# Cheap Index Tracker (not Quinn Life)



## InvestWisely (24 Sep 2008)

I am looking for a cheap index tracker. No entry/ exit fees, and absolutely minimal charges.

I am currently paying €650 per month into a Quinn Life tracker.
I want to put more money into index trackers, paying monthly to benefit from euro cost averaging. I don't want to increase the payments to the Quinn product, because I want to spread the risk. If anything were to happen to Quinn, God forbid, where would I stand?

So, with that in mind I did some research on the web. The cheapest tracker available in the UK seems to be provided by Fidelity (annual charge of 0.1% against 1%/ 1.2% for Quinn). I phoned them yesterday. I was told that, while I could invest in certain of their funds, because I am resident in Ireland they are unable to sell me their tracker. Something to do with regulation. Dead end.
I then tried the Vanguard site. It appears to be available to Irish residents, but the minimum top up is €5000. Way too much for my euro cost averaging strategy. Another dead end.

I seem to remember reading in Eddie Hobbs book "Loot", that a number of IFSC based companies sell index trackers, but I can't come up with anything.

Can anyone help me please? Thanks.


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## markowitzman (24 Sep 2008)

if you have the money get in to market rather than euro cost average.


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## Dogsbody (24 Sep 2008)

Sadly Vanguard funds are unavailable to Irish residents, try AIB indexmaster or New Ireland smart funds.You may have difficulty getting under the 1% mgmt charge though unless you have substantial funds to invest. Good luck.


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## markowitzman (24 Sep 2008)

you could buy etfs directly from a broker.


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## InvestWisely (24 Sep 2008)

Thanks for your replies guys.

markowitzman - to be honest, I would prefer not to have the hassle of buying ETFs. I want the simplicity of just setting it up, and letting it all work by DD.
I hold my directly owned shares in certificated form, rather than Crest etc, and would want to do the same if I went down the ETF road. All in all, I would prefer the tracker route for ease and simplicity.

Dogsbody - do you know if the AIB/ New Ireland funds are only for people using them as a vehicle for a pension or an AVC? 

Thanks.


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## markowitzman (24 Sep 2008)

*good basic review of etfs and their advantages from Van Tharp Institute..........*

*Exchanges Traded Funds*             (ETFs) are one of the most important and timely investment vehicles             available to the trader or investor who wants to take control over             his own financial future. Here are just a handful of the important             qualities of ETFs you should be aware of.​ 

*ETFs                 have useful variety*.                 No matter what kind of ETF you need for your trading or                 investing interests, you are sure to be able to find an ETF                 thats right for you.  You                 can find ETFs that track any of the following:
*Broad                   Indices: *These                   are indexes like the Dow 30 industrial average, the S&P                   500 index, and the NASDAQ 100. Their symbols are DIA, SPY, and                   QQQQ. There are other major indexes like Japan Nikkei                   (EWJ), the European large-cap 350 (IEV) and the Morgan Stanley                   European and Asian mature company index (EFA). EFA is a                   particular favorite of mine because it represents the mature                   industrial world minus the US. 
*Major                   Market Sectors*: These include ETFs for the nine sectors of the S&P 500                   known as the sector SPDRs or "Sector Spiders". These                   ETFs symbols begin with an "x" and include finance,                   industrial, consumer staples, utilities, and technology among                   others. These are very high volume, very liquid and can be                   traded with options as well as in direct trading.
*Regions of the                   World: *These correspond to different regions of the world markets such                   as Asia less Japan (EPP), European and Asian mix (EFA), Latin                   America (ILF), and emerging markets (EEM).
*Individual                   Countries:* There are over 30 separate countries with their own ETF. These                   typically reflect the stock markets of each country comprising                   the largest capitalized companies, for example, Canada( EWC),                   Mexico (EWW) and one of my very favorites Brazil (EWZ).                   The Brazil ETF is very liquid and represents a country that is                   quickly turning into the economic powerhouse of Latin America                   in the Western Hemisphere. 
*Business                   Sectors:* These include specific market segments such as semiconductors                   (SMH), utilities (XLU, UTH), regional banks (KRE), US                   residential real estate (RWR), biotechnology (BBH), and medical                   devices (IHI). 
*Individual                   Commodities & Baskets of Commodities:* This has been a very hot sector over the last year and the run                   may be done. Commodities tend to be cyclical and very volatile                   at the end of long trends. You can either buy baskets like the                   Deutsche Bank commodities blend (DBC) or an ETF that reflects                   individual commodities such as gold (GLD, IAU) or grains (DBA). 
*Currencies &                   Currency Pair Trades:* The seven major currencies of the Forex market can now be                   purchased as ETFs including the US dollar (USD). You could                   even get sophisticated pair trade ETFs which play the                   difference between currency pairs. This is sophisticated                   trading that is not for novices. 
*Morningstar                   Style Boxes:* there are ETFs that correspond to different styles according to                   them and MorningStar style box framework, such as large-cap                   value or small-cap growth. 
*Proprietary                   Fundamental Screens: *There                   are even ETFs that reflect specific investment strategies and                   hypotheses. These all tend to be very sophisticated strategies                   and in order not to lead you astray I will refrain from                   reporting their symbols. It is enough to know that any                   philosophy of investment or trading can be framed with an                   appropriate set of ETFs. 
*Varieties of                   Bonds and Income-Generating Dividend Payers:* A couple of easy ones are long-term treasuries (TLT) and                   aggregate income that mixes treasuries and corporate bonds                   (AGG).
*The                   Entire World Market: *A simple example is the Vanguard                   Total Market Index viper (VTI).

 

*ETFs                 have more transparency.*                 Mutual fund components are effectively screened from public                 view, so you cannot analyze your current exposure. That can be                 very important as we saw this week. Youd like to be able to                 know what your exposure to companies like AIG, Lehman Brothers                 and Bear Stearns might be at some moment. You can get this kind                 of information in a timely manner with ETFs (WisdomTree ETFs are                 especially noteworthy in this regard).
 

*ETFs                 are less volatile than stocks*.                 There are times when the day to day fluctuations of price can                 upset even the sturdiest of stomachs.                  Because they are blends of multiple stocks or                 commodities, ETFs have a much smoother price curve than                 individual stocks.
 

*ETFs                 have enough volatility to be tradeable*.  Even though the                 price action of ETFs are generally much smoother than stocks                 that make up their components, there is plenty of price change                 for traders to be able to frame trades that offer favorable                 reward:risk characteristics. In a way, you can say that ETFs                 trade jagged volatility for more smoothly oscillating waves. ETF                 price waves are more like the long, powerful ocean swells that                 move for miles in deep water.
 

*ETFs                 can be compared for purposes of market research.*                 Because there are ETFs that cover the entire world market, as                 well as business sectors, countries and currencies, it is                 possible to rapidly assess the condition of the world market by                 doing a regular comparison of price performance between a set of                 representative ETFs.  Because                 price rolls up all the variables and market opinions of market                 participants who vote with their money, ETF price action serves                 as a barometer for market health and opportunity.
 

*ETFs                 can be analyzed using your favorite technical analysis.                  *Because ETFs buy and sell on exchanges just like stocks, they are                 subject to all of the technical and fundamental analysis that                 you use on individual stocks.                  So the good news is that you dont have to jettison the                 principles and techniques that have served you well already.                 ETFs allow you to leverage your time investment in mastering your                 niche in fundamental and technical analysis.
 

*ETFs                 can be used to construct any kind of portfolio you seek.*                 Sometimes you need a core portfolio to take care of your long                 term financial goals. Sometimes you need a short term hedge to                 protect gains in long term holdings that you dont want to                 prune or to seize an opportunity caused by a short term                 imbalance in price and market conditions. Sometime you just need                 to get money working in a sector now while you prepare to                 conduct a more detailed analysis of individual companies. No                 matter what kind of portfolio solution you are looking for,                 chances are there is a set of ETFs ready-made to answer the                 call.
 ETFs are here             to stay. The prudent investor will approach them with care and             interest to see just how you take advantage of the many favorable             qualities they offer to both the              trader and the long-term investor.


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## InvestWisely (24 Sep 2008)

Many thanks markowitzman. 

Lots of food for thought there. I obviously need to have another longer look at ETFs!

I intend holding for the long term, rather than trading. Regular monthly purchases would be best done as cheaply as possible to cut dealing costs, so that rules out my normal broker Bloxhams. Any thoughts??


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## Dogsbody (25 Sep 2008)

AIB/New Ireland funds are available for non pension investments.I opted for the index route to avoid the hassle of purchasing etfs some ot which I found could not be held in certificate form.

Personally I also find the taxation issue simpler with index funds.


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## Happy Girl (25 Sep 2008)

InvestWisely said:


> ........I am currently paying €650 per month into a Quinn Life tracker...... I don't want to increase the payments to the Quinn product, because I want to spread the risk. If anything were to happen to Quinn, God forbid, where would I stand?


 
I wondered the same and the following is the correspondence from Quinn Direct which puts my mind at rest:

_"Dear ........,_

_Further to your query today in relation to the Investment Compensation_
_Scheme, I can confirm that Quinn-life is a life assurance company and not_ _an investment company, so therefore this does not apply. As discussed, the life policy is backed by assets in the form of shares, to the equivalent of the value of the amount owing to policyholders. These assets are called __unit linked assets and must be held to cover the value of all policyholders __liabilities. In addition, Quinn-life is required to maintain a solvency __margin above this of at least €3.2m._
_If you have any further queries, please do not hesitate to contact us._

_Kind Regards,_
_Arlene Parlour_
_QUINN-life Direct Ltd, Cavan"_


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## bogle (25 Sep 2008)

Dogsbody said:


> Sadly Vanguard funds are unavailable to Irish residents...



 Sent an e-mail to Vanguard about 6 months ago looking to see if I could invest in some of their index funds. They replied hey sure no problem but you have to be able to invest a minimum of €100K !!! A great pity as we could really do with Jack Bogle over here to shake up the market.    You could have a look at www.ishares.co.uk with regard to ETFs.   Does anybody know where companies like QuinnLife invest the contributions received e.g. do they simply buy shares in tracker ETFs that match their funds? If so then you might as well purchase the ETF directly and cut out the middle man, otherwise it might be costing a lot just to have QuinnLife manage you're hard earned cash!


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## Dogsbody (26 Sep 2008)

Strange, I also e-mailed Vanguard around six months ago and was told no full stop.I was already aware of the 100k min.


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## bogle (26 Sep 2008)

Dogsbody said:


> Strange, I also e-mailed Vanguard around six months ago and was told no full stop.I was already aware of the 100k min.



Actually you're right. Here's part of the reply I got at the time...

"... As there are adverse tax consequences that result from Non-Exempt  Irish
residents investing in Vanguard's Offshore Funds, it has been our policy
not to accept investments from Non-Exempt Irish Residents as there can be
alternative investment products that can better suit your needs..."

Not sure where I got the 100K figure from.


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## Dogsbody (26 Sep 2008)

The Irish stock exchange has just launched a new suite of ETFs in conjunction with ETF Securities. More info on the ISE website.


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## marathonic (10 Feb 2009)

You can get Eurostoxx ETF's that charge 0.25%.

Interactive Brokers minimum commission is $10 per month (this allows 2 European purchases/sales per month).

With the 0.75% difference in commissions between the ETF and Quinn, it means that you'd be better off buying ETF's through Interactive Brokers when your portfolio balance is over $16,000 (12,300 euro).

Personally, I buy shares directly and therefore have no annual charge apart from the $120 for Interactive Brokers.


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## nasher (11 Feb 2009)

check out motley fool website some interesting comments about index funds and charges i know it relates to vanguard coming to u.k.{100k minimum investment }but maybe they might as it says shake up the market regarding charges for funds


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## Marc (17 Feb 2009)

For those investors who are looking for an index-tracking option similar to Vanguard's funds, I can provide a range of Institutional class index funds to investors who have portfolios in excess of €100,000. (This is the total portfolio value rather than the investment per fund). These funds are Euro share class and UCITS. 

Typical annual management charges are as follows:

European Smaller Companies: 0.50%pa
European Equity Market: 0.30%pa
U.S Smaller Companies: 0.50%pa
Pacific Basin Smaller Companies: 0.50%pa
Emerging Markets: 0.50%pa
Emerging Markets Smaller Companies: 0.75%pa
Global Bonds: 0.25%pa
Global Equity Market: 0.30%pa

Unlike an ETF, which has to blindly follow a commercial index, strategies are engineered to capture specific risk/return characteristics with reliability and transparency. The goal is to provide investors with a series of precisely defined, low-cost building blocks, paying careful attention to trading costs allowing them to maximize the benefits of asset class diversification and to assemble balanced portfolios.

These funds benefit from block trading strategies that are impossible to replicate in an actively managed or traditional index tracking fund. My analysis indicates that a typical investor will save around 1.5%pa after all fund management and advice fees compared to an average managed fund.

I offer a fee-only advisory service. If you have more than €100,000 to invest, please send me a private message.


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