Review by hdeakin299
submitted on 09 November 2012
Likes: Total full "on the road "costs said to be approx .7% which is very good :The AMC is very low bargain price : High proportionate TER may be inevitable at this low AMC level: No additional platform charges
Dislikes: The TER is 3 times the AMC
Jessica Brown wrote in the Sunday Times of 25 9 05 :"Fidelity ,claims to be offering investors the cheapest ever way into the UK market after slashing the annual fee on its tracker fund from 0.5% to just 0.1%".This index fund tracks the shares in the FTSE Actuaries All Share Index of 611 UK Companies.So this low price has been available for about 7 years.The sector is UK Large Cap Blended Equity.
A recent Fidelity (a PDF) publication, called "Fee transparency: Annual Fund Supermarket and Service Fees" confirms this fund has a 0.1% is the Annual Management charge : the document also gives information about the "Standard Fund Supermarket and Service Fee (%p.a.) : here Fidelity lists this as N/A for its own funds : so this appears to rule out any extra platform charges being applied to its own funds. The Total Expense Ratio (or TER) is 0.3% : still cheap but 3 times the basic Annual Management Charge (or AMC) .Overall the TER still appears cheap and on the right side of the 0.5% TER that I apply as a kind of watershed ( to sort out cheap from dear funds). And ,as the PDF indicates, as per above , platform charges appear to be taken out of the equation and this is confirmed on "The Fidelity Index Tracker Comparision Tool" where it is stated : "No additional monthly platform fee."
Fidelity has just launched "Compare Your Tracker.com" which deals with UK based trackers. In an article called "The Truth about Trackers" on this site Tom Stevenson writes : "In the case of Moneybuilder UK Index we have kept the total expense ratio (TER) to .3% , Which is one of the cheapest on the market." He continues "The total cost of running the fund TER plus transaction costs and sampling error ) amounts to approximately 0.7%." So this is a very rare case where the approximate total full "On the Road " cost/charges are known and published by Fidelity..
Press commentators awhile ago indicated that about 80% of the All-Share is made up of the same stocks as the 100 Index but apparently many years ago this percentage was a lot lower . Nowadays perhaps the tracking costs of these 2 Indexes are broadly similar . Only the very largest All-Share tracker funds fully replicate the whole Index because of the costs involved.To help reduce these costs the compromise is to partially replicate or mirror the Index .
This fund has a Manager called Matt Jones. The role of an All Share tracker manager is to ensure that the returns ,or lack of them , are broadly in line with those of the FTSE All-Share : in this case , the fund gives full replication of larger companies and uses sampling techniques to identify a sub set of liquid small cap stocks. Apparently different tracker funds use different replication methods such as "stratified sampling " which is a statistical tool allowing the manager to buy just some of the companies in an index that they feel are representative of the total.This is done to reduce dealing and other costs.But even though the costs can be reduced by using these partial replication and sampling techniques we do not know how much money is saved as we do not know the final "on the road" cost of this or indeed of any other tracker. At least , it is good to know these sampling techniques help reduce the costs.
This fund's advantage is that ,at least the identifiable charges (the TER) are known as being on the right side of the 0.5% "TER watershed" . As stated above , we do not know exactly how much dealing costs are reduced by the statistical techniques but it it is also true that full "on the road" costs for funds are never published . I think it makes it more important to keep those charges we do know about (ie the TER) as low as possible and in this case the TER is reasonable and so it gets a good rating overal
Review by moneyhoney
submitted on 08 November 2009
Likes: very low cost for a fund
Dislikes: sunk with the market!
I wanted a tracker fund as they seem to do better than most fund managers. Bought Fidelity because they seemed to have the lowest cost at the time. happy overall though wishing and waiting for markets to fully bounce back!
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