A guide to cheapest index tracker funds _ This is Money invest in gold vs silver

Over the past 20 years they have developed a loyal band of followers who believe that trying to pick a fund manager, who will in turn try to beat the market, is too much of a gamble to deliver consistent investing success.

However, tracker funds was traditionally the name given to those that work like investment funds (called oeics and unit trusts in investing jargon), while etfs are traded on stock exchanges like ordinary shares.

The popularity of etfs has boomed in recent years, with the london stock exchange revealing there are now 300,000 ETF trades a month, compared to about 10,000 a decade ago. It says there are now 873 etfs available on the exchange.

Even the world’s most famous investor warren buffett has advocated the use of index funds – stating that the instructions on the estate he will leave for his wife is to put it 90% into index funds tracking error and charges: how good is your index fund?Invest in gold vs silver

Another danger is that as simple index funds also reflect the make-up of that index, they will hold companies and sectors proportionally to their size. Sometimes companies and sectors become huge, making up a big chunk of the index and leaving tracker investors highly exposed to individual stocks or sectors, as happened with banks in 2007. The cheapest index tracker funds

A standard global tracker will most probably include UK investments, so if you already have a tracker based on british stocks then it may be worth finding a global tracker that excludes them so you don’t double up.

You can invest direct with some providers or through a DIY investing platform, the latter will incur an extra charge for the platform but will allow you to manage all your investments together and keep them all within one isa wrapper, if you choose.Invest in gold vs silver

There is a trade-off between admin charges and dealing fees to be weighed up, along with whether your situation means you will be best with a flat or percentage fee. A flat fee tends to work out better when investing a large amount, while a percentage fee can be better for small investments.

You also have to decide on the type of products you want to invest in. Some platforms will be better for fund dealing, some will be better for shares and investment trusts, and some have a wider choice of products with annual management charges that have been negotiated down for customers.

But in less efficient markets, such as emerging markets and asia, or niche areas like smaller companies, stock-picking fund managers find it easier hunt out gems and therefore find it easier to beat trackers.You still need to spend some time picking a good manager though.Invest in gold vs silver

Over the past 20 years they have developed a loyal band of followers who believe that trying to pick a fund manager, who will in turn try to beat the market, is too much of a gamble to deliver consistent investing success.

However, tracker funds was traditionally the name given to those that work like investment funds (called oeics and unit trusts in investing jargon), while etfs are traded on stock exchanges like ordinary shares.

The popularity of etfs has boomed in recent years, with the london stock exchange revealing there are now 300,000 ETF trades a month, compared to about 10,000 a decade ago. It says there are now 873 etfs available on the exchange.

Even the world’s most famous investor warren buffett has advocated the use of index funds – stating that the instructions on the estate he will leave for his wife is to put it 90% into index funds tracking error and charges: how good is your index fund?Invest in gold vs silver

Another danger is that as simple index funds also reflect the make-up of that index, they will hold companies and sectors proportionally to their size. Sometimes companies and sectors become huge, making up a big chunk of the index and leaving tracker investors highly exposed to individual stocks or sectors, as happened with banks in 2007. The cheapest index tracker funds

A standard global tracker will most probably include UK investments, so if you already have a tracker based on british stocks then it may be worth finding a global tracker that excludes them so you don’t double up.

You can invest direct with some providers or through a DIY investing platform, the latter will incur an extra charge for the platform but will allow you to manage all your investments together and keep them all within one isa wrapper, if you choose.Invest in gold vs silver

There is a trade-off between admin charges and dealing fees to be weighed up, along with whether your situation means you will be best with a flat or percentage fee. A flat fee tends to work out better when investing a large amount, while a percentage fee can be better for small investments.

You also have to decide on the type of products you want to invest in. Some platforms will be better for fund dealing, some will be better for shares and investment trusts, and some have a wider choice of products with annual management charges that have been negotiated down for customers.

But in less efficient markets, such as emerging markets and asia, or niche areas like smaller companies, stock-picking fund managers find it easier hunt out gems and therefore find it easier to beat trackers.You still need to spend some time picking a good manager though.Invest in gold vs silver