If you simply wish to follow markets rather than the whims or judgements of individual fund managers, you can of course buy tracker funds. These are now available for all the main regional and local markets in the world. They come in three forms: unit trusts, investment trusts and exchange traded funds (ETFs).
ETFs are a relatively recent import from the US. They are similar to investment trusts, in that they can be bought and sold like ordinary shares. But their main attraction is that their charges tend to be lower than those of trusts, because they are less expensive to manage. In theory, index funds should give you the same return as an index, minus costs. So other things being equal, the fund with the lowest expenses should do best over time.
New types of ETF are multiplying all the time. Managers seem to revel in dreaming up wacky names for them. In the US, the first ETF to track the S&P500 index was called the Spider. More recent arrivals include Webs, Diamonds and Qubes. Here in the UK, Barclays Global Investors were first off the mark with iShares.
The key point to bear in mind is that all of these funds are managed by specific companies according to different terms and conditions. As ever, you should not make any investment unless you are fully aware of the risks, terms and conditions, and completely satisfied that the product in question is suitable for you. If you are unsure, your best course is to seek professional advice.
You can find index tracker trusts listed on trustnet.com under 'Indexed Funds'. Trackers are available for all the main FT indices - the Footsie, the All-Share, the SmallCap, the Fledgling and Techmark - as well as various indices for America, Europe, Japan and the world as a whole.
If you want to get right down to tracking individual countries, for the moment you will have to open a dollar account and buy your ETFs in the States. The Americans are way ahead of us in this as in most other financial matters. Stateside ETFs currently cover all separate sectors of the American market and most individual markets of any size in Europe, Asia and the US itself.
Recommend ReadingBook offers!
