Best Low Cost S&P Index Fund Options

Discussion in 'Pensions' started by Hubert, Jan 7, 2017.

  1. Hubert

    Hubert Registered User


    New joiner to AAM.

    Am self employed and manage my own pension, aged 40. Read a lot of investment books but no way a guru. Am satisfied with my approach which is to focus on low cost index linked funds/ETFs rather than more expensive actively managed products. I keep a small amount on the side to gamble.

    I minimise trading activity and try to keep my all in pension costs as low as I can. That means a friendly trustee who really couldn't do it any cheaper, a telephone execution account only with Davy and avoiding the general industry hard sell like the plague.

    I'm looking for views on the best S&P 500 low cost index fund/ETF with decent cororelation and above all currency protection. Not sure I have the stomach for longer term EUR/USD risks looking for a product that will provide hedging also.

    I sold out my pension investments (mainly ETFs which did well but then anyone with a heartbeat couldn't have gone wrong the last few years) and put the vast majority into a Rabo direct deposit this time last year and have sat on it. I think markets overvalued but am taking a 20 year plus view with my pension so have decided to put a portion into a low cost S&P fund/ETF. I plan to drip it in over the next 24-36 months and forget about it for 20 years bar monitoring it.

    Appreciate any advice on best products to look at.
  2. Markel

    Markel Registered User

    Vanguard are reliable and cheap
  3. SBarrett

    SBarrett Frequent Poster

    Hedging is going to come at a cost. The volatility of the underlying assets tends to be greater than the volatility of the currency, so hedging will not reduce your risk by much.

    You can go with Vanguard, Blackrock, State Street. All large ETF providers.

  4. darag

    darag Frequent Poster

    Don't waste money hedging the currency "risk" - most of the S&P 500 index is composed of large multinationals so there is a negative correlation between the index and the currency which provides a natural hedge. You could see this effect after the Brexit vote, GBP fell sharply but the FTSE100 (dominated by multinationals) jumped so the value in EUR of FTSE exposure didn't move greatly.

    I guess this currency risk idea dates from a time when the world was less globalized or for investing in smaller companies who only make profit locally.
    rob oyle likes this.