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?

As the underlying holdings of an ETF's are openly traded securities, they will be vulnerable to market price fluctuations.

Benefits

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.

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.

*Please note that the tax treatment of the products depends on the individual circumstances of each customer and may be subject to change in the future.