Index trackers get even cheaper

At a time of ‘noflation’ in the UK, one item is going down in price.

The cost of investing using an index tracker is getting even cheaper, with the announcement today that Fidelity is making further cuts to the cost of its range.

From 1st October, the range of seven index trackers will experience a reduction in ongoing charges.

Starting at just 0.06% for the Fidelity Index UK fund (via their direct platform, Fidelity Personal Investing), Fidelity has also reduced the cost of its US, World, and Emerging Markets trackers.

It’s worth noting that other platform charges do apply, whether you invest directly or through an adviser such as Informed Choice.

The range of seven funds is also available on other platforms, where pricing will start at just 0.08% for the UK tracker and 0.09% p.a. for the US tracker.

While index tracker funds are still a small part of the overall investment fund industry, net annual sales have reached record highs.

According to the latest Investment Association figures, tracker funds recorded net sales of £4.9 billion in 2014, up from £3.4 billion in 2013.

Informed Choice features a couple of the Fidelity index trackers in client portfolios held on the Fidelity platform, so this is good news for our clients.

We consider cost as one factor when selecting suitable investment funds, alongside risk-adjusted returns, consistency and other factors.

We expect the cost of index trackers to continue to come down, which will hopefully also exert some downwards pressure on actively managed funds, especially as more investor cash is allocated to these lower cost investment vehicles.

Please note that nothing in this post is a recommendation to buy a specific fund.

You should always seek professional independent financial advice before making an investment decision.

The value of investment funds can go down as well up.