Why ETFs

Offering instant diversification, broad investment choice and low‐fees, ETFs make an excellent choice for investors.

“ETF assets close to $10tn after second year of record growth”

What is an ETF?

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

The iShares S&P 500 ETF, for example, tracks 500 of the biggest US companies including the likes of Apple, Amazon and Tesla, also known as the S&P 500 Index.

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

Like any investment, ETFs carry a degree of risk for investors.

Key reasons to invest with ETFs

They’re simple

ETFs let you invest in an entire market, quickly and in a single transaction, by tracking the performance of an index.

Wide investment choice

You can choose to invest globally, across specific regions or in individual stock markets. There are also ETFs for bonds, commodities and themes such as ESG or tech.

They’re diversified

ETFs often hold hundreds of individual shares or bonds, helping reduce risk and making them ideal for a long-term portfolio.

Easily bought and sold

ETFs are bought and sold on the stock market like shares — offering greater flexibility than traditional funds like unit trusts.

They’re low cost

ETFs have some of the lowest investment costs around — as little as 0.05% — so more of what you make goes in your pocket rather than someone else’s.

Zero stamp duty

With most share purchases in the UK, investors have to pay 0.5% stamp duty. But with ETFs there’s no stamp duty.