ETFs
Choose from over 400 exchange-traded funds (ETFs)
to invest in commission-free.
to invest in commission-free.
When you invest, your capital is at risk.
Other charges may apply. See our pricing table.
Other charges may apply. See our pricing table.
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ETF investing
ETFs or exchange-traded funds are funds that trade on a stock market. Most ETFs track the performance of a market index or a basket of stocks, so they are an easy way to spread your money across different companies in one go. Because ETFs are listed on stock markets, you can buy and sell them throughout the day.
Exchange
ETFs are bought and sold on a stock exchange.
Traded
You can buy and sell ETFs throughout the day.
Funds
ETFs invest in a collection of stocks, bonds or other assets.
Why invest in ETFs?
ETF Advantages
SimpleInvest in a ready-made basket of stocks or other assets, you don’t have to choose each stock individually.- Portfolio diversificationSpread your money across different companies and even different assets. All this should help you to reduce your stock-specific risk.
- Low costIndex ETFs are generally less expensive than actively managed funds and they should also cost less than buying each individual share.
- Tax-efficientSome ETFs are exempt from the UK’s 0.50% stamp duty. Hold your ETFs in an ISA or SIPP account and you could get extra tax efficiencies.
ETF Disadvantages
- Market returnsMost ETFs track an index. By design, it will never aim to beat the index.
- Diversification not guaranteedSector-specific ETFs might actually concentrate your risk, as any external effect on that sector could move the price of all stocks in an ETF.
- Liquidity riskLiquidity risk is the risk that an asset may be difficult to sell quickly or to sell at a reasonable price. Certain ETFs can suffer lower liquidity at times.
- Investment riskAny investment you make can rise as well as fall in value.
Please remember any tax treatment depends on your individual circumstances and may be subject to change in future. ISA and SIPP rules apply.
Types of ETFs to invest in
Equity ETFs
Index tracking ETFs are the most popular ETFs and provide exposure to the broader market, such as the S&P 500.
Bond ETFs
Ready-made portfolios of government and corporate bonds, covering different maturities and industries. Bond ETFs could help control the level of risk in your portfolio and potentially provide an income.
Commodity ETFs
Exchange-traded commodities (ETCs) give exposure to commodity markets and track things like gold or crude oil.
Dividend ETFs
These exchange-traded funds are focused on dividend-paying stocks and can provide a regular income.
Sector ETFs
Industry-focused ETFs can give you exposure to specific sectors you are interested in, from major industries like pharma to more niche ones like coffee.
International ETFs
Get exposure to different geographic areas and seize opportunities in developed and emerging countries.
Market-cap index ETFs
These are passive funds that select stocks based on a company’s market cap or value of its shares.
Sustainable ETFs
ESG investing is growing in popularity, and sustainable ETFs can help you diversify your investments in line with your ethical beliefs.
- 01Start with our ETF guide
- 02Research and find ETFs to buy
- 03Check you are using ETFs properly
- 04
Exchange-traded funds FAQs
Here you'll find answers to the most frequently asked questions. If you have a question that's not listed, please contact support.
Are ETFs and index funds the same?
ETFs and index funds are not the same. They are similar because both ETFs and index funds tend to be passive and track the performance of a stock market or sector. But the way they are built makes them quite different.
You can think of an ETF as more like a share. ETFs trade on the stock market so you can buy and sell them at any point. Index funds are not exchange-traded, so you can only buy and sell your holdings at certain points each day.
For more information on what makes an ETF different. Take a look at our ETF guide.
Are ETFs good for beginners?
ETFs can be a good option for both beginners and experienced investors. They are a great way to invest in a group of companies or other assets like bonds in one go and without having to choose the companies yourself. As with any investment, a decision to invest or not should take into account your personal circumstances and goals.
Is investing in ETFs safe?
When you invest in ETFs, like with any investment, you have to be prepared that the value of your investment can go down as well as up. ETFs are not necessarily safer than any other investment, often they track an index so if that falls, so will the value of your investments. What ETFs do provide is the ability for you to spread your money across many companies in one go. This way you’re not relying on one company for growth and this can reduce the risk that your investments fall in value.
Can I buy fractional ETFs via the Freetrade app?
At the moment you can’t buy fractional ETFs via the Freetrade app. However, fractional ETFs are on our product roadmap and will be available in the future.
