In this article we look at some of the cheapest ways to access markets across the globe using your 2020-21 and 2021-22 allowance.
Exchange traded funds (ETFs) are a great way of investing in funds at low cost.
Below is a summary of some of the cheapest ETFs in the market which you can invest on a monthly basis from £25pm or via a lump sum in an ISA.
The FTSE 100 is a good place to start with the largest companies by capitalisation featuring in the index including companies such as AstraZeneca, Unilever and Barclays.
Another low cost ETF tracker to consider is from Legal & General. The L&G UK Equity ETF (LSE: LGUK) tracks the Solative Core UK large and mid cap index composed of 104 companies. The fund ongoing charge is a very low 0.05%.
A very low cost way to get exposure to European companies is through HSBC EURO STOXX 50 ETF (LSE:H50E) and Invesco EURO STOXX 50 ETF (LSE:SX5S) both with low ongoing charges of 0.05%. Both funds provide access to the largest 50 companies from 11 countries in the Eurozone.
Moving across the pond if you are looking to invest in the US market then Invesco MSCI USA ETF (LSE: MXUS) and Invesco S&P 500 ETF (LSE: SPXP) both offer investors access to the S&P 500 and the MSCI USA index at a very low ongoing charge of 0.05%.
You can access the second largest economy through Franklin FTSE China UCITS ETF (LSE:FRCH) which tracks the FTSE China 30/18 Capped Index which comprises 872 Chinese firms. The fund has an ongoing charge of 0.19%. Another option for investing in China is via the Lyxor MSCI China ETF (LSE:LCCN) which tracks the MSCI China Index and has an ongoing charge of 0.29%.
To gain exposure across the Asia Pacific zone then a low cost option is via L&G Asia Pacific ex Japan Equity ETF (LSE:LGAP) which tracks the Solactive Core Developed Markets Pacific ex Japan Large and Mid Cap index, with over 50% exposure to Australian companies followed by Hong Kong with 20% exposure. The fund has an ongoing charge of 0.11%.
The Xtrackers Nikkei 225 ETF (LSE:XDJP) is a cheap way of accessing the Japanese market tracking stocks from top performing blue chip companies based in Japan. The fund has an ongoing charge of 0.09%. Another option for investors is the L&G Japan Equity ETF (LSE:LGJP) which tracks the Solactive Core Japan Large & Mid Cap Index and has an ongoing charge of 0.10%.
To access emerging markets you will typically pay a bit more on an ongoing basis. HSBC MSCI Emerging Markets ETF GBP (LSE:HMEF) tracks around 1400 large and mid cap companies and offers investors good value with an ongoing charge of 0.15%. Another fund to consider is the iShares Core MSCI EM IMI ETF (LSE:EIMI) tracking the MSCI Emerging Markets Investable Market Index and tracks over 3,000 companies including smaller stocks.
If you are looking for global exposure then SPDR MSCI World ETF (LSE:SWRD) is worth a closer look. The fund tracks the MSCI World Index which is comprised of approximately 1,500 companies across 23 developed markets and you can access at a low ongoing charge of 0.12%.
For a global fund that has exposure to emerging markets, then the Vanguard FTSE ALL-World UCITS ETF (LSE: VWRD) is worth considering with an ongoing charge of 0.22%.
ETF Investment via an ISA
An investment or stocks and shares ISA as they are often called is a “tax wrapper” that allows you to invest in different types of investments e.g. funds to individual shares to help you save any profits you make from tax.
If you are investing in a ETF fund and you have not used your current annual allowance which is currently £20,000 (For the 2020-21 and 2021-22 tax years) then it makes sense to benefit from this tax free wrapper.
For more on ETF ISAs click here
As with all investing you need to be comfortable that the value of your investment migh go down as well as up.