Legal & General UK Index: December 2025 fund update

• Legal & General is one of the UK’s leading providers of passive funds

• We view this fund as a great option for accessing the whole UK market

• It’s one of the lowest cost funds tracking the FTSE All-Share Index

• This fund currently features on our Wealth Shortlist of funds chosen by our analysts for their long-term performance potential

How it fits in a portfolio

The Legal & General UK Index fund provides investors with broad exposure to the UK market. It’s a low cost way to track the FTSE All-Share Index, which covers 98% of the UK’s total market value. The companies in the index vary in terms of their size and the sectors in which they operate.

An index tracker fund is one of the simplest ways to invest and we think this fund could be a great low-cost starting point for an investment portfolio aiming to deliver long-term growth. A broad UK tracker fund could help diversify a portfolio that is focused on other regions like Asia or the US.

Manager

Legal & General has managed index tracker funds for over 30 years and is one of the largest providers of index funds in the UK. That means it’s got the resources and expertise to track indices as closely as possible, and the scale to keep charges to a minimum.

Each index fund at Legal & General has a primary and secondary manager, though in practice the team as a whole helps to manage each fund. Jason Forster is responsible for UK fund management and is the primary manager for this fund. He previously worked on the firm’s index fund management systems before becoming a fund manager in 2002. Konstantins Golovnovs is the secondary manager for this fund. He joined Legal & General’s graduate scheme in 2010 and worked his way up to become a fund manager.

Process

This fund tracks the performance of the FTSE All-Share Index. It aims to invest in every company in the index and in the same proportion. This is known as full replication and helps the fund closely match the returns of the benchmark.

The fund is made up of around 550 companies, but the top ten companies account for 40% of the portfolio. AstraZeneca, HSBC and Shell are currently the largest companies in the fund. It also invests in smaller companies which can increase risk.

In any index tracker fund, factors like withholding taxes, dealing commissions and spreads, and the cost of running the fund all drag on performance. The team try to keep the fund’s turnover, the frequency at which shares are bought and sold, as low as possible to reduce some of these costs.

Legal & General cross trades shares internally across all its own funds when there’s an index rebalance. This provides a saving on Stamp Duty, which is a government tax that’s paid on the purchase of UK listed shares. Trading efficiently like this helps to reduce the tracking difference between the fund and the index.

Culture

Legal & General has developed its passive fund range over the last three decades. The company manages around £510bn in tracker funds, allowing it to offer a wide range of index-tracking options.

Legal & General has built a team of experienced passive fund specialists and is innovative too. If an index doesn’t exist for a sector the team would like to track, they’ll often work with index providers to create one so they can track it.

The team running this fund works closely with various risk departments across the business. We believe this provides support and adds challenge where appropriate.

Employees are also encouraged to participate in Legal & General’s sharesave scheme which should encourage them to be more engaged with the growth of the company. In addition, a portion of fund managers’ bonuses are invested into the funds they manage. By doing this, their interests are further aligned with the investors in the fund.

ESG Integration

Legal & General Investment Management (LGIM) is predominantly a passive investor, but we are impressed with the extent to which they’ve woven Environmental, Social and Governance (ESG) into its culture. Being a mostly passive fund house hasn’t stopped them being innovative when it comes to ESG.

In May 2019, the firm launched its ‘Future World’ range of funds, which invest more in companies that score well on a range of ESG criteria, though the UK Index fund isn’t part of that range.
In 2019, LGIM established its Global Research and Engagement Groups, which bring together representatives from the investment and stewardship teams, in order to unify their engagement efforts. Engagement is conducted in line with the firm’s comprehensive engagement policy. A detailed description of the firm’s engagement and voting activity (including case studies) is available in its annual Active Ownership report.

LGIM’s Stewardship team is responsible for exercising voting rights globally, both for LGIM’s active and index funds. Voting decisions are publicly available through a tool which allows a user to search for any company to find out how LGIM voted, and a detailed rationale is provided for votes against management and abstentions.

Investors should note that, as of the end of October 2025, this fund invests 13.70% in companies involved with the extraction of oil, gas or coal. This could leave the fund vulnerable to fluctuations in commodity prices, regulatory changes aimed at reducing carbon emissions and potential shifts in consumer preferences towards sustainable alternatives. However, the fund’s composition represents the exposure of the FTSE All-Share Index meaning the team has no control over the companies included in this passive fund.

Cost

The fund has an ongoing annual fund charge of 0.11%, but a discount of 0.07% is available for HL investors, which reduces the charge to 0.04%. We believe this is excellent value when compared with other UK tracker funds. Our platform charge of up to 0.45% per annum also applies, except in the Junior ISA where no platform charge applies.

Part of the fund discount is provided through a loyalty bonus, which might be subject to tax if held outside of an ISA or SIPP.

Performance

Over the last 10 years, the fund has tracked the FTSE All-Share Index closely, rising 113.64%* compared to 115.13% for the index. As you would expect from an index tracker fund, it’s fallen behind the benchmark over the long term because of the costs involved in running the fund. However, the tools used by the managers have helped to keep performance tight to the index. Remember, past performance isn’t a guide to future returns.

The FTSE All-Share Index currently has significant exposure to sectors such as financials, consumer staples and industrials. Therefore, these sectors are likely to have the biggest impact on the fund’s performance, though the makeup of any index can change over time.

Over the past 12 months, the fund gained 19.77% versus 19.82% for the index. Large companies performed better than small and medium-sized companies during this time.

The financials sector contributed significantly to the fund’s overall returns as UK banks performed strongly. Higher interest rates have benefited banks as they increase the cost of borrowing, which boosts profits. Aerospace & defence companies, like Rolls-Royce, also performed strongly driven by the UK’s commitment to increase defence spending.

Given Legal & General’s size, experience and expertise running index tracker funds, we expect the fund to continue to track the index well in the future, though there are no guarantees.