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We understand that stepping into the world of investments can be overwhelming. We’re committed to empowering every investor towards financial growth.

Our platform is designed for long‑term investing, so it’s normal to experience ups and downs during your investment journey. If your portfolio isn’t performing as well right now or your circumstances have changed, you can always amend your savings plan or pause your contributions.

No matter what you need assistance with, we’re here to help. We’re always improving our products and services so if there is anything that you feel will help you better manage your account with us, please let us know.

How does InvestEngine support customers with additional needs?
We ensure accessibility by using an easy‑to‑read font and can provide printouts of materials upon request. Our client support team is also available to accommodate phone support if you need it—just drop us an email. Please see here for further information on the additional support available for clients.

What if I need additional financial advice?
While InvestEngine doesn’t provide financial advice, we encourage you to consult an independent financial adviser for tailored guidance.

If you need additional support managing your finances, there are several organisations that can help: 

• StepChange
• Citizens Advice
• Pensions and Lifetime Savings Association
• Money & Pensions Service

What should I do if my financial circumstances change?

We understand circumstances can change at any time. InvestEngine offers clients the flexibility to manage their investments to suit their financial needs.

You can amend your Savings Plan or pause contributions at any time through our platform. There are no fees for withdrawing your funds, and you can access them at any time.

Further information can be found here.

I’m feeling anxious about my investments. What can I do?

If you’re feeling stressed, it might be time to reassess your attitude to risk. Use our risk questionnaire in your Managed Portfolio to adjust your risk level if needed.

Remind yourself why you started investing in the first place. Are your goals long‑term (e.g., retirement) or short‑term (e.g., saving for a house)? Keeping your objectives in focus can help you stay grounded and avoid impulsive decisions.

• Note: If your goals haven’t changed, market fluctuations may not significantly impact your long‑term plans.

If managing your investments feels overwhelming, consider working with a financial advisor or opting for a Managed Portfolio. Professional guidance can provide reassurance and a clear strategy tailored to your goals and risk tolerance.

What if my portfolio isn’t performing well?

Investing comes with its ups and downs, and it’s not uncommon for portfolios to underperform at times. If you’re concerned about your portfolio’s performance, please contact us to discuss further.

• Note: if you decide to sell your investments during a downturn in the market, you’ll lock in that value. Staying invested may give your portfolio time to recover.

Investing is a long‑term game. Short‑term fluctuations are normal, and selling in a panic could lock in losses. Try to stay focused on your long‑term strategy and avoid reacting to market movements, if you can.

If an ETF pays out a dividend, in some cases withholding tax (WHT) can be due. This is dependent on the ETF and where it is traded and domiciled.

The large majority of InvestEngine’s ETFs are domiciled in Ireland, and the dividends are paid without any withholding tax deducted. 

InvestEngine provide some ETFs which are domiciled in the Netherlands or Luxembourg. In these cases, some of the ETFs may pay their dividends that have the withholding tax deducted at source; so the withholding tax is deducted before it is paid out to the owner of the security.

InvestEngine do not provide an advisory service, so we can not provide any tax advice and we must ask clients to do their own due diligence. This includes researching any ETFs you purchase; we provide a Key Investor Information document at the bottom of every ETF page, which you may find useful when doing your own due diligence. You can view our ETFs in our ETF range and view these supporting documents.

For any clients who want to know more about the Excess Reportable Income (ERI) on our ETFs, we must direct you to the fund manager of the ETF for this.

If you would like to know about the UK Fund Reporting Status (UKFRS), we can inform our clients that all of our ETFs (funds) are UK reportable.

An ETF is a type of investment fund that’s designed to track the performance of a stockmarket or other financial index.

The Vanguard FTSE 100 ETF, for example, seeks to mirror the returns of the FTSE 100, an index of the biggest UK shares such as BP, Lloyds Bank and Tesco. 

Most ETFs invest in shares or bonds, but there are also funds that track the price of gold and other commodities — even bitcoin. There are also ETFs that focus on specific investment themes such as cybersecurity and climate change. 

ETFs are bought and sold on the stock market like shares, hence their full name of exchange‑traded funds. 

They can be traded throughout the investing day — unlike traditional index‑tracking funds such as unit trusts which can only be bought or sold once a day through their fund manager. 

Most ETFs are passively rather than actively managed — they simply buy and hold investments to mimic the performance of an index, rather than trying to beat the market by stockpicking and investment timing. This buy‑and‑hold approach also helps to keep ETF costs down. 

ETFs have grown in popularity among investors because of their low charges, straightforward investment approach, and the wide choice of stock markets and indexes they track. 

ETFs are not to be confused with Exchange Traded Commodities (ETCs), which we also offer on the platform. An ETC does not hold assets itself, but is structured as a debt instrument underwritten by a bank for the issuer of the ETC, which are backed by the commodities they track as collateral.

ETCs are not the same as commodity ETFs, which do directly invest in and hold physical commodities.

In functionality ETCs are very similar to an ETF; they are listed on exchanges and valued based on the price changes of the underlying asset being tracked. They also share many of the benefits of ETFs in their low costs and easy diversification.

You are able to find out more information about an ETC, it’s composition and structure on the KIID provided with any of the ETCs on our platform.

Ready to build your own portfolio? View our ETF range here

Important information

This communication is provided for general information only and should not be construed as advice. 

If in doubt you may wish to consult a professional adviser for guidance.

ETFs invest in shares or other assets to track the performance of a stockmarket or bond index, or the price of a commodity such as gold. 

Typically this involves the ETF buying each of the securities in the index according to their percentage weight within that index. 

So, if BP is 3% of the UK’s FTSE 100 index, a FTSE 100 ETF would invest 3% of its portfolio in BP shares, and so on for the other shares in the FTSE 100. 

Having copied its make‑up, the ETF then naturally mirrors the ups and downs of the index. 

An ETF that buys all the securities in an index according to their weights is described as using full replication. 

Some ETFs, particularly, those tracking indexes containing thousands of securities (such as the MSCI All Country World Index) may seek to match the index performance by investing in a selection of securities rather than all of its constituents. This is variously called sampling or partial replication or optimised replication. 

All the above are also termed physical ETFs because they are buying actual shares or other assets of the index they are tracking. 

Alternatively, with synthetic or swap‑based ETFs, the ETF doesn’t directly invest in the index’s securities. Instead, it has an agreement with an investment bank in which the bank promises to pay the ETF the return on the index, in exchange for a fee. 

Synthetic ETFs can be useful for tracking markets that are more difficult or costly to invest in directly. However, because there is a swap transaction with a third‑party bank, there is a potential downside from so‑called counterparty risk. 

See the hundreds of ETFs available for commission‑free DIY investing with InvestEngine

With investors in the UK putting tens of billions of pounds into ETFs and the choice growing all the time, they’re fast becoming one of the leading ways to invest in shares, stock markets and more!

The ETFs we invest in are simple buy‑and‑hold investments, which passively track the performance of an index or pool of investments. Index‑tracking ETFs do not attempt to beat the market like an active fund; rather, they try to be the market.

ETFs have very low fees because tracking an index is inherently less expensive than active management. They are also tax efficient and not subject to 0.50% stamp duty, which is charged on most UK share purchases.

Here are 5 reasons why ETFs can be a great choice for your portfolio:

1. An easy way to invest in the stock market

Instead of trying to pick the best‑performing shares in the stock market — which even the professionals struggle to do — with ETFs you’re invested in every share in your chosen market. Most ETFs simply aim to match the performance of a market index like the FTSE 100 (the ‘Footsie’), and generally do a pretty good job.

2. Less risky than investing in individual shares

Individual shares are volatile, and companies can go bust. However, with ETFs you’re buying into investment funds which commonly hold hundreds of different shares or bonds. This spreads investment risk in your ISA.

3. Shares, bonds, gold, climate change & more!

ETFs offer a huge range of choice for your investment, from individual stock markets like the FTSE 100 or S&P 500, to regions such as Europe or Asia, to global market exposure. There are also ETFs for bonds, commodities like gold, and investment themes such as climate change or digitalisation. Plenty of ways to build the ISA you want. See InvestEngine’s range of hundreds of ETFs

4. Low costs

ETFs have some of the lowest investment costs around, so more of what you make goes in your (tax‑free) pocket rather than someone else’s. The annual management charge on some ETFs is as little as 0.05% — equivalent to just 50p a year on a £1,000 investment to own some of the world’s biggest companies! That’s a fraction of the charges you could be paying with traditional investment funds such as unit trusts, OEICs and investment trusts.

5. NO stamp duty

With most share purchases in the UK, investors have to pay 0.5% stamp duty — even in an ISA. But with ETFs there’s no stamp duty. This additional tax saving gives your ISA investment a head start because you’re not losing half a percent of your money upfront.

How best to invest in the stock market? There are many different ways to put your money to work in the markets: shares, ETFs, and other types of funds like unit trusts and investment trusts.

If you’re struggling to choose between these different investment types, here’s a quick comparison to help you decide which is best for you: 

Shares 

If you want to invest in a particular company, whether Tesla or Tesco, then buying their shares is the obvious route. 

Most shares are traded on a stock market with prices that constantly change throughout the business day. 

You’re backing a specific business and returns can be high. As well as potential increases in the value of the shares, many companies also pay their investors a dividend, generally twice or more a year. 

But, make no mistake, investing in a company’s shares is risky. Share prices of individual firms can be very volatile. Sharp falls in short periods of time are always a possibility and, at worst, you can lose all your investment if the company goes bust. 

ETFs

Rather than picking individual companies to invest in, with an ETF you’re generally investing in a whole market. 

Most ETFs aim to closely track the performance of a specific stockmarket index such as the S&P 500, which comprises the 500 biggest companies in the US. 

Typically they do this by spreading your money across the shares of all the companies in the index according to their percentage weight within that index. With the S&P 500, for example, this gives you access to the likes of Apple, Amazon and Tesla in a single investment.

As well as share indexes, there are ETFs that seek to track the price of gold and other commodities or bonds. There are also ETFs that focus on specific investment themes such as cybersecurity and climate change. 

ETFs are bought and sold on the stock market like shares, hence their full name of exchange‑traded funds. But as funds that hold a spread of different investments, they’re less risky than buying individual shares. 

Compared with other types of investment funds, ETFs can also be very low cost — with annual charges of as little as 0.05%, or just 50p per £1,000 of investment. 

And, unlike with purchases of shares in the UK where you have to pay 0.5% stamp duty (as well as any dealing commission), there’s no stamp duty to pay on ETFs. 

However, because most ETFs are designed simply to track a market index, you don’t have the potential to outperform the index and, when the market falls, so will the value of your investment. 

Unit trusts and investment trusts 

Unit trusts (and their close cousins ‘OEICs’) and investment trusts are also types of investment funds. Like ETFs, they hold a spread of different shares or other investments. 

But unlike ETFs, in most cases these funds are trying to beat the performance of their chosen market. 

They do this by buying investments they think will do well, and avoiding those they think will do badly. 

Some of these ‘actively managed’ funds outperform, but most don’t — particularly over time. They also tend to have higher charges than ETFs. 

Unit trusts/OEICs are simpler than investment trusts. The former can only be bought once a day through their fund manager, there’s no stamp duty to pay and generally no dealing commission. 

Investment trusts, on the other hand, are bought and sold in the stock market like shares or ETFs. They can increase their investment exposure using borrowed money (called ‘gearing’). 

Shares of an investment trust can also diverge from the value of their underlying portfolio of investments, and may trade at a ‘discount to net asset value (NAV)’, or at a ‘premium’. 

Both gearing and changes in an investment trust’s discount/premium can enhance or detract from the performance of the underlying investments. 

And like other shares in the UK, purchases of most investment trusts are subject to 0.5% stamp duty. 

At InvestEngine, our focus is on ETFs. Their low costs and diversification, along with wide choice and ease of buying and selling, make them an excellent option for investors’ portfolios. Find out more about why we love ETFs.

Here’s why exchange‑traded funds (ETFs) could be a good choice for investment beginners: 

Simple investing

Rather than picking individual stocks, with ETFs you can invest in an entire market in one go.

For example, a single purchase of the Vanguard S&P 500 ETF spreads your money across the S&P 500, a stock market index that tracks the performance of 500 of the largest companies in the United States — including big names such as Apple, Tesla and Amazon. 

So through one investment, you’ve got yourself exposure to 500 of America’s biggest companies!

As well as being a simple way to invest, the wide range of holdings in many ETFs reduces risk compared with buying individual shares. 

Easy to buy and sell 

The growth of low‑cost investment apps and digital services means you can now open an account and buy ETFs in just a few clicks in much the same way that you can buy stocks & shares.

You can get started for £100 or less. And with an app like InvestEngine that has ‘fractional investing’, you’re able to invest as little as £1 in any ETF, regardless of its share price. 

Low costs

ETFs have some of the lowest investment costs around, so more of what you make goes in your pocket rather than someone else’s. 

The annual management charge on some ETFs is as little as 0.05% — just one‑twentieth of 1%, equivalent to 50p a year on a £1,000 investment — and there are plenty charging less than 0.3% a year. 

There’s also no stamp duty to pay when you buy ETFs — unlike with most UK shares — which saves you 0.5% upfront. 

Take your pick! 

As well as ETFs for a wide variety of stock markets and other types of investment such as bonds and precious metals, there are ETFs that focus on specific investment themes such as climate change (eg. L&G Clean Energy ETF) and digitalisation (eg. iShares Digital Security ETF).

ETFs that screen their investments for ESG criteria (environmental, social and governance) such as iShares MSCI USA ESG Screened ETF, have become a popular trend in recent times. 

Sometimes you will find that an ETF does not hold the same securities as the index it is tracking, which may mean that the ETF is ‘synthetic’.

While a synthetic ETF will still aim to replicate the performance of the index it is tracking, it does not achieve this by buying all the stocks (or bonds) in the underlying index, as with a ‘physical’ ETF. Instead, a synthetic ETF will enter into a deal with a counterparty (usually a bank) who agrees to swap the returns of the index with the returns from the basket of assets which the ETF holds.

This is often done to reduce the ETF’s costs, and/or when there are particular tax advantages to not holding the index’s underlying stocks directly, which can result in improved performance.

It is important to note that a synthetic ETF’s holdings may therefore differ from the index the ETF is tracking.

For example, the Invecso MSCI Europe UCITS ETF is a synthetic ETF, which holds some non‑European companies while still replicating the performance of the European index. The ETF holds companies like Amazon and Nasdaq (correct at the time of writing), when you might expect it to hold only European companies.

A synthetic ETF can use any ‘basket’ of assets to replicate the index, as the index’s returns are contractually provided by the swap counterparty, rather than through holding the index’s underlying stocks directly.

You can view this previous post on our Community page, which explains more about synthetic ETFs.

We have a KIID at the bottom of every page when viewing the ETF, where you can find out more about the ETF’s replication method.

(Kindly note, we are not an advisory service and must ask all clients to do their own due diligence on all their holdings).