Bestinvest says
This fund provides a simple, low cost way of investing in large cap US equities, specifically those of the S&P 500 index. This index is made up of large, well known companies with global businesses which provides investors with both geographic and sector diversification. Active fund managers have historically struggled to add value at the large cap end of the US equity market, making low cost passive funds like this an attractive alternative as part of a diversified portfolio.
The fund's investment objective is to provide long term capital growth by matching the capital performance of the S&P 500 Index. The managers believes that, in the longer term, financial markets are rational and that asset prices cannot durably differ from their fundamental value. Therefore one of the most efficient ways to gain long term exposure to a market is to invest in a representative market index. The managers aim to match the index's performance through full replication of its stocks. Though primarily an equity fund, the manager will also use futures, a type of derivative which provides liquid exposure to the whole of the index. These are used to manage cash balances in the fund - by buying and selling futures the manager can regulate market exposure in response to inflows and outflows without the costs involved in trading all of the shares in the portfolio.