Foundation Fundlist changes: Europe, Japan and US passive funds

Passive funds or ‘trackers’ offer inexpensive and straightforward exposure to particular markets.

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  1. Rob Morgan

In contrast to ‘active’ funds that employ fund managers to try and select the best performing investments, passive funds or ‘trackers’ simply  aim to replicate the performance of a particular index.

For those who prioritise cost they can offer inexpensive and straightforward exposure to particular markets. Charges are generally lower, and sometimes a lot lower, than active funds. If you are not convinced a fund manager can add much value in the area you are interested in, then a tracker will likely be a consideration.

We have recently undertaken a review of the passive funds on our Foundation Fundlist, our list of preferred funds for new investment, with a view to including only the highest quality and keenly-priced options covering the main investment areas.

From time to time costs change on individual funds and new products are made available, so it’s worth periodically checking you are getting the type of investment you want for the best possible terms. To this end we have made the following changes to the list:

*TOC or Total Ongoing Charges is now the industry standard for comparing annual charges across investment products. It includes the previously commonly used OCF (ongoing charges figure), which represents the running costs of the product, as well as the transaction and incidental costs incurred.

Using funds with the lowest charging structures can, over the long term especially, translate to higher returns. Fidelity Index Europe ex UK, Fidelity Index Japan and Fidelity Index US all have highly competitive costs and aim to track the MSCI Europe ex UK Gross Total Return Index, MSCI Japan Net Total Return Index and S&P 500 Index  respectively.

Each fund uses full physical replication – a strategy that seeks to physically hold all or close to all of the securities of the particular index, with the approximate weightings of that index. They are available in either income units (where income from the underlying holdings is paid out) or as accumulation units (where income is reinvested for you).

In accordance with these changes L&G US Index has also been removed from the Adventurous Growth Foundation Portfolio, replaced by Fidelity Index US.

Please note that the removal of a fund from the Foundation Fundlist does not constitute a recommendation to sell.

Past performance is not a reliable guide to future returns. This website is not personal advice based on your circumstances. No news or research item is a personal recommendation to deal. Investment decisions in fund and other collective investments should only be made after reading the Key Investor Information Document or Key Information Document, Supplementary Information Document and Prospectus. If you are unsure of the suitability of your investment please seek professional advice.

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