Top 5 Index Funds for 2024
An index fund is an investment product that tracks a specific basket of stocks or bonds. They are similar to mutual funds and provide investors with broad diversification at a low cost.
If you’re interested in learning more about the best index funds to buy, the pros and cons of investing in index funds and how to invest with competitive commissions, then keep on reading.
Table of Contents
What are Index Funds
An index fund is a fund that invests in stocks that track a specific index. For example, a FTSE 100 Index Fund, will invest in the 100 stocks listed in the FTSE 100 index. Index funds can provide investors with broad exposure to specific countries and themes. They can be used to diversify and hedge a portfolio.
Top 5 Index Funds 2024
Below is a quick snapshot of some of the best index funds available to buy for UK investors with a detailed analysis of what investment exposure each one provides.
How did we identify the best index funds?
There are a variety of different investment management companies that provide investors access to low-cost index funds. These include Vanguard index funds, Fidelity index funds, and many others. Sticking to the largest index funds can be ideal as these will generally be the most liquid of instruments with the highest level of volume. This means you can buy and sell very quickly, if necessary.
The index funds have also been selected to provide broad exposure to the performance of stock markets around the world as well as individual investment themes. These companies create and manage products called exchange-traded funds (ETFs). These track an underlying index and are listed on a stock market for investors to access.
Here are some of the top index funds to watch this year:
- Vanguard S&P 500 UCITS ETF - Best Index Fund for the US Stock Market
- SPDR MSCI Europe UCITS ETF - Best Index Fund for European Stocks
- iShares MSCI China ETF - Best Index Fund for Chinese Economic Growth
- xTrackers MSCI Emerging Markets Index - Best Index Fund for Emerging Markets
- iShares Select Dividend ETF - Best Index Fund for High Dividend Paying US Equities
Of course, this list is not exhaustive and what is considered the best index fund will be different for each investor. However, the index funds highlighted are some of the most well-known that track a certain index, be it the S&P 500 stock market index, the Nasdaq index, and more. As with any form of investing, risk management is key so be sure to do your research and use the information below as a starting point.
Did you know that with the Admiral Markets Invest.MT5 account you can invest in index funds from the UK, Germany and France with a commission of just 0.1% and a low minimum commissions of just 1 GBP/EUR?
You can also invest in index funds from the US with a commission from $0.02 per share and a low minimum commission of 1 USD.
5 Best Index Funds Research & Analysis
Let’s take a look at each one of these funds in a bit more detail before we look at how to invest in them with low commissions and a state-of-the-art investing platform!
1. Vanguard S&P 500 UCITS ETF (VUSA)
The Vanguard S&P 500 UCITS ETF was created on 22 May 2012 and has since grown to be one of the go-to funds for exposure to the US stock market. The fund uses passive management techniques to track the performance of the Standard and Poor’s 500 Index, commonly known as the S&P 500 index.
The index measures the performance of the largest 500 stocks listed on the New York Stock Exchange by market capitalization. The index fund from Vanguard is considered a low-cost fund as it only charges a 0.07% ongoing charge which covers management costs to run the fund. However, the investor does not need to pay the ETF manager this charge, it is calculated daily and rebalanced in the assets of the fund and therefore already reflected in the share price.
In Berkshire Hathaway’s 2014 shareholder letter, legendary investor Warren Buffett recommended that the cash left to his wife should be 90% invested in a very low-cost Vanguard S&P 500 index fund with 10% in short-term government debt.
2. SPDR MSCI Europe UCITS ETF (ERO)
SPDR (Standard and Poor’s Depositary Receipt) funds are created and managed by investment management company State Street Global Advisors. They provide access to a wide range of SPDR funds, also known as ‘spiders.’
The SPDR MSCI Europe ETF aims to track the performance of the MSCI Europe Index created by the company formerly known as Morgan Stanley Capital International. The objective of the fund is to track the performance of large and mid-sized companies in Europe.
This index fund provides broad exposure to European stock markets. The top 10 holdings of the 428 holdings in the fund include Nestle SA, ASML Holding NV, Novo Nordisk, LVMH, AstraZeneca, Roche Holding Ltd, Novartis, Shell, HSBC and TotalEnergies.
As of May 2021, 22.94% of the holdings were from the UK, with 17.93% from France and 14.80% from Germany with the rest across all of the other major European countries such as Sweden, Spain, Netherlands and more.
3. iShares MSCI China ETF (MCHI)
iShares by BlackRock is another very well-known index fund provider, offering a range of funds covering different markets. The iShares MSCI China ETF aims to track the performance of the MSCI China Index which is composed of Chinese companies that are available to international investors.
The index fund provides exposure to China’s stock market which is difficult for foreign investors to access directly. Investments in the fund are from a variety of stock sectors. As of June 2023, 29.01% is weighted towards consumer discretionary, 19.82% communication, 15,80% financials, 6.16% information technology and lesser amounts for other stock sectors.
While some investors remain keen on investing in China, it is worthwhile noting that investments in this region tend to be quite volatile. Some of the top holdings of the fund include Tencent Holdings, Alibaba Group ADR, China Construction Bank, JD.com ADR, Baidu ADS, Xiaomi Corp and many others.
With Admiral Markets, you can trade the iShares MSCI China ETF CFD. Contracts for difference allow you to trade long and short and potentially profit from rising and falling markets. Learn more in the How to Trade CFDs article.
4. xTrackers MSCI Emerging Markets Index (XMEM)
xTrackers are ETFs that are created and managed by DWS Investments. They provide investors exposure to different asset classes covering commodities, equities, fixed income and multi-asset funds.
The xTrackers MSCI Emerging Markets Index ETF aims to reflect the performance of certain shares in companies from global emerging market countries determined by MSCI (Morgan Stanley Capital International). These companies tend to be large to medium-sized such as Tencent Holdings, Samsung Electronics, Vale SA, Taiwan Semiconductor Manufacturing, Reliance Industries and many others.
As of June 2023, 26.92% of the fund was weighted towards China, 15.57% Taiwan, 14.25% India, 12.41% Republic of Korea, 5.61% Brazil and other emerging market countries such as Indonesia, South Africa, Mexico and more.
Of the 1,379 stocks held within the fund, the top components include Taiwan Semiconductor Manufacturing, Tencent Holdings, Samsung Electronics, Alibaba Group, Meituan, Reliance Industries and many others.
5. iShares Select Dividend ETF
The iShares Select Dividend ETF is unique in the fact that it aims to track an index that is composed of high dividend-paying US stocks. The benchmark index used by iShares is the Dow Jones US Select Dividend Index.
The fund offers investors access to the broad exposure of 100 US stocks with a 5-year record of paying dividends. The index covers all different sectors with the majority from the Utilities and Financials stock market sectors.
With Admiral Markets, you can trade the iShares Select Dividend ETF CFD, allowing you to trade long and short.
How to Buy Index Funds in 4 Steps
Here is a quick and simple guide to investing in different index funds with globally regulated broker Admiral Markets. In fact, you can use the same steps to invest in stocks and shares from 15 of the largest stock exchanges in the world too!
Step 1: Open an Admiral Markets Invest.MT5 account
With an Admiral Markets Invest.MT5 account you can invest in nearly 4,000 different stocks and ETFs from stock markets all around the world including the United States, United Kingdom, Australia, Japan and a wide range of European countries including Germany, Netherlands, France, Switzerland and many others.
Furthermore, you can:
- Access FREE real-time market data
- Receive complimentary Dow Jones Newswires
- Invest from state-of-the-art trading platform, MetaTrader 5
- Build a potential passive income stream with a portfolio of dividend-paying stocks
Sign up today by clicking this link and filling out a short questionnaire which is standard for all regulated brokers.
Step 2: Deposit funds into your wallet
With Admiral Markets UK Ltd, you can deposit funds with zero commissions using a wide range of different methods which include bank transfer, Visa/MasterCard, Klara and PayPal, as well as many other commission-based methods.
Most methods have instant processing times so you can start investing straight away. You can view all the methods and associated fees on the deposit and withdrawal page.
Step 3: Choose your investment and invest!
You can invest from the MetaTrader 5 desktop trading platform or from the MetaTrader 5 Web platform. Either way, the platform is simple to use and easily accessible. You can also search for all the different instruments available to invest directly from the platform too, just follow these steps below:
1. Login to the Admiral Markets online dashboard.
2. Click Trade to open the MetaTrader 5 web platform.
3. Search for your symbol and start trading!
Conclusion
Index funds have seen a rise in demand in recent years. They are also becoming even more specialised allowing investors to access regions of the world otherwise close to them.
The very meaning of index funds allows you to track the performance of a broad index tracking a stock market or commodity. This provides a unique way to passively build a diversified portfolio.
However, it’s important to invest with a regulated broker that offers low commissions. You can test all of the services and features provided by Admiral Markets completely FREE by opening a demo trading account.
Continue Reading:
- Top 10 UK Shares to Watch
- Best Bond ETFs UK
- Best NASDAQ ETF
- Best Income Funds UK
- Best S&P 500 ETF
- Best Vanguard ETFs
- What Are ETFs? ETFs Explained
- How to Trade ETFs with €1000
- The CFD Trading Guide
FAQs on Best Index Funds
Which index funds are best?
There are a variety of index funds available to investors. The best will depend on what your investment objective is. Those seeking the performance of the US stock market may choose the Vanguard S&P 500 ETF. Those seeking the performance of emerging markets may research the xTrackers MSCI Emerging Markets Index ETF. There are thousands of index funds to choose from.
What is the best FTSE 100 index fund?
There are a variety of fund provides which provide ETFs to track the performance of the FTSE 100. This includes the Vanguard FTSE 100 UCITS ETF, the iShares FTSE 100 UCITS ETF, the Lyxor FTSE 100 UCITS ETF and many others.
About Admiral Markets
Admiral Markets is a multi-award winning, globally regulated Forex and CFD broker, offering trading on over 8,000 financial instruments via the world's most popular trading platforms: MetaTrader 4 and MetaTrader 5. Start trading today!
This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or recommendation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.
