ETFs

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View our comprehensive list of ETFs here.

ETFs, or Exchange Traded Funds are traded in Europe and the US. There is an estimated $18bn currently invested and in the US $238bn.

They are bundles of different shares that may be based on indices, sectors, commodities or types of stock.

Examples in the UK are iShares which are quoted on the London Stock Exchange. They are managed by Barclays Global Investors.

Products that may appear to be similar or fulfill the same purpose are OEICS, Unit Trusts, Investment Trusts and Index Futures. BUT..............

ETFs are passively managed and therefore generally incur lower dealing costs than the aforementioned instruments.

They can easily and quickly be bought or sold (long or short): they are continuously priced just like shares.

What is more they pay regular dividends, are generally priced close to NAV and can be held within an ISA or PEP.

ETFs are exempt from Stamp Duty.

A comprehensive list of ETFs and their providers is now available here.

Questions asked by our readers:

Could I hold ETFs as if it is a share? - Leap Sean Ho
Yes- They are shares.

Why play long or short? - Leap Sean Ho
ETFs track indices, metals, sectors etc.etc. If you believe the underlying asset is going up you go long (buy the stock). If you think it is going down you go short (sell the stock)

Are there time limits imposed? - Leap Sean Ho
Not on buying ETFs-- exactly as shares.
Do you mean on going short? This is a bit more involved. It depends on your broker. In theory there should be no time limit.

And any cost involved? - Leap Sean Ho
In going long: Normal share dealing costs- commission etc, no stamp duty. There is a manegement fee "hidden" in the share price. This is called the Total Expense Ratio (TER). This may range from 0.15% to 0.8% This varies from provider to provider and instrument to instrument.For example Barclays iShares FTSE100 the TER is 0.4% iShares S&P Listed Private Equity the TER is 0.75%

Note that the TER is included in the quoted share price.