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Do index funds track an index or include the yield?

Robin | Gloucestershire| 03/09/2018 | 0

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Robin's question in full

I am confused about index funds, e.g. Vanguard Equity fund. Do they track an index or include the yield? In the case of Vanguard, their low cost is attractive but their portfolio is made up of other Vanguard funds. I assume these probably each carry a fee structure - is this correct?

Boring Money's Response

Hi Robin,

In the case you mention, the Vanguard Equity fund is an all global equity trust.

This means that it is a fund which invests across the world in passive indices such as the FTSE All Share and the S&P 500. The aim of such funds is capital growth.

There is a yield of 1.65%, however that rolls up as part of the total return. There is no double charging.

Hope this helps!

 

Holly adds:

Index funds can be pretty tricky to understand, so we've written the detailed article 'Index Funds Explained', which might be some help to you Robin.

Good luck!

 

 

Just be aware...

We are not regulated to give personal financial advice - This isn’t full-fat regulated financial advice. Boring Money is a publisher and not regulated by the FCA. 

This means we can't help with specific personal circumstances or recommend specific investment products. It also basically means that if we say something daft, you have no recourse to come back and complain.

We’re only allowed to give you a steer or share an opinion or tell you the facts - That said, we promise that our answer to you is an independent unbiased perspective with no commercial gain to make. If you need regulated financial advice, you can find a good adviser via sites such as Unbiased & Vouchedfor.

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