Vanguard vs HSBC vs Fidelity Index Fund: Global Trackers Compared

The Vanguard vs HSBC vs Fidelity index fund question comes up constantly among UK passive investors, because these three are the default one-fund options on most platforms: the Vanguard FTSE Global All Cap Index Fund, the HSBC FTSE All-World Index Fund and the Fidelity Index World Fund. They look almost interchangeable from the outside. They are not. Each tracks a different index, and that single choice changes what you own, how diversified you are, and what you pay.

Here is the honest comparison, focused on the three things that actually decide it: what each fund holds, the ongoing charge, and which one fits your strategy. Charges and figures move over time, so always confirm the latest on each fund’s own factsheet before you buy.

What each fund actually tracks

This is the real difference, and most people miss it.

The Vanguard FTSE Global All Cap Index Fund tracks the FTSE Global All Cap index. That means large, mid and small-cap companies across both developed and emerging markets, several thousand holdings in total, with roughly 8% in emerging markets and a small slice (around 6%) in small caps. It is the broadest of the three: as close to “the whole listed world” as a single retail fund gets.

The HSBC FTSE All-World Index Fund tracks the FTSE All-World index. Same developed-plus-emerging coverage as Vanguard (emerging markets sit around 8%), but it holds only large and mid-cap companies, roughly 4,000 of them, and leaves small caps out. In practice the returns track the Global All Cap closely, because small caps are a small part of the total.

The Fidelity Index World Fund tracks the MSCI World index, and this is the biggest divergence. MSCI World is developed markets only. There is no emerging market exposure at all, so no China, India or Taiwan, and like the HSBC fund it is large and mid-cap. If you want emerging markets, this fund does not give them to you unless you add a separate one.

So the spectrum runs: Vanguard (everything), HSBC (everything except small caps), Fidelity (developed world only).

Charges

Cost is the part you control, and over decades it compounds.

• Vanguard FTSE Global All Cap: ongoing charge around 0.23% a year.
• HSBC FTSE All-World: ongoing charge around 0.12% a year (recently trimmed from 0.13%).
• Fidelity Index World: ongoing charge around 0.12% a year.

The HSBC and Fidelity funds are roughly half the cost of the Vanguard fund. On a £50,000 pot, the difference between 0.12% and 0.23% is around £55 a year, which is not trivial when it recurs and compounds. Remember this is only the fund charge; your platform also levies its own fee, which our investment platform fee calculator helps you weigh up.

Which should you pick?

There is no single winner, but the decision is simple once you frame it around exposure and cost.

Pick the Vanguard FTSE Global All Cap if you want the most complete single fund and are happy to pay a little more for small-cap inclusion and the widest diversification. It is the “buy one fund and never think about it” choice for people who want true all-cap, all-world coverage.

Pick the HSBC FTSE All-World if you want almost the same global exposure, including emerging markets, at roughly half the charge. Dropping small caps costs you very little in practice, so for many investors this is the best balance of breadth and cost.

Pick the Fidelity Index World if you specifically want developed markets only, or if you plan to bolt on a separate emerging markets fund to control that weighting yourself. Just go in knowing it excludes emerging markets entirely; that is a deliberate choice, not an oversight.

For most UK passive investors building one global holding, the HSBC FTSE All-World is the sweet spot: full developed-plus-emerging coverage at a low charge. Those who want every small cap too lean Vanguard; those who want developed-only simplicity lean Fidelity.

A few practical notes

All three come in accumulation (reinvests dividends) and income (pays them out) versions; inside an ISA or SIPP, accumulation is usually simpler. Switching between these funds inside a tax wrapper does not trigger capital gains tax, so you are not locked in forever. And do not chase tiny past-performance gaps between them: they track different indices, so short-term differences mostly reflect small-cap and emerging market weightings rather than skill.

To go deeper, see our guides on how to buy your first index fund, the wider best index funds in the UK roundup, and active vs passive investing. You can check current holdings and charges on the Vanguard fund page and read about index construction at FTSE Russell.

Frequently asked questions

What is the difference between Vanguard, HSBC and Fidelity index funds? They track different indices. Vanguard FTSE Global All Cap covers large, mid and small caps across developed and emerging markets. HSBC FTSE All-World covers developed and emerging markets but only large and mid caps. Fidelity Index World tracks MSCI World, which is developed markets only with no emerging market exposure.

Which is the cheapest of the three global index funds? The HSBC FTSE All-World and Fidelity Index World funds are the cheaper pair, with ongoing charges around 0.12% a year. The Vanguard FTSE Global All Cap is higher at around 0.23%. Always confirm current charges on each fund’s factsheet, as they change.

Does Fidelity Index World include emerging markets? No. Fidelity Index World tracks the MSCI World index, which holds developed markets only. If you want emerging market exposure you would need a fund that tracks an all-world index, such as the HSBC or Vanguard options, or add a separate emerging markets fund.

Is the Vanguard FTSE Global All Cap worth the higher charge? It depends how much you value small-cap exposure and the broadest possible diversification. The Global All Cap adds thousands of small-cap holdings the others lack, but small caps are a small share of the total, so the practical return difference is usually modest. Many investors prefer the cheaper HSBC fund.

Can I switch between these funds without paying tax? Inside an ISA or SIPP, switching between funds does not create a capital gains tax bill, so you can change your mind later. Outside a tax wrapper, selling one fund to buy another is a disposal that could trigger capital gains tax depending on your gains and allowance.