• Learn about investing
• Investment types explained
• Stocks and shares (equities)
• Unit Trusts and OEICs
• Investment Trusts
• Exchange Traded Funds (ETFs)
• Gilts
• Bonds
• Complex investments

Exchange Traded Funds (ETFs)

Exchange Traded Funds – what are they?

Exchange Traded Funds (ETFs) are issued as shares. Like a Tracker Fund, they reflect a particular market. There are also specialist ETFs that focus on different asset classes, such as property or Bonds.

ETFs – how are they traded?

ETFs are traded via a stock exchange, rather than a fund house, and have the added advantage that, being registered outside of the UK, under current regulations there's no Stamp Duty paid on purchases.

Unlike most Unit Trusts and OEICs, there's no initial fee to pay on purchases and the spread between the bid and offer prices is typically low. With typical management fees of just 0.5% a year or less, ETFs often appeal to investors, where cost is a particular consideration.

For active investors, the fact that ETFs are traded constantly throughout the trading day means they can take advantage of price movements. With an OEIC, Tracker Fund or Unit Trust the price is fixed once a day, so that opportunity is ruled out.

ETFs – how are they grouped?

ETFs are easily grouped according to the country or region in which they invest, the type of asset class they invest in, and the level of risk associated with them. On our website, you can choose ETFs by country or region, asset type and risk level.

ETCs – investing in commodities

For the more adventurous investor, there's a class of investment modelled on an ETF called an Exchange Traded Commodity (ETC). Rather than invest in shares or Bonds, you can invest directly or indirectly in commodities such as oil, corn and lean hogs.

Before trading in ETCs it is essential you fully understand the risks involved. The first time you trade in ETCs with us, you will need to complete an appropriateness assessment.

Investment carries a variety of risks

We understand that investing isn't right for everyone. It's well known that investments, their value and the income they provide can go down as well as up and you might not get back what you originally invested. If you're not sure about the suitability of an investment please contact our Advice team.

01296 41 41 41