5 ETF Must-Knows

1. What is the difference between ETFs and mutual funds or stocks?

iShares ETFs combine popular features of both. Like a mutual fund, an ETF is a collection of stocks or bonds. And like a stock, investors can buy and sell an ETF throughout the day as long as the market is open. More information can be found here.

2. What are the benefits of ETFs?

  • Efficiency and access: ETFs are traded on stock exchanges, so investors can easily make or add to an investment, or sell their investment.
  • Cost effectiveness: ETFs often have lower costs than other types of investment funds.
  • Diversification: ETFs provide access to a whole world of investment options, covering a broad range of asset classes, sectors and geographies.
  • Transparency: With ETFs, investors have daily visibility as to what securities the fund holds, how it’s performing and associated costs.

3. Are ETFs professionally managed?

iShares ETFs are overseen by some of the most experienced portfolio managers in the industry. Our fund managers aim to ensure the ETF does what it's supposed to do. This includes closely matching the ETF's benchmark index and keeping its fees low.

Index ETFs differ from actively managed funds, in which the manager attempts to achieve superior compared to a predetermined index, which often increases fees and taxes.

4. How do investors buy an ETF?

iShares ETFs can be bought and sold just like individual stocks via regulated stock exchanges. Investors may choose to include iShares ETFs as part of their tax wrapper such as an ISA, SIPP, GIA (General Investment Account) or offshore bond.

The iShares range comprises of more than 300 ETFs offering cost and diversification benefits to investors.

iShares ETFs are available on a wide range of authorised wrap platforms.

Stockbrokers

iShares ETFs can be bought or sold during daily trading hours using a stockbroker. The London Stock Exchange (LSE) has a handy tool to help locate a stockbroker.

iShares Connect

The iShares Connect programme links financial advisers looking to optimise their business models with Third Party Managers (TPMs), who are offering managed portfolio solutions. This union provides investment strategies to ultimately help end-clients reach their financial goals.

5. How can investors use ETFs in their portfolio?

ETFs are extremely versatile. Many investors use them to pursue long term goals, such as funding their retirement or growing wealth. Others take advantage of ETFs to help achieve specific goals, such as seeking income or managing against jumpy markets. And those with strong market views use ETFs to seek timely new opportunities, instead of picking individual stocks, bonds or mutual funds.