HSBC’s global index fund is the cheapest and so tops the table.There is very little to choose between these four global equity trackers: Source: Morningstar and fund provider’s data. Best global tracker funds – compared Tracker Check out InvestEngine, Freetrade, and Vanguard for that option. Percentage fee brokers often allow you to trade global index funds for nothing.Ī few brokers also enable you to trade global equity ETFs for £0. See our cheap broker comparison table for more. That’s because the impact of a high dealing fee is surprisingly damaging over the long-term. In that case, we’d invest in a global index fund in preference to the global ETF. The same broker allows you to trade index funds for free.Your stockbroker charges an ETF dealing fee that costs more than 1% of your typical transaction value.The only time the fund type is a deal breaker is if: We’re equally happy using ETFs or index funds and include both in our best global tracker fund table below. They’re both excellent ways of quickly diversifying your investments across the globe for an amazingly low cost. Global index fund or Global ETF?ĮTFs and index funds are both types of index tracker. The index – You should Google the tracker’s index to make sure it’s truly global. Note, investor compensation schemes only kick in if your broker or fund manager goes bust and your money disappears. But if it’s based in Ireland – as most ETFs are – then you’re looking at €20,000 max. Investor compensation – You’re covered for up to £85,000 if your global index tracker is based in the UK. Try to work out whether the impact of costs over your investing lifetime is worth switching. Only you know your personal hassle threshold. That would cost you £50 a year on a £50,000 investment if, for example, your fund’s OCF is 0.25% instead of 0.15%. An OCF differential of 0.1% on £10,000 is just £10. Don’t worry about bells and whistles.ĭon’t fret about small changes in cost, either. Go for cheap, plain vanilla flavour trackers. Reassuringly expensive price tags will not secure you a superior global equity tracker fund. There’s often little performance differential between global index trackers so, if in doubt, pick the cheapest by Ongoing Charge Figure (OCF) / Total Expense Ratio (TER). The more the better, because your index fund will then do a better job of representing the global stock markets that it follows.Ĭost – This is the most important factor that will impact your returns and that you can control. Instead look for ‘All-World’ or ‘Global’ index funds that include emerging markets.Īlternatively, if you do choose a developed world solution, you can add an emerging market index fund to your portfolio to make up the difference.ĭiversification – Following on from the above, compare how many stocks your shortlist of global tracker funds includes. Such ‘world index trackers’ are less representative of the global economy. They skip the emerging markets, including the likes of China and India. Global tracker funds – what really matters?Īll-World – Most products labelled world index funds only encompass developed world countries. Even ex-hedge fund managers have switched sides and urge everyday investors to pick global index trackers. Investing giants like Warren Buffet recommend index funds. It is the best strategy to choose if you want to maximise your chances of meeting your financial goals. Investing this way is known as index investing or passive investing. In other words, they trade stocks to mirror the fortunes of each firm’s rise and fall consonant with their performance, investor sentiment, and global capital’s best estimate of future earnings. Global tracker funds replicate their chosen index as faithfully as possible. The index followed by a global tracker fund is essentially an international league table of the world’s leading companies from Amazon to Alibaba to Taiwanese semiconductor giant TSMC.
This gives you a slice of ownership in thousands of world-class firms and lets you buy into the prospects of entire industries, countries, and continents at a stroke. Your money is pooled along with the global tracker’s many other participants, and is used by the fund’s management team to invest in every major stock market on the planet. What is a tracker fund?Ī tracker fund is an investment fund that tracks an index like the FTSE 100 or, in the case of a global tracker, an index such as the FTSE All World.
In this post, we’ll explain how to choose the best global tracker fund for you and we’ll list our picks from the range of choices on offer. A global tracker fund takes care of all your equity diversification needs in a single investment product.
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