Bestinvest says
The fund provides a simple, low cost and flexible way of investing in the FTSE 100 Index. The index is made up of large, well known companies with global businesses which provides investors with geographic diversification, though it can be concentrated by sector. Active fund managers have historically struggled to add value at the large cap end of the UK equity market, making low cost passive funds like this an attractive alternative as part of a diversified portfolio.
The Fund aims to provide long term capital growth by matching the return of the FTSE 100 Index. This index comprises the 100 largest companies in the UK by market value and, though it only includes 100 companies, such is their size that they make up around 85% of the UK stockmarket by value. The managers aim to replicate the index as closely as possible, subject to liquidity constraints. The fund replicates changes to the index bearing in mind the trade-off between tracking error and trading costs. The fund invests in the physical securities of the index - this avoids the counterparty risk associated with index tracking products that use derivatives.