Low-cost index funds and ETFs that will save you money

This is our updated list of low-cost index funds and ETFs that can help UK investors crush their portfolio costs.

Every pound you save in management fees is a pound that snowballs over the years and speeds you towards your financial goals.

Hammering down charges is therefore absolutely vital. Our piece on management fees explains how even small savings add up to a big difference.

A growing recognition of the central importance of investment fees has driven explosive growth in low-cost index funds and Exchange Traded Funds (ETFs) over the past decade or so. These funds are the best value investment vehicles available and the right choice for passive investors.

Low-cost index funds and ETFs – how we choose them

Our list is broken down into the main sub-asset classes you may wish to invest in.

The picks per asset class are ordered purely by cost, as measured by the Ongoing Charge Figure (OCF).

There are other factors to consider when buying a low-cost index fund. So it’s always worth reading any documentation to make sure a given fund fits your bill.

You can precisely identify the fund you’re after by using the ISIN codes or ETF tickers we give in brackets.

We’ve occasionally included actively managed options when low-cost index funds are not available. We don’t include platform exclusive funds as they’re generally not a good deal overall.

Right, let’s go grab some bargains!

UK large cap equity

Cheapest

HSBC FTSE All Share Index Fund Institutional (GB0030334345) OCF 0.02%

Next best

Lyxor Core Morningstar UK ETF (LU1781541096) OCF 0.04%

L&G UK Equity ETF (IE00BFXR5R48) OCF 0.05%

iShares UK Equity Index Fund D (GB00B7C44X99) OCF 0.05%

Fidelity Index UK Fund P (GB00BJS8SF95) OCF 0.06%

HSBC FTSE All Share Index Fund C (GB00B80QFX11) OCF 0.06%

Vanguard FTSE UK All Share Index Unit Trust (GB00B3X7QG63) OCF 0.06%

The L&G ETF has a socially responsible investing (SRI) remit.

UK mid cap equity

Cheapest

Amundi Prime UK Mid and Small Cap ETF (PRUK) OCF 0.05%

Next best

Vanguard FTSE 250 ETF (VMIG) OCF 0.1%

HSBC FTSE 250 Index Fund C (GB00B80QG052) OCF 0.12%

UK small cap equity

There are no good low-cost index funds available for the UK small cap asset class. The iShares ETF listed below is more an expensive FTSE 250 tracker. Our other suggestions are active funds and are shown as a selection of what’s available rather than a comprehensive survey.

Cheapest

Schroder Institutional UK Smaller Companies Fund (GB0007893984) OCF 0.52%

Next best

iShares MSCI UK Small Cap ETF (CUKS) OCF 0.58%

JP Morgan UK Smaller Companies Fund (GB0031835001) OCF 0.6%

Baillie Gifford British Smaller Companies B Fund (GB0005931356) OCF 0.67%

UK equity income

Cheapest

Vanguard FTSE UK Equity Income Index Fund (GB00B59G4H82) OCF 0.14%

Next best

WisdomTree UK Equity Income ETF (WUKD) OCF 0.29%

SPDR S&P UK Dividend Aristocrats ETF (UKDV) OCF 0.3%

World equity – developed world and emerging markets (total world)

Cheapest

HSBC FTSE All-World Index Fund C (GB00BMJJJF91) OCF 0.13%

Next best

Fidelity Allocator World Fund W (GB00B9777B62) OCF 0.20%

iShares MSCI ACWI ETF (SSAC) OCF 0.20%

Vanguard FTSE All-World ETF (VWRP) OCF 0.22%

Vanguard LifeStrategy 100% Equity Fund (GB00B41XG308) OCF 0.22%

Vanguard FTSE Global All Cap Index Fund (GB00BD3RZ582) OCF 0.23%

Vanguard LifeStrategy and Fidelity Allocator invest in other index trackers. Fidelity invests in REITs and small caps.

World equity – developed world only

Cheapest

Amundi Prime Global ETF (PRIW) OCF 0.05%

Next best

L&G Global Equity ETF (LGGG) OCF 0.1%

Lyxor Core MSCI World ETF (LCWL) OCF 0.12%

Vanguard FTSE Developed World ETF (VHVG) OCF 0.12%

SPDR MSCI World ETF (SWLD) OCF 0.12%

iShares Developed World Index Fund D (IE00BD0NCL49) OCF 0.12%

Fidelity Index World Fund P (GB00BJS8SJ34) OCF 0.12%

The L&G ETF has an SRI remit.

World ex-UK equity

Cheapest

L&G International Index Trust I Fund (GB00B2Q6HW61) OCF 0.13%

Next best

Vanguard FTSE Dev World ex-UK Equity Index Fund (GB00B59G4Q73) OCF 0.14%

Aviva Investors International Index Tracking SC2 Fund (GB00B2NRNX53) OCF 0.25%

You can also pick ‘n’ mix using individual US, Europe ex-UK, Japan, and Pacific ex-Japan trackers.

World income equity

Cheapest

Vanguard FTSE All-World High Dividend Yield ETF (VHYG) OCF 0.29%

Next best

Xtrackers MSCI World High Dividend Yield ETF (XDWY) OCF 0.29%

iShares MSCI World Quality Dividend ETF (WQDS) OCF 0.38%

Vanguard Global Equity Income Fund (GB00BZ82ZW98) OCF 0.48%

The Vanguard fund is active but gives you a non-ETF option.

World small cap equity

Cheapest

L&G Global Small Cap Index Fund (IE00BG0VVG79) OCF 0.2%

Next best

UBS (Irl) ETF – MSCI World Small Cap Socially Responsible (WSCR) OCF 0.23%

Vanguard Global Small-Cap Index Fund (IE00B3X1NT05) OCF 0.29%

iShares MSCI World Small Cap ETF (WSML) OCF 0.35%

Emerging markets equity

Cheapest

Amundi Prime Emerging Markets ETF (PRAM) OCF 0.1%

Next best

Lyxor MSCI Emerging Markets ETF (LEMA) OCF 0.14%

HSBC MSCI Emerging Markets Index ETF (HMEF) OCF 0.15%

iShares Emerging Markets Equity Index Fund (GB00B84DY642) OCF 0.19%

Socially responsible investing

Cheapest

L&G UK Equity ETF (IE00BFXR5R48) OCF 0.05%

Next best

L&G Global Equity ETF (LGGG) OCF 0.1%

HSBC Emerging Market Sustainable Equity ETF (HSEF) OCF 0.18%

Vanguard ESG Developed World All Cap Equity Index Fund (IE00B76VTN11) OCF 0.2%

The SRI (or ESG) options above are meant to enable you to build a complete SRI portfolio, as opposed to us just listing the top three our four funds with the lowest OCF from any old category.

Multi-factor – Global

Cheapest

JPMorgan Global Equity Multi-Factor ETF (JPLG) OCF 0.2%

Next best

Invesco Global ex UK Enhanced Index Fund Y (GB00BZ8GWR50) OCF 0.23%

HSBC Multi Factor Worldwide Equity ETF (HWWA) OCF 0.25%

Amundi ETF Global Equity Multi Smart Allocation Scientific Beta ETF (SMRU) OCF 0.4%

iShares Edge MSCI World Multifactor ETF (FSWD) OCF 0.5%

All factor investing is effectively straying into active management territory. Essentially, you hope that your chosen subset of the market can outperform. The important thing is to choose products underpinned by sound financial theory, a verifiable set of rules, and a commitment to low costs.

Regional ETFs are available. But we’ve stuck to global multifactor products for simplicity.

Property – UK

Cheapest

iShares UK Property ETF (IUKP) OCF 0.4%

iShares MSCI Target UK Real Estate ETF (UKRE) OCF 0.4%

Next best

No index fund alternative

Property – global

Cheapest

iShares Global Property Securities Equity Index Fund D (GB00B5BFJG71) OCF 0.17% 

Next best

L&G Global Real Estate Dividend Index Fund I (GB00BYW7CN38) OCF 0.2

Amundi ETF FTSE EPRA/NAREIT Global ETF (EPRA) OCF 0.24%

HSBC FTSE EPRA/NAREIT Developed ETF (HPRO) OCF 0.24%

SPDR Dow Jones Global Real Estate ETF (GLRA) OCF 0.4%

The SPDR ETF includes emerging markets exposure.

All-commodities

Cheapest

L&G All Commodities ETF (BCOM) OCF 0.15%

Next best

Invesco Bloomberg Commodity ETF (CMOD) OCF 0.19%

iShares Diversified Commodity Swap ETF (COMM) OCF 0.19%

WisdomTree Broad Commodities ETF (COMX) OCF 0.19%

Gold

Cheapest

Invesco Physical Gold A ETC (SGLP) OCF 0.12%

WisdomTree Core Physical Gold ETC (GLDW) OCF 0.12%

Xtrackers IE Physical Gold ETC (XGDU) OCF 0.12%

Gold trackers are Exchange Traded Commodities (ETCs).

UK Government bonds – intermediate duration

Cheapest

Lyxor Core FTSE Actuaries UK Gilts ETF (GILS) OCF 0.05%

Next best

Invesco UK Gilts ETF (GLTA) OCF 0.06%

Vanguard UK Gilt ETF (VGVA) OCF 0.07%

iShares Core UK Gilts ETF (IGLT) OCF 0.07%

Fidelity Index UK Gilt Fund P (GB00BMQ57G79) OCF 0.1%

iShares GiltTrak Index Fund (IE00BD0NC250) OCF 0.1%

UK Government bonds – long

Cheapest

Vanguard UK Long-Duration Gilt Index fund (GB00B4M89245) OCF 0.12%

Next best

SPDR Bloomberg Barclays 15+ Year Gilt ETF (GLTL) OCF 0.15%

iShares Over 15 Years Gilts Index Fund (GB00BF338G29) OCF 0.16%

UK Government bonds – short

Cheapest

Lyxor FTSE Actuaries UK Gilts 0-5Y ETF (GIL5) OCF 0.05%

Next best

Invesco UK Gilt 1-5 Year ETF (GLT5) OCF 0.06% 

L&G UK Gilt 0-5 Year ETF (UKG5) OCF 0.06% 

iShares UK Gilts 0-5 ETF (IGLS) OCF 0.07%

UK Government bonds – index-linked

Cheapest

Lyxor Core FTSE Actuaries UK Gilts Inflation-Linked ETF (GILI) OCF 0.07

Next best

iShares £ Index-Linked Gilts ETF (INXG) OCF 0.1%

iShares Index Linked Gilt Index Fund D (GB00B83RVT96) OCF 0.11%

Vanguard UK Inflation Linked Gilt Index Fund (GB00B45Q9038) OCF 0.12%

Total global bonds hedged to £ (government and corporate)

Cheapest

iShares Core Global Aggregate Bond ETF (AGBP) OCF 0.1% 

SPDR Bloomberg Global Aggregate Bond ETF (GLAB) OCF 0.1%

Vanguard Global Aggregate Bond ETF (VAGS) OCF 0.1%

Next best

Vanguard Global Short Term Bond Index Fund (IE00BH65QG55) OCF 0.15%

Vanguard Global Bond Index Fund (IE00B50W2R13) OCF 0.15% 

All hedged back to Sterling.

Global inflation-linked bonds hedged to £

Cheapest

Lyxor Core Global Inflation-Linked 1-10Y Bond ETF (GISG) OCF 0.2%

iShares Global Inflation Linked Government Bond ETF (GILG) OCF 0.2%

Next best

L&G Global Inflation Linked Bond Index Fund I (GB00BBHXNN27) OCF 0.23%

Xtrackers Global Inflation Linked Bond ETF (XGIG) OCF 0.25% 

Sanlam Global Inflation Linked Bond Fund X (IE00B7VQTF30) OCF 0.26%

Royal London Short Duration Global Index Linked Fund M (GB00BD050F05) OCF 0.27%

All are short and intermediate options, hedged back to Sterling. Royal London and Sanlam funds are active.

UK corporate bonds

Cheapest

iShares UK Credit Bond Index Fund (IE00BD0NC474) OCF 0.1%

Next best

iShares Corporate Bond Index Fund (GB00B84DSW83) OCF 0.11%

Vanguard UK Investment Grade Bond Index Fund (IE00B1S74Q32) OCF 0.12%

iShares Core £ Corporate Bond ETF (SLXX) OCF 0.2%

Concluding thoughts on low-cost index funds and ETFs

There’s often little to distinguish index trackers that are closely matched in price. However we have previously written two pieces to help you resolve tie-breaker situations:

Comparing funds
Why tracking difference is important

If you’re looking for the cheapest place to buy and hold these funds then take a look at our cheapest broker comparison table.

Our article on designing your own asset allocation will help you construct your own portfolio. If you want a quick shortcut, you can do a lot worse than picking a fund-of-funds for an instant portfolio solution.

We update this list periodically. Quoted OCFs may date, as fund groups fight their turf wars by undercutting each other (hurrah!) but this article should still prove an excellent starting point for your research.

If anyone comes across any better index tracker options I’d love to hear about them in the comments below.

Take it steady,

The Accumulator

Note: Some comments below may refer to an older collection of low-cost index trackers. Scroll down for the latest thoughts.

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A choice of cheap index trackers to help passive investors craft their portfolios
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