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Legal & General cuts tracker costs in passive price war

US and UK shares trackers now cost 0.1%, and just 0.06% on Hargreaves Lansdown.

 

by Daniel Grote on Oct 30, 2014 at 15:17

Legal & General cuts tracker costs in passive price war

Legal & General (L&G) has cut charges across its tracker fund range, firing another shot in the ongoing price war among passive investment providers.

Charges for the L&G UK 100 Index, UK Index and US Index funds, which track the FTSE 100, FTSE All-Share and FTSE World USA indices respectively, have been cut to 0.1%. The charges relate to the platform share classes of the funds, meaning investors will still pay the platform charge.

Meanwhile online stockbroker Hargreaves Lansdown has secured even cheaper charges for its clients. L&G's US and UK trackers will cost just 0.06% on its platform. That makes them the cheapest passive funds in the UK, although investors with portfolios of less than £250,000 will pay a 0.45% platform charge to Hargreaves.

L&G has made the biggest price reduction to its International Index fund, which tracks the FTSE World ex-UK index, dropping the charge from 0.31% to 0.14%. Investors on Hargreaves Lansdown will pay 0.09% for this fund, meaning it becomes the cheapest passive for global shares exposure.

Hargreaves Lansdown has also secured discounts to L&G's All Stocks Gilt and Index Linked Gilt funds, which it will offer at 0.1%, and the Global Inflation Linked Bond Index fund, which it will offer at 0.17%.

'Price is a key factor in the popularity of index funds and we are delighted to be able to bring to market a highly competitive set of new prices on a comprehensive range of asset classes,' said L&G's Honor Solomon.

Hargreaves Lansdown head of passive investing Adam Laird added that L&G's move represented 'the latest in a string of price cuts' for passive investors, who have been growing in number. 'Assets have grown 25% in the last year, and over half of September's retail fund sales went into index trackers,' he said.

Here are L&G's price cuts in full:

Tracker fund

Old price 

New price 

Index tracked

L&G All Stocks Gilt Index

0.18

0.15

FTSE Actuaries Govt Securities All Stocks 

L&G All Stocks Index Linked Gilt Index

0.18

0.15

FTSE Actuaries Index-Linked (All Stocks)

L&G European Index

0.20

0.12

FTSE World Europe ex-UK 

L&G Global 100 Index

0.26

0.14

S&P Global 100

L&G GEM Index

0.43

0.33

FTSE All World Emerging 

L&G International Index

0.31

0.14

FTSE World ex-UK

L&G Japan Index

0.19

0.15

FTSE World Japan

L&G Pacific Index

0.22

0.19

FTSE World Asia Pacific ex-Japan

L&G Short Dated Stlg Corp Bond

0.21

0.15

Markit iBoxx Sterling Corporates 1-5

L&G Sterling Corporate Bond

0.19

0.15

Markit iBoxx Sterling Non-Gilts ex-BBB 

L&G UK 100 Index

0.18

0.10

FTSE 100

L&G UK Index

0.17

0.10

FTSE All-Share 

L&G US Index

0.18

0.10

FTSE World USA 

2 comments so far. Why not have your say?

16

Oct 30, 2014 at 18:07

It is the platform charge that matters

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Bestmate

Nov 05, 2014 at 14:53

> 16

Sure the platform charge is the greater part but these reductions still matter. A tracker is a tracker and generally speaking the least expensive gets your cash. Not so with the platform provider however. Price is merely a consideration. Security of the company, quality of website, breadth of investments available and above all quality of service are vital.

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