Whether the current stock market rebound will continue is uncertain. But I do think shares, in general, will recover and go on to make new highs in the end.
So I’d approach investing today by drip-feeding regular money into the markets. One approach is to select individual company shares, but I see many advantages of buying low-cost tracker funds. In this article, I’ll name five of my favourites.
With tracker funds, we can achieve instant and wide diversification at low cost. And we can choose between Income units or Accumulation units. I’d choose the Accumulation version of each fund, which will automatically roll the dividends back in. In that way, I’ll be on the way to compounding my investment.
The Income version will pay the dividends in cash, and you can re-invest them manually wherever you like, or take them to spend or save. For me, the Income version will be handy when I’ve retired and need money to live on. I’d consider spreading my monthly investments over the following five funds.
Vanguard FTSE 100 Index
I think the FTSE index could be a decent vehicle for long-term investors. This fund will give you exposure to the underlying performance of the UK’s largest public limited companies such as HSBC, AstraZeneca, BP and British American Tobacco.
I view the FTSE 100 as generally offering a decent dividend yield, which will contribute to your gains from this tracker. Historically, the Footsie has always bounced back from its lows and I reckon there’s a good chance it will do so now.
HSBC FTSE 250 Index
To me, the UK market’s mid-cap index offers a greater orientation to growth than the FTSE 100. So I’d want to include an investment in the FTSE 250 within my overall portfolio. And this tracker would do the job.
With this fund, I’d get exposure to names such as GVC, Direct Line Insurance, Travis Perkins, Pennon and many more.
UBS S&P 500
There’s no denying the success of American businesses and the country’s stock market. Therefore, I’d want exposure to that ongoing success and the S&P 500 looks like a decent vehicle for achieving that.
You’ll find many well-known and successful names in the index such as Microsoft, Apple, Amazon, Facebook and many others.
Legal & General Pacific Index
This fund follows the FTSE World Asia Pacific Index, excluding Japan. We’ve seen a lot of fast-paced growth from that corner of the world, so I’d want to include the region in my portfolio.
The fund’s holdings include Taiwan Semiconductor Manufacturing, Samsung Electronics and AIA.
Vanguard Emerging Markets Stock Index
I’d consider allocating a portion of my funds to this tracker, which exposes us to up-and-coming emerging markets around the world.
The fund follows the performance of the Morgan Stanley Capital International (MSCI) Emerging Markets Index, which tracks companies in 25 emerging markets in Europe, Asia, Africa, Latin America, and Russia. Individual holdings include Alibaba, Tencent and Naspers.