Just as a twirlable moustache and a sinister laugh means you’re dealing with a villain, fund names instantly reveal much about the nature of an investment.1
Learn how to decode fund names and you can quickly parse product lists, rapidly spot index funds and ETFs, and save time finding what you want.
Here’s a typical fund name and what it means:
Let’s break the formula down.
This is the asset management firm who created the product. In the UK, the main players issuing index trackers are:
BlackRock aka iShares
State Street aka SPDR
Legal & General
The provider’s name may be twinned with a sub-brand. For example: iShares Core.
Core ETFs are often low-cost entries in a provider’s range, although that’s not a hard and fast rule.
The sub-asset class shows where the fund’s assets are concentrated. For a broadly diversified equity fund this is typically a geographic region. For example: the Developed World.
Specialised funds will often pair the region with a tilt to an investment style, such as Global Small Cap.
The sub-asset class may be preceded by the name of the index tracked by the product. As in: Vanguard FTSE 100 UCITS ETF. That tells you the ETF tracks the largest 100 companies listed on the London Stock Exchange.
FTSE, MSCI, S&P, Stoxx and Bloomberg Barclays are the big index providers. They are often referenced in tracker names.
A bond tracker’s name often signals the maturity dates of its holdings:
iShares UK Gilts 0-5 UCITS ETF. This ETF holds UK government bonds (gilts) that will mature in up to five years. Five years and below indicates the sub-asset class is short-dated UK government bonds.
SPDR Bloomberg Barclays 15+ Year Gilt UCITS ETF. This ETF hold gilts that mature in 15 years or more. Anything over 15 years is a long-dated bond holding.
The giveaway – Most but not quite all index funds pop the word index or tracker into their name to make things slightly easier.
Active fund names don’t feature indexes, but not all trackers do either.
A single fund may offer itself in more guises than Zeus, as denoted by its share class. Instead of turning up as a bull or swan like a Greek god, a fund simply puts some letters in its name (e.g. Class A or D or I) to indicate that exactly the same product is available at different costs.
Index funds tend to be limited to three types:
Retail – Available to individual investors like you and me. The fund name may include the abbreviation Ret instead of a share class letter.
Institutional – Available to pension funds and the like. Sometimes available to you and me when a deal has been cut between the fund provider and a particular broker. Inst funds are cheaper than their retail counterparts.
Platform exclusives – Some fund managers furnish large online brokers like Fidelity and Hargreaves Lansdown with slightly cheaper versions of their index funds. The fund will offer a small discount on its annual charge but will otherwise be the same fund that’s found everywhere else bar an ‘exclusive’ letter designation in its name.
Share class letters have specific meanings in the US. That doesn’t apply here in the UK, where classification notation is all over the shop.
There are two varieties: Accumulation and Income.
Accumulating funds reinvest your dividends and interest back into the product without you lifting a finger.
Income funds pay out dividends and interest as cash money into your broker account. You can then reinvest or spend at your leisure.
Accumulating funds are also termed ‘capitalising’ and usually contain one of the following abbreviations:
Income funds are also known as ‘distributing’ and may feature these: abbreviations:
You’ll notice most ETFs include the abbreviation UCITS. This memorable acronym refers to EU regulations that enable funds to be sold across European markets.
UCITS funds are meant to maintain certain standards that protect retail investors, such as a minimal level of diversification.
UCITS rules also apply to index funds.
Non-European ETFs are not governed by UCITS regulations. Neither are other exchange-traded products like ETCs (Exchange Traded Commodities).
Take the hint. Exercise caution and conduct more research on non-UCITS products.
There is now a UK UCITS standard that facilitates post-Brexit harmony.
As we hit the tail end of a product’s name, you may see a cavalcade of cryptic codes, scattered around at the provider’s whim.
Some ETF names are gilded with their replication method.
For example: Lyxor Core MSCI World (DR) UCITS ETF – Acc.
DR stands for direct replication and indicates that the ETF physically holds the securities in the index.
The alternative is a synthetic ETF that’s occasionally signalled by the word ‘Swap’.
ESG stands for Environmental, Social, and Governance. ESG funds are meant to favour companies that make an effort to reduce the harm they inflict on the planet. Mileage varies.
ETF fund names often quote a currency, such as GBP, USD, or EUR. This usually refers to the currency the fund reports its results in and doesn’t protect you from currency risk.
The information is useful when the product currency hedges its return to neutralise the risk of swings in foreign exchange markets.
Some providers helpfully mention currency hedges in the fund name.
For example: Xtrackers Global Government Bond UCITS ETF 2D GBP Hedged.
This ETF hedges its return to the pound. Its returns to UK investors should be mostly unaffected by jostling in the currency markets.
Incidentally, 2D in this name refers to the share class.
You’ll occasionally see the letters IE, IRL, LU, or LUX dropped into a name.
That’s because Ireland and Luxembourg offer favourable witholding tax rates if a fund is based there.
Some providers use that as a selling point. You won’t see less competitive tax jurisdictions being flagged, however.
You can confirm your fund’s domicile using its International Securities Identification Number (ISIN).
ISIN numbers contain a handy two-letter country code, which helps you recognise your product’s domicile:
IE = Ireland
GB = Great Britain
LU = Luxembourg
FR = France
US = US
DE = Germany
CH = Switzerland
CA = Canada
GG = Guernsey
IM = Isle of Man
JE = Jersey
An ISIN number looks something like this: GB00B59G4H82. The GB means this fund is resides in good old Blighty.
It’s less well-known that the Irish and Luxembourgian investor compensation schemes are less generous than the UK’s.
Whatever you do, record the ISIN number of the fund you’re interested in.
This catchy number is the one way I’ve found to reliably distinguish between fund versions, and ensure I buy the right one when I place an order.
More to know than fund names
Want to learn more?
Take it steady,
An ETF is a type of investment fund, so I’ll use the term ‘fund’ when referring to generic characteristics shared by traditional funds and ETFs alike.