Hargreaves Lansdown woos thrifty investors with low-cost trackers

Fund manager Hargreaves Lansdown recently angered investors by raising fees on its tracker funds. But it has now unveiled some low-cost products in a bid to attract thrifty investors.

In the world of stocks and shares, £1 might not seem like a lot of money. Yet fund supermarket Hargreaves Lansdown's (HL's) recent decision to charge tracker funds an extra £1, or even £2, a month sparked a wave of criticism. But now the broker is back on the charm offensive and has unveiled some new low-cost products in a bid to attract thrifty investors.

The reason so many investors got annoyed was that trackers are one of the most popular and cheapest fund investments around. Because they passively track a particular index, trackers are cheaper than more actively-managed funds, where a manager tries to beat to beat a benchmark. Indeed, a typical tracker has a total expense ratio (TER) of around 0.5%, compared to an average 1.68% for actively-managed equivalents. When you consider that few actively-managed funds beat the index in the long-term, it is understandable that many investors prefer trackers.

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James McKeigue

James graduated from Keele University with a BA (Hons) in English literature and history, and has a certificate in journalism from the NCTJ. James has worked as a freelance journalist in various Latin American countries.He also had a spell at ITV, as welll as wring for Television Business International and covering the European equity markets for the Forbes.com London bureau. James has travelled extensively in emerging markets, reporting for international energy magazines such as Oil and Gas Investor, and institutional publications such as the Commonwealth Business Environment Report. He is currently the managing editor of LatAm INVESTOR, the UK's only Latin American finance magazine.