Exchange Traded Funds (ETFs)

What are Exchange Traded Funds?

ETFs, like unit trusts, are bundles of individual stocks offering diversification over a whole market or sector. However, they are listed on the London Stock Exchange and can be traded continuously during the day, like ordinary shares.

How Do ETFs Work?

ETFs trade on the London Stock Exchange's extraMARK market. Like shares they are traded through a broker at any time of day. Anything you may do with a share you can do with an ETF.

There is no initial set up fee or stamp duty when you buy them and they are eligible for ISAs.

How Risky are they?

ETFs instantly diversify your investment across a bundle of stocks or indices, so smoothing out the sharp ups and downs you may get form holding just one stock, therefore your risk can be reduced.

Benefits

Instant diversification over a whole market index or sector, so spreading risk and increasing access to range of securities.
Easily traded and continually priced throughout the working day like shares.
No stamp duty on purchases.
No initial set up fee.
Eligible for ISAs.