Moneywise's First 50 Funds - 20 cheap tracker funds
See our 50 first funds for beginners homepage for links to the other funds in the list.
Vanguard LifeStrategy 20% Equity Inc or Acc
A low-risk fund that provides some upside potential from investing while limiting the risk of losing your money, it has 20% exposure to globally diversified equities with the remainder in globally diversified government and corporate bonds. The underlying portfolios are wholly made up of Vanguard index tracker funds. For a bit more risk, use the 40% equity version.￼
ISIN – Inc: GB00B4620290
Vanguard LifeStrategy 60% Equity Fund Inc or Acc
This instant medium-risk portfolio has 60% exposure to globally diversified shares with the rest in globally diversified government and corporate bonds.
ISIN – Inc: GB00B4R2F348
Vanguard LifeStrategy 100% Equity Fund Inc or Acc
This one-stop fund is aimed at higher-risk investors, who don’t want to think about how to put a portfolio together. The main stock market exposure is to US shares, followed by UK shares. To reduce risk, go for the 80% version.
ISIN - Inc: GB00B545NX97
- Read the Moneywise interview with Nick Blake, head of marketing and policy for Vanguard’s European business.
BlackRock 100 UK Equity Fund D Acc
By tracking performance of the FTSE 100 Index of the biggest companies traded on the London Stock Exchange, it seeks to achieve capital growth.
Fidelity Index UK Fund W Inc or Acc
It aims to replicate performance of the FTSE All Share Index. This index represents 98% of companies traded on the London Stock Exchange.
￼￼ISIN – Inc: GB00BP8RY721
HSBC FTSE 250 Index C Inc or Acc
Its goal is to provide long-term capital growth by matching the return of the FTSE 250 index, which represents medium-sized companies on the London Stock Exchange.
ISIN – Inc: GB00B80QFZ35
Vanguard FTSE UK Equity Income Index Inc or Acc
Offering low-cost, diversified access to higher income UK shares, it tracks performance of the FTSE UK Equity Income Index, made up of the highest-dividend paying shares among the largest 350 companies on the London Stock Exchange.
￼ISIN – Inc: GB00B5B74684
Fidelity Index World Fund W Inc or Acc
A good fund to start a portfolio with, it tracks performance of the MSCI World Net Return Index of large- and medium- sized companies from more than 12 developed countries.
￼￼ISIN – Inc: GB00BP8RYC79
Vanguard FTSE Developed World ex-UK Equity Index Fund Inc or Acc
A good diversifier if you already have a lot of UK exposure in your portfolio.
￼ISIN – Inc: GB00B5B74F71
L&G International Index Trust I Inc or Acc
Tracking performance of the FTSE World (ex UK) Index, which has a broad spread of company shares from developed and emerging markets globally (excluding UK companies), it’s cheaper than the Vanguard fund. However, it includes emerging markets countries, so might be a bit riskier.
￼ISIN – Inc: GB00B2Q6HX78
Vanguard FTSE Developed Europe ex-UK Equity Index Inc or Acc
Good for instant exposure to developed countries in Europe. Its main exposure is to French, German and Swiss companies.
ISIN – Inc: GB00B5B74N55
Higher risk overseas shares
Vanguard Global Small Cap Index Fund Inc or Acc
It tracks performance of the MSCI World Small Cap Index of smaller companies in developed countries.
ISIN – Inc: IE00B3X1LS57
Fidelity Index Emerging Markets W Inc or Acc
It aims to achieve long-term capital growth by closely matching performance of the MSCI Emerging Markets Index of rapidly developing economies.
ISIN – Inc: GB00BP8RYV68
HSBC American Index C Inc or Acc
Seeking long-term capital growth, it matches the return of the S&P 500 Index of 500 large companies listed on the New York Stock Exchange or NASDAQ (another American stock exchange).
ISIN – Inc: GB00B80QG490
Legal & General US Index I Inc or Acc
Its goal is to track performance of the FTSE USA Total Return Index, which captures large and mid-cap sized US companies.
(C Class is available via Hargreaves Lansdown for 0.06%)
ISIN – Inc: GB00B0CNGS66
Vanguard UK Gov Bond Index Inc or Acc
This fund can be used to achieve lower- risk diversity from an equity portfolio. Seeks to provide returns consistent with the performance of a market-weighted bond index of UK government fixed-income securities denominated in Pound Sterling.
ISIN – Inc: IE00B1S75820
L&G Short Dated Sterling Corp Bnd Index I Inc or Acc
Holds bonds consisting mainly of large, corporate investment-grade bond issues with maturities of between one and five years (the safer end of the maturity spectrum because interest rate changes will have less of an effect on the outcome to the investor).
ISIN – Inc: GB00BKGR3G14
BlackRock Corporate Bond Tracker D Inc or Acc
It seeks to provide both income and capital growth by aiming to track the performance of the benchmark Markit iBoxx GBP Non-Gilts Overall Total Return Index, of global corporate bonds. It holds more than 1,000 underlying bonds issued from around 10 countries.
ISIN – Inc: GB00B7J60R40
Vanguard Global Bond Index Inc or Acc
This highly diversified fund gives exposure to more than 7,300 bonds with the US, Japan, Canada, France and Germany being the highest weighted countries.
ISIN – Inc: IE00B2RHVP93
Source Physical Gold P-ETC (SGLD)
Gold tends to make a good diversifier in a portfolio as it behaves differently to other asset classes and tends to rally while other assets are falling. This fund is an ‘exchange traded commodity’ rather than a traditional index tracker fund. However, it’s traded on the London Stock Exchange and you can buy it through most investment platforms.
Think of it like buying gold bars without the hassle of having to store your gold somewhere. The fund provides investors with the performance of the gold spot price through certificates collateralised with gold bullion. Each Gold P-ETC is a certificate, which is secured by gold bullion held in JPMorgan Chase Bank’s London vaults.
The familiar name given to securities issued by the British government and issued to raise money to bridge the gap between what the government spends and what it earns in tax revenue. Back in 1997, the entire stock of outstanding gilts was £275bn; by October 2010 it had surpassed £1,000bn. Gilts are issued throughout the year by the Debt Management Office and are essentially investment bonds backed by HM Treasury & Customs and considered a very safe investment because the British government has never defaulted on its debts and this security is reflected in the UK’s AAA-rating for its debt. Gilts work in a similar way to bonds and are another variant on fixed-income securities.
The term is interchangeable with stock exchange, and is a market that deals in securities where market forces determine the price of securities traded. Stockmarket can refer to a specific exchange in a specific country (such as the London Stock Exchange) or the combined global stockmarkets as a single entity. The first stockmarket was established in Amsterdam in 1602 and the first British stock exchange was founded in 1698.
Also known as index funds, tracker funds replicate the performance of a stockmarket index (such as the FTSE All Share Index) so they go up when the index goes up and down when it goes down. They can never return more than the index they track, but nor will they lose more than the index. Also, with no fund manager or expansive research and analysis to pay, tracker funds benefit from having lower charges than actively managed funds, with no initial charge and an annual charge of 0.5%.
A market-weighted index of the 100 biggest companies by market capitalisation listed on the London Stock Exchange. It is often referred to as “The Footsie”. The index began on 3 January 1984 with a base level of 1000; the highest value reached to date is 6950.6, on 30 December 1999. The index is “weighted” by how the movements of each of the 100 constituents affect the index, so larger companies make more of a difference to the index than smaller ones. To ensure it is a true and accurate representation of the most highly capitalised companies in the UK, just like football’s Premier League, every three months the FTSE 100 “relegates” the bottom three companies in the 100 whose market capitalisation has fallen and “promotes” to the index the three companies whose market capitalisation has grown sufficiently to warrant inclusion. Around 80% of the companies listed on the London Stock Exchange are included in the FTSE 100.
Generic, loosely-defined term for markets in a newly industrialised or Third World country that is in the process of moving from a closed economy to an open market economy while building accountability within the system. The World Bank recognises 28 countries as emerging markets, including Argentina, Brazil, China, Czech Republic, Egypt, India, Israel, Morocco, Russia and Venezuela. Because these countries carry additional political, economic and currency risks, investors in emerging markets should accept volatile returns. There is potential to make large profit at the risk of large losses.
Corporate bonds are one of the main ways companies can raise money (the other is by issuing shares) by borrowing from the markets at a fixed rate of interest (the reason why they are also known as “fixed-interest securities”), which is called the “coupon”, paid twice yearly. But the nominal value of the bond – usually £100 – can fluctuate depending on the fortunes of the company and also the economy. However it will repay the original amount on maturity.
If you own shares in a company, you’re entitled to a slice of the profits and these are paid as dividends on top of any capital growth in the shares’ value. The amount of the dividend is down to the board of directors (who can decide not to pay a dividend and reinvest any profits in the company) and they will be paid twice yearly (announced at the AGM and six months later as an interim). Dividends are always declared as a sum of money rather than a percentage of the share’s price. Although dividends automatically receive a 10% tax credit from HM Revenue & Customs (HMRC), which takes the company having already paid corporation tax on its profits into account. Dividends are classed as income and, as such, are liable for personal taxation and so shareholders have to declare them to HMRC.
A standard by which something is measured, usually the performance of investment funds against a specified index, such as the FTSE All-Share. Active fund managers look to outperform their benchmark index. Cautious fund managers aim to hold roughly the same proportion of each constituent as the benchmark, while a manager who deviates away from investing in the benchmark index’s constituents has a better chance of outperforming (or underperforming) the index.
An interchangeable term for shares (UK) or stocks (US). Holders of equity shares in a company are entitled to the earnings and assets of a company after all the prior charges and demands on the company’s capital (chiefly its debts and liabilities) have been settled. To have equity in any asset is to own a piece of it, so holders of shares in a company effectively own a piece proportionate to the number of shares they hold. (See also Shares).