Fidelity UK Index Fund ISA

What is a Fidelity UK Index Fund ISA?

A Fidelity UK Index Fund ISA is a Stocks and Shares ISA that invests in the Fidelity UK Index Fund.

What is a Stocks and Shares ISA?

A Stocks and Shares ISA is a type of tax-free investment account that allows you to invest in the stock market via funds and shares.

ISAs are completely sheltered from income tax and capital gains tax.

This means your profits from investment growth and dividends are completely tax-free.

What is the Fidelity UK Index Fund?

The Fidelity UK Index Fund is an index fund (specifically an OEIC) managed by Fidelity.

You can invest in the fund via an investment platform, such as Hargreaves Lansdown or Fidelity’s investment platform, by purchasing units of the holding.

You can hold the fund in a Stocks and Shares ISA or a General Investment Account, and you can mix and match between other investment funds to diversify your portfolio.

What does the Fidelity UK Index Fund invest in?

As the fund is an index fund, also known as a tracker fund, it simply aims to track the performance of a specific index – specifically, the FTSE All-Share Mid-day (Gross Total Return) Index.

This means that the underlying holdings of the fund are not hand-picked by investment professionals. The fund simply invests proportionately in the holdings of the index, replicating the performance of that market as a whole.

The FTSE All-Share is an index of the London Stock Exchange and is effectively an aggregation of the 600+ companies listed on the main stock market, from the FTSE 100 through to the FTSE SmallCap.

Charges:

Because the fund doesn’t benefit from expert investment decisions, it means that the ongoing fund charges (OCF/TER) are considerably lower compared to Fidelity’s actively managed funds.

Fidelity’s UK Index fund’s ongoing charge is 0.06% per annum, whereas you would expect to pay in the region of 0.5% per annum for an actively managed fund.

An actively managed fund will aim to outperform its benchmark and make up for the charges in investment returns, but they are not always able to do so.

Risk level:

The fund is graded as higher risk, with a score of 6 out of 7 on the risk scale.

Although the fund’s performance is diversified across over 600 companies, some of them being the biggest companies in the UK, it also invests in many small UK companies that have more volatile share prices.

Also, as the fund isn’t actively managed, it can’t take any preventative investment decisions to avoid poorly performing companies.

How do I open a Fidelity UK Index Fund ISA?

1. Open a self-select Stocks and Shares ISA (also known as a DIY or self-invested ISA)

You can do this via an investment platform provider online, and the process takes from 10 to 15 minutes.

2. Contribute up to £20,000 into your ISA

You can add money with a debit card lump sum payment, or with a monthly direct debit.

3. Buy units in the Fidelity UK Index Fund

Find the Fidelity fund through your online platform and invest.

Can I transfer an existing ISA into a Fidelity UK Index Fund ISA?

You can transfer existing Stocks and Shares ISAs or Cash ISAs that you’ve opened in previous years into a new ISA and invest in the Fidelity UK Index Fund.

ISA transfers don’t count towards your allowance, so you can transfer your old ISAs but also invest £20,000 of new money on top if you wish.

How to transfer a previous year’s ISA to your new one:

1. Contact your new ISA provider to obtain an ISA transfer form

2. Complete the form and return it to your ISA provider

3. Your new provider will complete the transfer for you

4. Once done, you can invest your ISA money into the Fidelity UK Index Fund via the platform