We reveal the most popular low-cost passive investments of the year.
Passive funds and exchange traded funds (ETFs) provide a good way of accessing stock markets at low cost.
Cheapness, however, is not their only attraction. Simplicity is another: investors – particularly those who are younger – favour the certainty offered by a fund that will do what it says on the tin. With active funds, in contrast, investors hope the manager outperforms the index; while some fund managers produce the goods time and again, various studies have shown the majority of active funds fail to achieve this goal on a consistent basis.
With index funds and ETFs it is possible to track everything from equities to gold or bonds – but what are the favourite passive investment choices of investors?
To find the answer we looked at data from our sister website interactive investor, to find out what the most-bought passive investments of 2019 have been. We looked at the number of buys that had taken place.
The Vanguard LifeStrategy fund range dominated, with three of its five trackers taking the top three spots. The LifeStrategy funds are global multi-asset passive funds that invest in various indices, with equity weightings of fixed proportions ranging from 20% to 100% and the balance held in bonds and cash. The Vanguard fund fee is low, at 0.22%.
Top of the most popular passive fund list is Vanguard LifeStrategy 80% Equity. In second place was the slightly more cautiously allocated Vanguard Life Strategy 60% Equity, while Vanguard LifeStrategy 100% Equity was in third position.
The fourth most-bought tracker fund was Vanguard FTSE Developed World FTSE ex UK, which as the name suggests specifically excludes the UK from being tracked.
The fifth most-bought tracker was Vanguard US Equity Index, which blindly follows the fortunes of the S&P Total Market index up and down.
Given that all the most-bought tracker funds focus to a large extent or exclusively on the US market, their largest individual holdings are the biggest constituents of the S&P 500: Apple, Microsoft and Amazon.
In terms of ETFs, it is a completely different story, with UK strategies much more popular among customers of interactive investor.
Top of the pile is the iShares Core FTSE 100 Ucits ETF GBP, which follows the fortunes of the FTSE 100 index. The ongoing charge figure is very low, coming in at 0.07%.
The second most popular ETF is the iShares Physical Gold ETC. Gold has been one of the star performers of 2019, with its safe haven qualities coming to the fore against a backdrop of an unpredictable White House, the rise of populism and deglobalisation.
Taking third place in the popularity stakes is Vanguard S&P 500 UCITS ETF, following by two UK-focused ETFs in fourth and fifth place respectively: Vanguard FTSE 250 UCITS ETF and Vanguard FTSE 100 UCITS ETF.
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