Besinvest’s Jason Hollands says there are a number of criteria to consider when selecting passive investments such as ETFs: “First, there is the running cost of the fund. This will reduce investor returns to some degree, so the lower the fees the better when it comes to passives.
“Secondly, there’s the index replication approach that’s used. Our preference is for funds that fully replicate every holding in an index, not just a representative sample.”
Hollands adds that liquidity – the ease with which an asset or security can be converted into cash – is also an important consideration: “The ETFs in the above list all hold investments that are frequently traded and are not in narrow specialist areas.”
He adds: “I also factored in current market conditions in respect of my US choices. Many investors choose funds that track the S&P 500 Index for their US exposure. There are low-cost ETF options to do this. Our pick is the Vanguard S&P 500 UCITS ETF GBP which has a tiny 0.07% annual cost.”
However, Hollands says he went for the SPDR S&P US Dividend Aristocrats UCITS ETF – instead of an S&P 500 tracker – because, in the current environment where tech and other growth shares are experiencing turmoil, the SPDR ETF was the more defensive choice.
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