Exchange Traded Funds
What are Exchange Traded Funds (ETFs)?
A new investment product that combines the benefits of a fund (instant diversification and access to a whole market or sector), with the benefits of a share (flexibility, a single price, ease of access and continuous dealing during market hours). They are available in some of the major UK, US and European Sectors. "iShares" is the brand name of the first ETFs to be launched in the UK.
How do they work?
ETFs can be bought and sold like any other shares listed on a stock exchange, but provide instant exposure to many companies. So an ETF gives you the flexibility of a share with the diversification of a fund. ETFs can be traded at any time during the day, unlike other funds, where deals are typically executed once a day. Your investment in a number of shares can be bought or sold in a single trade so you have less cost and hassle. They are listed on the London Stock Exchange on ExtraMARK, and there is no stamp duty to pay on purchases.
How risky are they?
ETFs are shares in a fund that aims to reflect the performance of a market index or a sector index e.g. technology. These are also known as iShares. As a shareholder in the fund you are investing in a basket of shares that make up the relevant index. Investing in a basket of shares provides greater diversification and therefore lower risk than holding just a few shares.
Which account should I choose to invest in ETFs?
You can invest in ETFs through our Trading Account, or Trading ISA Accounts.