Best Index Trackers

S

SL100

Guest
Hi,

I have been looking at Index Trackers in the UK and in Ireland.

In the UK the cheapest trackers identified by Motley Fool are:

Db x-trackers FTSE 100 ETF(XUKX) (TER 0.30%, fund is ETF)
Lyxor ETF FTSE 100 (L100) (TER 0.30%, fund is ETF)
Liontrust Top 100 (TER 0.38% fund is UT/OEIC)
iShares FTSE 100 (LSE: ISF) (TER 0.40%, fund is ETF)
Prudential UK Index Tracker (TER 0.50%, fund is UT/OEIC)

Three questions:

- is there somewhere that I can view TER comparisons for trackers open to Irish Residents?
- do any Irish funds come close to these low costs?
- has anyone invested in a UK based tracker (FTSE for example) as an Irish resident and what are the tax implications?

Any help greatly appreciated!
 
Hi,

I would answer your questions as follows;

(i) You need to distinguish between trackers that are listed on the stock markets (which are ETFs) and trackers that are non-listed like the Liontrust and Prudential ones you outline. The ease with which you can obtain information on listed tracker funds is far greater than for the non-listed. In addition, you can hold a variety of ETFs in the same stockbroking account whereas when you start buying non-listed funds you may have to deal individually with the Pru and Liontrust. That said, I know in the UK that non-listed funds are available through platforms where you can buy and sell a variety of funds through that single platform. You would have to open a separate account with one of those platform operators. Cumbersome in my view.

ETFs can be viewed at the relevant sponsors web site and most of the detailed information you may want is there like the TER, stock holdings, dividend payments etc. Just pop Lyxor ETFS or iShares ETFs or db x-trackers ETFs into google and the relevant web site should present itself.

(ii) Some of the Irish fund managers have tracker funds. They are non-listed funds so you would need to deal through an intermediary and best to check his and the fund manager's costs. It is very hard for the Irish-based trackers to compete with ETFs, cost wise.

(iii) As an Irish resident, the tax implications of buying a UK tracker fund (ETF or otherwise) are no different than buying into an Irish-based fund. There are a few minor exceptions but you are fine with tracker funds listed on any of the developed markets like UK, Europe, US etc.
 
One other thing you might consider is counterparty risk from the different structures of ETFs. This link from iShares explains it: [broken link removed] .
Basically, if you invest in a cash/physical-based ETF the fund buys all or most of the equities in the underlying index. With a swap-based ETF you buy the performance of the index not the underlying securities, and are exposed to the risk that the counterparty may e.g. go insolvent. [UCITS regulations limit this exposure to 10% of the fund’s NAV.] So, depending on your views on counterparty risk you might wish to take the fund structure into account in making your selection.
[Disclaimer: The above is comment / observation and is not a recommendation to follow any particular investment strategy or to buy / not buy any particular fund.]
 
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