What is an ETF ISA?
An exchange traded fund (ETF) are funds that issue shares which are traded on a stock exchange.
They can invest in a broad range of assets providing investors with access to specific markets, sectors and strategies at relatively low cost.
How does an ETF work?
ETFs provide investors access to a wide range of asset classes such as equities and fixed income. they can:
- Follow the performance of a market index such as the FTSE 100 or FTSE 250
- Follow the performance of a smart beta index which is weighted to deliver a specific outcome such as income or low volatility e.g. for low volatility smart beta, ETFs will seek to minimize volatility by tracking indices that demonstrate lower fluctuations during market turbulence.
- Be actively managed by a dedicated manager
- Be actively traded like any stock on an exchange
- Have low charges as passive trackers are generally cheaper than actively managed funds
With ETFs you typically know what you are investing in as there is transparency to what securities the fund holds as well as performance and costs (total expense ratio).
How do I invest in an iShares ETF ISA?
You can invest in iSahres ETFs via a platform provider. Platforms include:
- Fidelity - Through the Fidelity platform once you set up an investment account you can invest in a wide range of iShares ETFs
- Hargreaves Lansdown - Provide a list of popular iShares ETFs their clients are buying at any given time.They provide access to most major EFT providers.
- AJ Bell - With AJ Bell you can invest in ETF providers such as Amundi, Franklin, HSBC and Invesco. AJ Bell provides a screening tool to allow you to drill down to the ETF that might best suit your
