Investors’ 10 favourite ways to track UK stocks and how they differ
The FTSE 100 is the flagship index of the UK stock market, and many choose to get exposure to it through an exchange-traded fund or tracker fund.
But how do the available products offering passive exposure to UK shares differ and how can investors go about choosing the right one for them?
We previously looked at trackers with a global and US focus and now, we’re taking an in-depth look at the 10 most popular funds among AJ Bell DIY investors which track the UK stock market, explaining the differences in benchmarks, performance and costs.
What is passive investing?
‘Passive’, ‘tracker’, ‘index funds’ are all synonymous terms which involve using a using a tracker fund or ETF (long name being an exchange-traded fund) to replicate an underlying index and mimic its returns.
We have previously discussed the structural differences between ETFs and tracker funds, but key things to note are that ETFs are listed on the public market, meaning that when you buy and sell it you trade it just like shares in a company. This means you can buy ETFs at any time, but the price will change depending on the intra-day moves.
Open-ended index funds are priced at a level which matches the underlying value of their holdings (or their net asset value or, the value of the stuff inside it), and you’re only able to trade them once a day.
What are the UK indices?
FTSE Russell is an example of an index provider, and its most well-known indices are the FTSE 100, FTSE 250 and the FTSE All Share.
10 most popular tracker funds and ETFs
Breaking down the FTSE
The FTSE 100 contains the biggest UK public companies, including the likes of Shell, BP or NatWest. It’s often referred to as the UK’s version of the S&P 500 in the US, even though it has less stocks, less tech and a more international revenue base.
The FTSE 250 sits underneath it, in the sense that these are the next 250 biggest companies. These names are typically more exposed to the UK economy. This is a feature of most equity markets, with smaller companies more likely to generate a large part of their revenue from their domestic market.
This is why when the government releases its annual Budget in the Autumn, what the Chancellor announces is more pertinent to the FTSE 250 than the FTSE 100.
The FTSE All-Share includes a spread of company sizes, combining the FTSE 100, FTSE 250 and FTSE SmallCap indices. It thereby provides the broadest view of the UK equity market with more than 500 stocks.
Understanding which of these indices your chosen product tracks is important as it will impact the overall returns you get, given their different make-up.
If you’d bought a FTSE 100 tracker five years ago for example, you would have almost 80% total returns today, but if you’d gone for a FTSE 250 product, the total return would be just 21%. The FTSE All Share, which because companies are weighted by market value is dominated by the FTSE 100, is up almost 70% by comparison, data from FE Analytics shows.
How does the UK stack up in the passive demand race?
Global and US equities are the two dominant markets when it comes to capturing passive money, owing to the strength of the returns over the past few decades.
Taking the most widely held ETF and tracker funds for global, US and UK equities, respectively, among AJ Bell customers, the FTSE trackers made around 47% over five years, meanwhile you’d have made between 57%-83% in the others, depending on which one you picked.
The UK is not as in demand, with £199 million going into UK equity trackers in 2024 out of the £20.6 billion put into equity trackers overall that year, the latest Investment Association data found, but they are still incredibly popular, with many boasting billions in assets under management.
Understandably, they tend to be picked more by UK-based investors who are drawn to them thanks to their home bias.
Breaking down the top 10
Focusing on the five ETFs and all bar one track the FTSE 100: the Vanguard FTSE 250 UCITS ETF being the outlier.
As we saw above, the FTSE 250 delivered lower total return than the FTSE 100 and the products replicating it reflect this, with the Vanguard ETF making around 20% over five years versus 77% from the others.
It also has the highest fees of the pack, 0.1% versus a range of 0.01% to 0.09% among the FTSE 100s.
Because it’s the main market, the FTSE 100 is more widely covered and therefore more saturated with funds tracking it, meaning one of the only ways fund providers can compete is on fees since all performance will be pretty much the same. Meanwhile, since there are fewer FTSE 250 funds, they don’t have to compete so aggressively on price.
It's the same pattern for the tracker funds, with the one FTSE 250 focused name, HSBC FTSE 250 Index, commanding a higher fee (0.13%) versus the 0.05%-0.1% of the others.
But they are all still cheaper than ‘active’ funds, a portfolio run by a fund manager, where you pay extra for their stock-picking expertise.
Going down the list and you may be confused that some of the funds appear to be featured twice.
For example, the Vanguard FTSE 100 UCITS ETF Acc and the Vanguard FTSE 100 UCITS ETF Inc appear to be all exactly the same, except for three important letters at the very end.
‘Inc’ and ‘Acc’ stand for income and accumulation, respectively, a key distinction among funds that investors should check before they hit ‘buy’ on a fund.
An income and an accumulation version of the same fund hold exactly the same underlying investments and are managed in the same way by the same team. The difference is what happens to the income (dividends or interest) generated by those investments. An income fund pays dividends or interest to you in cash, and an accumulation fund automatically reinvests that income back into the fund.
Which version you need depends on what your financial goals are at the time, for example, people investing to cover regular outgoings might prefer the income version.
Just outside of the top five ETFs was the iShares UK Dividend UCITS ETF, which taps into this ‘income seeking’ mindset even more. It follows just 50 stocks with the highest yield in the FTSE, excluding investment trusts.
The UK market is known for its income credentials because a lot of its members are big dividend paying companies, a distinction from the US which is dominated by high growth technology names such as Apple, Microsoft and Nvidia.
The aforementioned iShares UK Dividend ETF follows just 50 stocks with the highest yield in the FTSE 350 (which combines the FTSE 100 and FTSE 250), excluding investment trusts.
Eve Maddock-Jones: Funds and Investment Trust Writer
Eve joined AJ Bell in 2026 as a funds and investment trust writer. She was previously editor at Investment Week, reporting on all major retail investor news, covering funds and investment trusts, ETFs and regulation...
