Thanks for the reply. That's what I'd assumed, but I was wondering if anybody knew differently.
Ref the stock markey going up & down, yes can be an issue if you need money at a particular time, but if you can wait until the market is up before drawing your cash (i.e. have a cash reserve also), you should be OK.
I was shocked at Christmas to discover a friend had about Â£14K in a share ISA, and no cash ISA! I strongly encouraged him to put future deposits in a cash ISA, at least until he had a decent reserve there.
I agree with most of the points made. However, I still think it's worth doing a quick check because:
1) When running passive money it is possible to make sampling errors and various passive managers have done so in the past. Quick way to check this is to see how they compare to the index over 1, 3 and five years.
2) Check what they are actually tracking. Is it the FTSE 100 or is it the FTA, or the FTSE 250. This wille nsure that you compare like with like.
3) You should also look at costs applied to the fund, via it's Total Expense Ratio. That is costs over and above fees. the TER takes into account both.
4) I'd also look to see if the manager is known as a passive manager (ie Vanguard, State St, BGI, L&G), rather than an active manager running a little bit of passive money on the side. This means that they will invest in the systems required to keep sampling and passive management in good order in the future. An active manager may well just have a few Excel spreadsheets with a couiple of bods...
Lastly, its worth having a look at these things - its pretty simple and if it can save you some performance return the it has to be worth ddoing.
'Other trackers consist of a selection of funds that are deemed to be representative of a particular index. Stocks for partially replicated trackers are selected using computer based models that pick stocks that perform closely to the given index. The most controversial tracking method is stratified sampling, which prioritises the larger stocks within an index. An example of this is the ******** fund, which aims to track the FTSE All Share by replicating 60% of the index in terms of market capitalisation. Critics say that funds relying on stratified sampling cannot be described as tracker funds as they fail to accurately represent some of the smaller players in an index.'