Best S&P 500 Tracker?

jacko74

A simple question..

Which is the best (ie simplest and cheapest) basic S&P Tracker Fund out there?

There's such a plethora of choices!

It doesn't have to be an ISA as my total annual income is well below the personal allowance anyway.

ColdIron

jacko74 said:

A simple question..

Which is the best (ie simplest and cheapest) basic S&P Tracker Fund out there?

Invesco Markets plc S&P 500 UCITS ETF A GBP (SPXP) is pretty cheap with a 0.05% OCF

I'm not sure what you mean by 'simplest', they all do the same thing in much the same way. Open ended funds are generally regarded as simpler than ETFs which would exclude the fund above by your criteria

There's such a plethora of choices!

Given that all trackers track essentially the same index you could argue that there is little choice, bar costs, at all

It doesn't have to be an ISA as my total annual income is well below the personal allowance anyway.

You are comparing apples and pears. An ISA is a tax wrapper that can contain investment products, much as a shopping trolley can contain food. You are asking for the 'best' petrol but saying that it doesn't have to be a car

NB You DO want to use an ISA (or maybe a SIPP) to contain your tracker as otherwise you will have to maintain detailed and complete records of purchases, sales and dividends for tax purposes even if you think you may not have to actually pay any tax

jacko74

ColdIron said:

jacko74 said:

A simple question..

Which is the best (ie simplest and cheapest) basic S&P Tracker Fund out there?

Invesco Markets plc S&P 500 UCITS ETF A GBP (SPXP) is pretty cheap with a 0.05% OCF

I'm not sure what you mean by 'simplest', they all do the same thing in the same way. Open ended funds are generally regarded as simpler than ETFs which would exclude the fund above by your criteria

There's such a plethora of choices!

Given that all trackers track essentially the same index you could argue that there is little choice, bar costs, at all

It doesn't have to be an ISA as my total annual income is well below the personal allowance anyway.

You are comparing apples and pears. An ISA is a tax wrapper that can contain investment products, much as a shopping trolley can contain food. You are asking for the 'best' petrol but saying that it doesn't have to be a car

NB You DO want to use an ISA (or maybe a SIPP) to contain your tracker as otherwise you will have to maintain detailed and complete records of purchases, sales and dividends for tax purposes even if you think you may not have to actually pay any tax

Thanks, by basic and simple I mean just a no-frills S&P 500 tracker, when I look at the websites for H&L or Vanguard for example they offer a multitude of different S&P 500 Trackers, all ostensibly offering the same thing. 

Thank you for the additional info on ISA's, I've always assumed ISA's come with higher fees than none ISA products that's why i thought there's little point in using one as my total income will definitely be below the personal allowance anyway. 

Section62

jacko74 said:

...
Thank you for the additional info on ISA's, I've always assumed ISA's come with higher fees than none ISA products that's why i thought there's little point in using one as my total income will definitely be below the personal allowance anyway. 

You need to be thinking about any gain you will (hopefully) make on the value of the fund you hold, in addition to your income.  Simplifying things a bit, when you sell a fund holding outside of an ISA or SIPP then the amount you've gained (the increase in value between buying and selling) may be subject to Capital Gains Tax (CGT).

So even if your income is below the personal allowance for Income Tax, you may still end up in a position where you have to pay CGT.

And as you won't know whether or not CGT is payable until the time comes, you need to keep records as ColdIron says, which would allow you to work out whether or not your gain is within your CGT allowance.

If you hold the fund in an ISA (or SIPP) then any gain is also free of CGT (as per the current rules), so the record keeping isn't as important (but still a good idea to keep records so you know what is going on).

dunstonh

Thanks, by basic and simple I mean just a no-frills S&P 500 tracker, when I look at the websites for H&L or Vanguard for example they offer a multitude of different S&P 500 Trackers, all ostensibly offering the same thing. 

Are you after an OEIC, UT, ETF, life fund or pension fund?

Are you after Inc or Acc version?

Are you after currency hedging or without?

Thank you for the additional info on ISA's, I've always assumed ISA's come with higher fees than none ISA products that's why i thought there's little point in using one as my total income will definitely be below the personal allowance anyway. 

No, that is not correct.      The vast majority of platforms do not charge extra for the tax wrappers  compared to unwrapped.    You mention income but remember that CGT applies to unwrapped as well.

wmb194

jacko74 said:

ColdIron said:

jacko74 said:

A simple question..

Which is the best (ie simplest and cheapest) basic S&P Tracker Fund out there?

Invesco Markets plc S&P 500 UCITS ETF A GBP (SPXP) is pretty cheap with a 0.05% OCF

I'm not sure what you mean by 'simplest', they all do the same thing in the same way. Open ended funds are generally regarded as simpler than ETFs which would exclude the fund above by your criteria

There's such a plethora of choices!

Given that all trackers track essentially the same index you could argue that there is little choice, bar costs, at all

It doesn't have to be an ISA as my total annual income is well below the personal allowance anyway.

You are comparing apples and pears. An ISA is a tax wrapper that can contain investment products, much as a shopping trolley can contain food. You are asking for the 'best' petrol but saying that it doesn't have to be a car

NB You DO want to use an ISA (or maybe a SIPP) to contain your tracker as otherwise you will have to maintain detailed and complete records of purchases, sales and dividends for tax purposes even if you think you may not have to actually pay any tax

Thanks, by basic and simple I mean just a no-frills S&P 500 tracker, when I look at the websites for H&L or Vanguard for example they offer a multitude of different S&P 500 Trackers, all ostensibly offering the same thing. 

Thank you for the additional info on ISA's, I've always assumed ISA's come with higher fees than none ISA products that's why i thought there's little point in using one as my total income will definitely be below the personal allowance anyway. 

Apart from usually costing no more than taxable accounts, the beauty of Isas is that you can be as sloppy with your administration as you like and it’ll never matter as you never have to report anything to HMRC.

With taxable accounts you need to keep track of interest, dividends, PIDs, capital gains, excess reportable income, the 30 day bed & breakfasting rules and other things I’ve forgotten. So even if the amounts you’re investing are small it can still be beneficial to use Isas.

EthicsGradient

Monevator has a very useful page on which it keeps a list of the cheapest trackers for various markets: Low-cost index funds UK - Monevator

One thing to note about Invesco Markets plc S&P 500 UCITS ETF A GBP (SPXP) mentioned above is that it has a very high unit price - about £800. If your platform won't hold fractional shares, this may be a problem if you want to invest small amounts regularly. It is "synthetic"; this gives an advantage to do with taxes on dividends, but means you do need all the parties involved in its swaps to stay solvent. I hold it myself (if I were starting from new, I might use one of the ones in Monevator's list, but I don't want to add yet another holding to my already large list).

ColdIron

jacko74 said:

I'm just looking to put a small proportion of my capital into a basic tracker fund for around 10 years.

Then choosing an S&P 500 tracker is very likely to be a poor choice, all your eggs in a single US basket. 10y years is considered medium term and not long term

It would be 100% equities which is pretty high on the risk/volatility scale, no bonds, property, infrastructure etc.

Do you think the US will be the best performer for the next 10 years (especially given the hand grenade tossed into the markets on Wednesday)? What about Japan, Europe, Asia Pacific, Emerging Markets and the UK where you earn and spend your money in Sterling? That would raise the risk/volatility factor even more.

People in your situation would be well advised to look at multi-asset fund, these are not trackers in themselves but may be funds built with trackers

Read this, Vanguard and HSBC are popular, evergreen choices

https://monevator.com/passive-fund-of-funds-the-rivals/

Qyburn

jacko74 said:

I'm not ashamed to admit I know very little about investing and I'm just looking to put a small proportion of my capital into a basic tracker fund for around 10 years.

Keeping it simple here are a couple of examples..

(1) Iweb have no annual charge for their S&S ISA. They charge £5 per trade which I'd higher than some other platforms, but that could still work out for the best if you just make one investment per year into one fund each time.
https://www.iweb-sharedealing.co.uk/our-accounts.html

(2) Contrast for example HL who charge a 0.45% annual fee, but with no charge for trading funds. If you have more than just over £1,100 then that costs more than Iweb in my first example.

wmb194

Qyburn said:

jacko74 said:

I'm not ashamed to admit I know very little about investing and I'm just looking to put a small proportion of my capital into a basic tracker fund for around 10 years.

Keeping it simple here are a couple of examples..

(1) Iweb have no annual charge for their S&S ISA. They charge £5 per trade which I'd higher than some other platforms, but that could still work out for the best if you just make one investment per year into one fund each time.
https://www.iweb-sharedealing.co.uk/our-accounts.html

(2) Contrast for example HL who charge a 0.45% annual fee, but with no charge for trading funds. If you have more than just over £1,100 then that costs more than Iweb in my first example.

What’s the definition of a, “basic tracker fund” though? Tracking what?