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Always remember that investments can go down as well as up in value, so you could get back less than you put in. A rule of thumb is to hang on to your investments for at least five years to give them the best chance of providing the returns you want.
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When it comes to growing your money over the long term, investing in ETFs is usually the best place to start. Whether you have been in the game for decades or are brand new to investing, ETFs offer a huge range of benefits over trying to pick individual stocks and shares.
The days of calling up your stockbroker on a landline and having them pitch you companies to buy or sell are done. We now all have access to practically unlimited information at our fingertips, and the chances of finding a ‘hot top’ without getting into insider trading territory are practically non-existent.
Now the aim of the game is asset allocation and diversification. Asset allocation simply means how you choose to split your money across different countries and different asset classes.
Some investors prefer to go heavy on US stocks. Others prefer a more global approach. Those who like a bit of risk might allocate more to stocks and shares, while the cautious among us are going to go looking for the security that bonds and gilts can offer.
Diversification is how wide we spread that allocation. Again, the days of having five or six stocks in a portfolio and calling it a day are long behind us. Now, investors can buy ETFs in the UK that give access to thousands of individual holdings from all across the world.
We are going to cover the best ETFs to buy now in the UK, but that is not to say these are simply the hot picks trending on TikTok or Reddit. Our focus is on the best ETFs for investors over the long term. That means these are good ETFs to invest in now but also great choices for a long-term investment strategy.
Here are the best ETFs in the UK:
*The five-year performance of the ETFs in the table above is based on a lump sum investment of £10k in December 2017. This table was created on the 30th of December, 2022. Past performance is not a reliable indicator of future results.
Anyone in the UK will have noticed that a lot of the investing content online is focused on a US audience. That can make it difficult to decipher what is available to us here and what is reserved only for Americans.
When it comes to ETFs, there is good news and bad news. The bad news is that buying US ETFs in the UK generally isn’t possible. The good news is that most of them are easily replicated with UK-approved equivalents.
Here are some of the best US ETFs available in the UK:
One of the most popular US ETFs is the SPDR S&P 500 ETF (SPY). This well-known fund tracks the S&P 500, which is essentially the 500 biggest companies in the US.
You’ll recognise many companies in this ETF, such as Apple, Google, Coca-Cola, Disney and Nike.
The Vanguard S&P 500 ETF (VUSA) is one of the best ETFs in the UK for investors looking for exposure to the US stock market. Given that it makes up around 60% of the total global stock market, that’s probably a smart move.
As with most ETFs, the price is right, with VUSA charging an ongoing fee of just 0.07% per year.
To buy the ETF, tap this link to discover the best ETF platforms in the UK.
The Dow Jones Industrial Average (DJIA) is one of the oldest stock market indices in the world. While the S&P 500 was created in 1957, the DJIA started way back in 1896.
It only contains 30 stocks, and the companies are chosen by a committee with the aim of representing the US economy as a whole.
In the US, the most popular ETF that tracks this index is the SPDR Dow Jones ETF (DIA). A great Dow Jones ETF UK alternative is the iShare Dow Jones Industrial Average ETF (CIND) which does the same thing for an ongoing management charge of 0.33%.
To buy the ETF, tap this link to discover the best ETF platforms in the UK.
The third major index in the US is the NASDAQ 100. This is a much more recent invention, with the NASDAQ 100 commencing in 1985. It’s an index that includes only non-financial companies, with a heavy emphasis on technology.
All the biggest names you’d expect to find are there, including Microsoft, Alphabet (Google), Apple, Netflix, Meta (Facebook) and some smaller tech companies like Zoom and Docusign.
QQQ is the acronym you’ll most hear when it comes to investing in the NASDAQ 100, with the Invesco QQQ ETF a popular option in the States.
For us Brits, a great Technology ETF UK is the iShares NASDAQ 100 ETF (CNDX), which covers the same bases. Like CIND, it has an ongoing management charge of 0.33%.
To buy the ETF, tap this link to discover the best ETF platforms in the UK.
Investing in UK ETFs is fairly straightforward. The UK market is smaller and less diversified than the US, but there is still a range of different ETFs to choose from.
There are many different companies offering index tracker options for UK investors, but below are our picks for the best ETFs to buy now and into the future:
A FTSE 100 ETF is a great place to start for investing in the UK. The iShares Core FTSE 100 (ISF) is one of the best ETFs to buy now for exposure to the UK stock market.
The FTSE 100 index represents the largest 100 companies listed on the London Stock Exchange. It’s comprised of large multinational companies generally in stable industries like finance or resources.
Some of the biggest companies include AstraZeneca, BP, Unilever, HSBC and Shell.
ISF provides exposure to the FTSE 100 and is a very low-cost ETF. It only charges management fees of 0.07% per year.
To buy the ETF, tap this link to discover the best ETF platforms in the UK.
For investors looking to buy UK ETFs that are lower on the risk spectrum, an index-linked gilt ETF is an excellent option to consider.
Gilts are UK government bonds that pay a fixed level of interest. Index-linked gilts don’t pay a fixed interest rate but instead pay a fixed margin above inflation. This can make them attractive at times of high inflation (like now) because the income investors receive increases as inflation rises.
The iShares Index-Linked Gilt ETF gives investors exposure to this low-risk investment and charges just 0.10% per year in fees.
To buy the ETF, tap this link to discover the best ETF platforms in the UK.
While the FTSE 100 is the most commonly used measure for the UK stock market, it doesn’t necessarily reflect the UK economy. That’s because many of the biggest UK-listed companies make most of their money outside the UK.
The FTSE 250 provides a better measure of companies that do most of their business domestically. As well as the FTSE 100 companies, it adds others such as ITV, Easyjet, Marks & Spencer, Greggs and Pets at Home.
The Vanguard FTSE 250 ETF (VMID) is a great option for investors here, with a low ongoing management charge of 0.10%
To buy the ETF, tap this link to discover the best ETF platforms in the UK.
For investors looking for a little extra spice in their portfolio, emerging markets can offer some additional diversification and the chance to generate sizable gains. Emerging markets tend to be more volatile than developed economies like the US and UK, but in return, they can serve up some big wins for investors.
Here is one of the best emerging market ETFs available in the UK:
One of the best-emerging market ETFs in the UK is the iShares Core MSCI Emerging Market IMI ETF (EIMI).
Chinese companies make up the largest component of this ETF at around 27%, with India, Taiwan, South Korea and Brazil rounding out the top five. There are still plenty of major brand names to be found in this fund.
Samsung, Alibaba, Tencent, Infosys and The Saudi National Bank are just some of the multi-billion dollar companies that can be found in the list of top holdings.
EIMI tracks the MSCI Emerging Markets Index and offers exposure to a wide range of growth economies for a surprisingly low ongoing management fee of 0.18%.
To buy the ETF, tap this link to discover the best ETF platforms in the UK.
While all of the above are good ETFs to invest in, they require picking and choosing which countries and indexes to allocate your funds to. That’s fine if you want to do the research and analysis, but many investors want a more hands-off approach.
If that’s you, a global tracker might be just the ticket.
Here are some of the best global ETFs available in the UK:
This ETF offers a diversified portfolio of stocks from all across the world. This is weighted according to the global market, so North American stocks make up the bulk of the fund at around 63%.
European companies are the second largest holding with around a 15% weighting, followed by the Asia Pacific region and Emerging Markets, both with around 10% of the portfolio.
VWRL has 3,762 individual stocks in the portfolio (at the time of writing). This means that just about any public company you use on a daily basis or see in the news regularly is likely to be held in this ETF.
It’s a huge level of diversification and offers great value for money with an ongoing management charge of 0.22%.
To buy the ETF, tap this link to discover the best ETF platforms in the UK.
If you want the same level of reach as above but in the fixed interest and bond markets instead, the iShares Core Global Aggregate Bond ETF has got you covered.
Much like VWRL, AGBP invests in bonds from all across the world and over many different sectors. There are low-risk government bonds such as US Treasuries and UK Gilts, as well as government-issued bonds from France, Italy, Japan and Spain.
Corporate bonds are also included in this portfolio from large corporations such as US mortgage providers Fannie Mae and Freddie Mac, Goldman Sachs, Bank of America, United Health and Boeing.
In total, there are currently 10,674 different bond securities within this ETF, and it comes at a low annual cost of 0.10%.
To buy the ETF, tap this link to discover the best ETF platforms in the UK.
Lastly, an investor who wants a truly set-and-forget ETF can consider a multi-asset global tracker fund. These aren’t all that common in ETF form (they’re most commonly available as index tracker funds), but Blackrock offers various options across a range of risk levels.
These work in the same way as any of the other ETFs on this list, except that they hold more than one asset type.
Here is one of the best multi-asset ETFs available in the UK:
Finding the right level of risk will be different for every investor, so we’re just going middle of the road with this one. The Blackrock ESG Multi-Asset Moderate Portfolio (MAMG) offers investors a diversified ETF that holds around 45% in stocks and shares and around 55% in bonds and gilts.
For investors who want more risk, there is an ETF that takes the same approach, but with a higher weighting to shares (MAGR) or for those who want a more conservative approach, MACG has under 20% invested into the stock market.
To buy the ETF, tap this link to discover the best ETF platforms in the UK.
The above list provides a guide to some of the best ETFs to buy now for investors in the UK. But that does not necessarily mean they are all right for your individual circumstances.
When considering making any investment, it is vital to ensure that you are comfortable with the level of risk involved and that it fits into your overall financial plan. It is also important to consider other investments you already have and confirm that your new purchase will fit in with your overall strategy and portfolio. For more information, read How to Buy ETFs in the UK.
Here are the best ETF brokers in the UK:
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