Telegraph's top 10 ETFs for low-cost investing

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The ETF 10 highlights the best funds for investors who want to keep costs low. The Telegraph 25 is the definitive list of our favourite funds and we also showcase the 10 best funds for growth, income, preserving your money and investing ethically

The dramatic growth of “passive” funds has been one of the defining features of the past decade. Scepticism over the ability of fund managers to beat the market has pushed investors towards exchange-traded funds (ETFs), listed funds that offer cheap access to almost all markets. 

But there are thousands to choose from and several considerations to make. What benchmark is the ETF trying to mimic? How well does it track it? What are the charges and how easy and costly is it to buy shares? 

Telegraph Money has dug through this minefield to give you our 10 favourite ETFs.

Best ETFs for low-cost investing

1. SPDR FTSE UK All Share (FTAL)

The fund provides very broad exposure to British stocks by tracking the FTSE All-Share index, which includes nearly 600 companies. It is very good at mimicking the index and is easy to trade. It is not the cheapest ETF to cover this market, but rival funds are smaller and are less accurate at tracking the index.

Ongoing charge: 0.2pc a year

2. iShares Core FTSE 100 (ISF)

This tracks London’s main benchmark, the FTSE 100, at a very low cost, while its size (£7.8bn) means there are plenty of shares trading on the market.

Ongoing charge: 0.07pc a year

3. SPDR S&P UK Dividend Aristocrats (UKDV)

This ETF give access to the British stock market’s best dividend growers. It follows an S&P index of 40 British stocks which have increased or maintained dividends for at least 10 consecutive years. The fund yields 2.6pc and offers some protection from potential dividend cuts.

Ongoing charge: 0.3pc a year

4. Vanguard FTSE 250 (VMID)

This fund gives investors a chance to own Britain’s smaller but often faster-growing companies at a fraction of the cost of actively managed funds. It tracks the FTSE 250 index and has a great performance record, while its £3.4bn size means it is easy to trade.

Ongoing charge: 0.1pc a year

5. iShares Core S&P 500 (CSP1)

This is one of the biggest ETFs listed on the London market, with more than £31bn in assets. The fund mimics the S&P 500 index, which covers around 80pc of the American stock market. 

Because of its size it is incredibly cheap to own – it costs just 7p a year for every £100 invested.

Ongoing charge: 0.07pc a year

6. HSBC MSCI World (HMWO)

This is one of the cheapest ways for investors to get broad exposure to more than 1,500 companies across 23 different countries. It has £2.6bn in assets and is easy to buy. The fund is also very good at tracking the MSCI World index and occasionally returns more than the benchmark.

The fund excludes stocks involved in selling weapons banned by international treaties.

Ongoing charge: 0.15pc a year

7. SPDR S&P Global Dividend Aristocrats (GBDV)

Like its peer for British companies, this ETF owns stocks that have grown dividends in a sustainable and consistent way. 

The fund currently owns 102 companies and yields 3.5pc. It has lagged the global stock market’s 92pc return over the past five years, delivering 27pc, as dividend stocks have come under pressure. But in providing access to strong income stocks from around the world, it has a role to play in ETF portfolios.

Ongoing charge: 0.45pc a year

8. Vanguard FTSE Developed Europe ex-UK (VERX)

Portfolios should be diversified and Europe provides exposure to world-leading engineering and healthcare companies and the global economy. This tracks an index that covers nearly 500 large and small stocks from 15 European countries. At £1.4bn it is also easy to trade.

Ongoing charge: 0.1pc a year

9. iShares Core MSCI Emerging Markets IMI (EMIM)

This ETF provides exposure to a benchmark that includes nearly 3,000 companies across 26 different emerging markets. It has a low charge an is easy to trade given its more than £13bn in assets, with a great track record of following its benchmark.

Ongoing charge: 0.18pc a year

10. iShares Global Aggregate Bond GBP Hedged (AGBP)

After a decade of record-low interest rates, investors may think bond markets are expensive, but exposure to these assets remains useful if and when stock markets go south. This ETF covers global bond markets like no other, tracking an index that includes 20,000 bonds via a sample of nearly 6,000. It converts returns into pounds to remove currency risk and has more than £4bn in assets, making it very easy to buy.

Ongoing charge: 0.1pc a year