Hargreaves Lansdown unveils super cheap tracker fund

Hargreaves Lansdown has launched a bid to win back support from passive investors through the launch of UK All Share tracker fund, along with the addition of dozen funds from US tracker giant Vanguard.

The move comes just two weeks after it was attacked for introducing monthly platform fees that made many low cost tracker funds more expensive on its Vantage platform.

Hargreaves has teamed up with Scottish Widows Investment Partnership for the launch of the SWIP FTSE All Share tracker fund, dubbed the Foundation Growth fund.

The fund has a total expense ratio of 0.11% and an annual charge of 0.07%, making it one of the cheapest trackers on the market. Swip is taking a big cut of its normal charge as it normally levies a 1.14% TER on direct investors in Foundation Growth.

Vanguard

As widely predicted, the announcement of the controversial platform fees was a precursor to Hargreaves getting US tracker giant Vanguard on to its platform. Vanguard does not rebate any of its annual management charge making the platform fee essential if Hargreaves were to offer its funds.

As a result of the deal 12 of Vanguard’s UK, US, global and bond tracker funds will go on to Vantage, the country’s biggest investment platform. Investors will pay TERs of between 0.15% and 0.33% plus a £2 monthly platform fee per fund. Just as importantly, investors will be able to access the funds with minimum sums of £1,000, compared to Vanguard's prohibitive normal level of £100,000 for direct investors.

'This new range of ultra low-cost tracker funds further enhances the Vantage Service' Danny Cox, head of advice, Hargreaves Lansdown, explained. 'We are meeting the needs of investors looking for low cost tracking funds combined with first class service.'

BlackRock trackers escape platform fee

As part of a new section of its site dedicated to tracker funds, Hargreaves has done a deal with investment group BlackRock so that investors in its tracker funds do not pay the £1-£2 monthly platform fees.

The BlackRock FTSE All Share tracker, for example, has a TER of 0.57%. While not cheap, the absence of the platform fee will make it more cost-effective for investors with smaller amounts of money.