and cause incremental costs. In other funds it is "free" to join or leave which means an inherently worse performance for everyone else as seen on a chart.

I expect each of the vanguard, blackrock, l&g and fidelity funds would probably make a good stab at tracking the index. You may find the overall costs lower for one fund than another depending on your platform of choice.

So, the only real differentiator is fees and tracking error, other than that they will be much of a muchness. They are probably all suitable, if a tracker is suitable at all.

zolablue25

Would the dilution fees make the Vanguard fund less desirable to people wishing to "drip-feed" regular savings into funds rather than those able to make lump sum deposits?

Marazan

zolablue25 wrote: »

Would the dilution fees make the Vanguard fund less desirable to people wishing to "drip-feed" regular savings into funds rather than those able to make lump sum deposits?

There is zero difference in the dilution levy that you would pay if you paid a £1000 lump sum or 10 £100 drips.

What the dilution levy does is stop you putting in and out the same £1000 as you try and time the market.