Investing from the UK

This page recommends approaches / funds that enable a UK investor to invest using similar techniques to those outlined in The Bogleheads' Guide to Investing. The book contains sample portfolios for investors of different ages that utilize different Stock Market and Bond Mutual Funds. This page recommends equivalent funds, available in the UK, and also outlines some sample portfolios.

General Approach
The funds recommended below are low cost indexed funds. In the UK these can be either unit trusts or ETFs. A few UK based companies offer low cost indexed stock unit trusts directly to the investor. Legal and General and Fidelity are recommended for their low expense ratios (0.5 and 0.1 respectively for the UK Stock Market). Indexed Bond funds, however, are only available as ETFs. The broadest selection of bond etfs are available from iShares. In addition to the internal expense ratios, ETF purchases must be made through a broker and there is a per transaction cost. The lowest cost per trade is Halifax's Sharebuilder which, as of the date of writing, charges £1.50 per trade for scheduled regular purchases. Vanguard has announced its intention to offer funds to the UK Investor, but as of yet no funds are available.

Stocks
The UK stock market is significantly smaller than the US and as such is not as diversified. For example, three companies (Shell, BP and HSBC) comprise nearly 25% of the index. As such, the UK investor should pair a FTSE indexed fund with a world indexed fund to gain appropriate diversification.

UK Stock Indexes
The following are low cost indexed funds containing UK Stocks.

World Stock Indexes
The following are low cost indexed funds containing world stocks.

Short Term Bond Fund
There are no indexed short term bond funds denominated in pound sterling.

Intermediate Term Bond Funds
The following are indexed intermediate term bond funds denominated in pound sterling.

Inflation Protected Bonds
The following is an indexed inflation protected bond fund.

Sample Portfolios
Listed below are UK equivalents to the 8 sample portfolios outlined in 'The Bogleheads Guide to Investing'. These are appropriate for different stages in life. Additionally, the 'boglehead' book also lists what those sample portfolios look like when using Vanguard funds. Vanguard funds are not yet available in the UK, as such this page contains sample funds using iShares ETFs.

Taxes
The UK tax structure on investments is similar to that in the US. As such it is beneficial to place the bond funds in tax sheltered accounts and have the stock funds in taxable (when tax sheltered is not available). Most investors will benefit from opening an Individual Savings Accounts and placing the bond holdings in that account.

Links

 * London Stock Exchange
 * FTSE UK Index Series
 * UK Debt Management Office (DMO)
 * FTSE UK Gilts Index Series
 * Bank of England
 * Pension Service

Papers

 * Pensions Bill -Impact Assessment