Hargreaves Lansdown’s passive investment manager said younger investors on the HL Vantage platform were driving the sector’s popularity.
He said: “Tracker funds are low-cost, straightforward investments. Their simplicity appeals to younger investors who may be starting to build an investment portfolio.”
Costs have been falling for passive funds, meaning investors can now access all leading bond and equity sectors for less than 0.25 per cent in ongoing charges.
Mr Laird added: “Charges are not the only consideration when choosing a tracker fund. There are dozens of options available and it is important to balance quality with cost.”
Investors can shelter £15,000 each year in a New Isa following the rule change on 1 July 2014.
Mr Laird warned that investors thinking about investing in passive funds as part of their Nisa portfolio should consider how the fund replicates its index – whether it invests directly in underlying stocks or uses a synthetic model.
Adviser view
Jason Chapman, managing director of Hertfordshire-based Willis Owen, said: “It looks like we are facing a bumper summer for Isa investments. But as Isa investments increase, the need for a long-term view becomes all the more important. It is also critical that these extra investments contribute to a diversified portfolio, which minimises exposure to risk.”
Key figures
More than one in six 30-year-olds holds at least one passive investment in their portfolio compared with the overall average of one in nine
57% of new tracker fund purchases were made by investors under 45
Investors in their 30s hold five times more of their portfolio in tracker funds than those in their 70s
Tracker fund assets have grown nearly 50% in the past 12 months
Source: HL Vantage
