iShares UK Equity Index Fund

18 March 2022

3 minute read

One of the attractions of tracker funds is that investors are able to gain broad exposure to local stock markets all around the world. When it comes to the UK, the FTSE All-Share Index represents 98% of all companies listed on the London Stock Exchange, by valuation. As an investor wishing to gain exposure to the UK market, a tracker fund tracking the performance of this index makes sense.

Who's it for? All investors

Why would you invest in the shares of UK companies? The UK has had a tough few years, post the Brexit vote in 2016. And, just as the UK finally left the EU in January 2020, the economy was hit by the economic consequences of the global pandemic. But recently, a sense of confidence has returned to the UK stock market, on the back of a successful vaccine rollout and improving economic data. Maybe it’s time to think about reviewing the UK exposure in your investment portfolio?

Why invest in the UK?

The million dollar question! There are three key arguments that dominate why investors should look again at the UK market. Firstly, we are seeing UK companies spearheading immense innovation that is disrupting many different industries. In the financial services industry, for example, we are seeing new and growing companies focusing on the global payments and foreign exchange markets. These companies are taking profitable market share from the traditional large companies in this space.

Secondly, the shares of UK companies are seen as being cheap. When compared to global markets, the valuation of UK companies trade at a discount. Simplistically, this means a company listed in the UK typically trades at a discount to a similar company listed elsewhere in the world. While there’s no guarantee that this discount will disappear, cheaper share prices are often seen as an attractive entry point for investors taking a long-term view to investing.

Thirdly, the UK is seen as a particularly attractive target for mergers and acquisitions. As a result of the cheaper valuations that UK companies sit on, combined with the relatively low level of the pound, we have witnessed a surge in overseas companies bidding for, and buying, UK companies.

How to invest

To gain general exposure to the UK market, the iShares UK Equity Index Fund could be worth looking at. The iShares UK Equity Index Fund is a tracker fund, which means it is designed to deliver similar returns as the UK stock market. Being a tracker fund, it’s operated automatically rather than by a fund manager, which dramatically reduces its running costs.

FTSE All-Share Index

The iShares UK Equity Index Fund tracks the FTSE All-Share Index. This index represents a broad representation of the UK market. In fact, the fund invests in about 600 companies listed on the London Stock Exchange, which includes large, medium and smaller sized companies. This represents about 98% of the UK stock market, by valuation.

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.

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