Best Index Tracker Funds for 2022

• MSCI World Index is a benchmark for global funds of all shapes and sizes. The index covers large and medium-sized companies across 23 developed markets. Investors’ cash in this Fidelity fund will flow into over 1,500 stocks across the globe
• In common with most stock indices, MSCI World is weighted by the size of the companies in the markets it tracks
• Given the huge success and high share prices of companies such as Apple, Alphabet and Microsoft, a lot of this fund is held in the US market (currently over two-thirds)
• These so-called Silicon Valley tech titans trade at quite lofty valuations adding a risk to investors by being exposed to such a large slice of the US market.
• On the flipside, the US stock market has gone from strength to strength of late. Similar performance in the future is not guaranteed, though.

0.12% per annum

Index tracking or ‘passive’ investing is all about low cost and simplicity. The Fidelity Index World fund offers both. A good option for investors who simply want exposure to global markets but don’t want to spend a lot of time picking a fund.

• The FTSE 100 is the UK’s index of leading companies traded on the London Stock Exchange. The index only contains 100 companies but, because of their size, these make up around 80% of the value represented by the main London market.
• The FTSE 100 is tilted significantly to companies found in sectors such as financials, oil, gas and mining
• These sectors are sensitive to the economic outlook so, by extension, the FTSE 100. This means it has lagged behind its international peers in recent years, though it has enjoyed a resurgence of late, with the nation’s emergence from the pandemic, along with rising energy prices.
•  This fund is highlighted for one simple reason, namely, its ability to generate income. The banks, insurance companies and mining giants of the FTSE 100 might not boast the same growth trajectory as the likes of Apple and Amazon in the US, but they do have a tradition of paying dividends to investors.

0.07%

Investors looking for an income thanks to a current yield of 3.5% (variable) and a low annual fund charge which barely eats into the payout.

• So-called ‘emerging markets’ tend to be grouped together as one investment sub-set. But beneath this umbrella term is a diverse range of countries, which are simply at a similar stage of development.
• Markets covered by this fund include resource-rich countries such as Brazil and South Africa, as well as populous industrial powerhouses such as China and South Korea.
• At around 80%, Asian countries dominate the make-up of this fund because that is where the biggest stock market value of emerging markets lies. Countries in this continent are influenced by two main economies: China and India. This can lead to volatility – when the world economy deteriorates, it’s normally emerging markets that take the first big hit, as global investors flee higher-risk areas.
• But many of these countries have a young and plentiful working age population. Combined with burgeoning middle classes, both factors should help deliver strong economic growth and hence stock market appreciation over the long term. Investors may, however, wish to buckle up for a bumpy ride along the way.

0.18%

Adventurous investors looking to branch out and gain exposure to global emerging markets from Brazil to Taiwan.

• ETCs such as this one have made it easy to buy, sell and hold gold through a trading account.
• Importantly, this fund is backed by physical gold that is held in a secure vault on behalf of investors. Other ETCs offering exposure to commodities do so using futures contracts rather than holding the physical substance, which can add to costs and complexity.
• Gold offers no income and has no intrinsic value beyond what someone is willing to pay for it. Despite this, itl has become a conventional way of diversifying a portfolio.
• Its price tends to rise in times of financial stress. That doesn’t prevent it from being a volatile commodity, however. It should never make up more than a maximum of 10% within a portfolio, simply acting as some insurance for the rest of your assets.

0.12%

A simple and cost-effective way for retail investors to gain exposure to gold.

• Socially responsible investing has become commonplace in recent years as a result of heightened focus from government, campaigners and consumers on issues such as climate change.
• Many individuals are now choosing to invest their money based on environmental, social and governance(ESG) considerations.
• This ETF tracks an index of stocks from across the globe, around 400 companies in total. It features a heavy weighting to the US because that’s where the most valuable businesses can be found.
• What’s different about the index this ETF follows however, is that it excludes companies with material involvement in certain industries, most notably oil, gas and coal mining, but also tobacco, gambling and armaments.
• It also excludes companies which fail to meet minimum standards in terms of ESG practices.

0.2%

Investors looking for a low-cost means of gaining exposure to global stock markets featuring companies run in an ethical way.