Index fund ideas from our Select 50

Index funds, also known as tracker funds or passive funds can be a great addition to a portfolio. As they are passively managed, meaning they track the ups and downs of an index without trying to outperform it, they come at a fraction of the cost.

Last November, there were inflows of £2.7 billion to index funds, the highest inflow since April 2021, according to trade body, Investment Association.^.1

So, if you’re an investor looking for a low-cost, ‘one-stop-shop’ option, and want your money well-diversified across lots of different companies and regions - index funds are worth considering.

Depending on the fund, they can focus on one index in a specific country - for example, a fund may track the FTSE 100 which is comprised of the top 100 largest companies in the UK - or they may well combine multiple indexes across the world.

They are typically held in a Stocks and Shares ISA, Self-invested Personal Pension (SIPP) or a general investment account.

There are 14 index-tracking funds on our Select 50 covering a wide variety of regions and asset classes.

Here’s a closer look at four index funds from this list that focus on the UK, US and global stock markets. These are regions that our investors in equity funds bought in January. 

1. iShares Core FTSE 100 

This fund tracks the FTSE 100 Index which is made up of the 100 largest companies by value listed in London. 

Its primary holdings include big names like Shell, AstraZeneca, HSBC, Unilever and BP - companies that are based in the UK but also operate internationally. This characteristic means the fund has more of an international focus than you might think and is less dependent on what’s going on in the UK economy.  

The fund is a really cheap way to access the FTSE 100 - with a 0.09% ongoing charge. 

2. Vanguard FTSE 250 ETF 

This fund tracks the FTSE 250 index so focuses on smaller to medium sized UK companies providing you exposure to the domestic UK economy - more so than the FTSE 100 tracker which includes more multinational companies.

Its current primary holdings include Spectris, an industry scientific and technical instruments supplier, budget airliner easyJet and British Land.

If you’re looking to add more UK exposure to your portfolio at a low cost, this fund is good value with an ongoing charge of 0.11%. 

3. Vanguard S&P 500 ETF

This fund provides a cheap and easy way to invest in the US stock market by tracking the popular S&P 500 Index. It will provide you access to the world’s most exciting companies like Microsoft, Apple, NVIDIA, Amazon and Facebook-owner Meta.

The fund has a 0.07% ongoing charge - so it’s a great low-cost way to gain exposure to the world’s largest stock market.

4. Vanguard FTSE All-World ETF 

This fund invests globally, and it’s weighted according to the size of a country’s stock market - so it makes sense just over 60% is allocated to the US.

Its top holdings include household names like Microsoft, Apple, NVIDIA, Amazon and Facebook-owner Meta.

As well as investing in the UK and Europe - this fund also offers some exposure to the Japan and emerging markets in Asia. There's also small doses of Latin America and Canada.

And all this worldwide coverage comes with a low cost too - at 0.22% ongoing charge.

Got a burning question you want to ask? Why not drop us a line. Click here to ask an expert your question. 

Source 

^1. Investment Association, 11 January 2024 

Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. Overseas investments will be affected by movements in currency exchange rates. Investments in emerging markets can be more volatile than other more developed markets. Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. Select 50 is not a personal recommendation to buy or sell a fund. Before investing into a fund, please read the relevant key information document which contains important information about the fund. Eligibility to invest in a SIPP or ISA and tax treatment depends on personal circumstances and all tax rules may change in the future. Withdrawals from a SIPP will not normally be possible until you reach age 55 (57 from 2028). This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.