A fully flexible way to invest
3 minute read
Diversifying your investment portfolio is an important way of mitigating risk. This is because it offers you the ability to benefit from many different markets around the world, rather than relying on just one. A simple way to do this is to invest in a tracker fund that tracks the performance of global markets.
Who's it for? All investors
Here’s a tracker fund that invests in the shares of companies from around the world. The aim of the fund is to track the performance of the MSCI World Index, which covers about 1,500 of the world’s largest companies. The fund does not invest in emerging markets. This may be a good thing if you already have an emerging market fund, or if you decide that emerging markets is not your thing. Alternatively, you may wish to look at an emerging market fund to invest in alongside this, to give full exposure to global markets.
A UK fund is likely to hold a wide number of stocks from a broad set of different British industry sectors. But a global fund can help diversify your investment portfolio. Global funds can invest in companies in any country, giving you exposure to regions such as Asia and America as well as markets closer to home in Europe. By investing further afield you can gain exposure to more markets that can help provide a better balance of sectors and industries, further helping with diversification.
For example, most of the biggest technology companies have their headquarters in the US, whilst Japan is home to many companies at the forefront of high-tech manufacturing. Such sectors tend to be less prominent in the UK.
Two of the major benefits to investors are lower costs and their simplicity. Tracker funds (also knowns as passive funds) operate automatically rather than by a fund manager, which dramatically reduces their running costs. This means the ongoing cost of a tracker fund can be significantly lower than the cost of an actively managed fund that invests in the same market. As a result, tracker funds can offer an attractive cost-effective option to use as a key part of a diversified portfolio.
Tracker funds are simple. They aim to track the performance of the market they invest in by investing in the shares that make up that market. The Fidelity Index World Fund aims to track the performance of the MSCI World Index, which means it will invest in all the companies that make up this index which, as of the end of November 2021, was 1,538 names. The fund will automatically adjust those holdings daily to ensure it always looks the same as the index, and hence performs the same.
If you are looking to gain general exposure to the global equity market, the Fidelity Index World Fund could be worth looking at. If passive funds appeal to you, you may wish to look at the tracker funds in the Barclays Funds List. We have selected 12 tracker funds which allow you to track the performance of different investment sectors at a low cost. Find out more information on these funds.
The tracker funds on our Funds List are selected solely on cost – those featured are simply the cheapest available tracker fund we offer in each sector where a relevant product is available. The funds included in this selection are reviewed every six months, in June and December.
Correct at the time of publishing.
To diversify your investment, you may like to consider our own Barclays Ready-made Investments (RMI). The RMI are just one example of a range of diversified funds which allow you to select the level of risk you are most comfortable with. These Barclays multi-asset funds invest in passive funds across a range of asset classes and regions, offering a globally diversified solution for investors. Ready-made Investments are not the only funds that we offer and they won’t be appropriate for everyone.
Past performance of the fund and its manager are not a reliable indicator of their future performance.
We don’t offer personal investment advice so if you’re unsure you should seek that independently.
Funds are designed for the long term so you should only consider them if you can stay invested for at least five years.
These are our current opinions but the future, as ever, is uncertain and outcomes may differ.
Read the Assessment of Value report [PDF, 3.2MB] for funds run by Barclays.
The value of investments can fall as well as rise. You may get back less than you invest. Tax rules can change and their effects on you will depend on your individual circumstances.
A fully flexible way to invest
A simple and tax efficient way to start investing
Boost your savings by investing up to £20,000 in our Investment (Stocks & Shares) ISA per year completely tax-free.