Three things you need to look at:
This number tells you by how much the fund deviates from the index. the smaller the number the better.
since you are not looking to outperform the index, then why should you pay high fund manager fees? Again, look for a low number. (Stating the bleedin’ obvious, right?)
Then compare the products. I seem to remember years ago that Virgin’s UK tracker fund stood up quite well. Much may have changed since then. Vanguard is the market pioneer in these products.
- Which index are you tracking?
A large cap index? A small cap index? A broader index?
basically, the broader the index, the less volatile. Large cap indices may have just a few dozen companies; others hundreds. FTSE100 obviously has a fewer number of larger companies, well-established but tend to trade at higher values. FTALLshare has all listed companies. more smaller companies, which tend to outperform slightly over many years.
Broader, small-cap indices are harder to replicate (track). Narrower, large-cap indices much easier.
Statistics suggest that the market fairly seldom underperforms short rates over ten-year periods. The data for the US market is that in the 131 years from 1871 to 2002, the market underperformed short rates in 26 ten-year periods; equities outperformed in 95 ten-year periods. if you use data from 1926 onwards (to exclude the ‘emerging market’ period for the US) that becomes 13 underperforming periods to 53 outperforming.
If you like those odds, go for it.