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Best ETFs 2021
Whether you're looking for buy-and-hold, dividend or growth ETFs, we've covered the best ETFs to invest in.
An exchange-traded fund lets you invest in a whole range of different investments in one fell swoop – but how do you tell between them? It’s impossible to look at every investment in every ETF to find one that suits you, but equally, there’s a lot of choice on the market and a lot of differentiation between ETFs, so it’s not exactly an eeny meeny miny moe situation. There are several different types of investment style, including ETFs that offer exposure to global markets, ETFs for dividends, and ETFs in specific categories, like ethical ETFs or technology ETFs.
To help you decide, here are some of the most traded ETFs on platforms today, as well as some of the most talked about on Reddit and Twitter.
Top ETFs being bought on trading platforms today
| Rank | Code | ETF | Monthly change in trade volume | Latest close price |
|---|---|---|---|---|
| 1 | SPOG | iShares Oil & Gas Exploration & Production UCITS ETF | 520.76% | 1518.5p |
| 2 | STHS | PIMCO US Short-Term High Yield Corporate Bond Index UCITS ETF | 278.63% | £9.514 |
| 3 | INRG | iShares Global Clean Energy UCITS ETF | 239.94% | 958.25p |
| 4 | VWRL | Vanguard FTSE All-World UCITS ETF | 163.59% | 88.85p |
| 5 | VWRP | Vanguard FTSE All-World UCITS ETF | 120.16% | £88.37 |
| 6 | IUKD | iShares UK Dividend UCITS ETF | 85.96% | 753.5p |
| 7 | VUSA | Vanguard S&P 500 UCITS ETF | 85.88% | £59.8025 |
| 8 | IUSA | iShares S&P 500 UCITS ETF | 85.80% | 3546.875p |
| 9 | EQQQ | PowerShares EQQQ Nasdaq-100 UCITS ETF | 63.22% | 25972.6797p |
| 10 | CNDX | iShares NASDAQ 100 UCITS ETF | 62.89% | $864.88 |
To generate this list, we’ve aggregated trending ETF information from four of the UK’s leading investment platforms.
Top ETFs trending on Reddit and Twitter today
| Rank | Code | ETF | Monthly change in trade volume | Latest close price |
|---|---|---|---|---|
| 1 | ARKK | ARK Innovation ETF | 153.70% | $80.24 |
| 2 | QQQ | Invesco QQQ Trust Series 1 | 132.29% | $397.85 |
| 3 | TQQQ | ProShares UltraPro QQQ | 106.62% | $166.33 |
| 4 | UVXY | ProShares Ultra VIX Short-Term Futures ETF | 93.24% | $23.21 |
| 5 | SPY | SPDR S&P 500 ETF Trust | 85.62% | $424.185 |
| 6 | VOO | Vanguard S&P 500 ETF | 63.57% | $416.57 |
| 7 | VTI | Vanguard Total Stock Market ETF | 51.98% | $229.05 |
| 8 | IWM | iShares Russell 2000 ETF | 39.65% | $225.16 |
| 9 | SOXL | Direxion Daily Semiconductor Bull 3X Shares | 3.56% | $68.61 |
| 10 | SQQQ | ProShares UltraPro Short QQQ | 59.97% | $8.47 |
What makes a “good” ETF?
ETFs aren’t like active funds, where a “good” fund is judged by whether it achieves returns in excess of their benchmarks. Generally, the best ETFs achieve low-cost, efficient access to specific markets. They need to be cheap, liquid and be widely available. The market is always diversifying and new opportunities come to market all the time. Here are today’s trending ETFs and the best ETFs for different types of investor.
How to pick the best ETFs?
Picking the best ETFs is really just finding the one that suits your investing style best. You’ll also want to look at the goals of the ETF and performance. Our lists above can help you narrow down your search for ETFs — here are some of the next steps you could take.
- First, work out what your investment style is. Do you want growth, dividends, or stocks in specific industries? This will help you narrow down your search.
- Decide if you’re looking for sustainable or ethical ETFs? If so, you could search “ESG”, “ethical” or “sustainable” in your ETF screener to find them.
- Look at the goals of ETFs. You can find ETF goals in the Key Investor Information Document. We’ve explained some of the information you’ll find on it below.
- Look at performance. Past performance isn’t an indicator of future results, but it’s always a good idea to check if the ETF is reaching its goals. This is something your chosen trading platform should have, but can also be found on the Key Investor Information Document.
- Objectives and investment policy. This section tells you some information about how the ETF is managed, whether it is designed to track the performance of an index, the base currency, whether you’d expect to receive an income from dividends or if they’re reinvested.
- Risk and reward profile. This section shows you how risky the ETF is. Higher risk has the potential for higher returns. You can also see any other risks involved in the ETF.
- Charges. This shows any charges associated with the fund, including the ongoing charge, which is the fee that’s paid to the fund manager.
- Past performance. Exactly as you’d expect, this is the performance of the ETF. If it’s tracking an underlying index, you may see the performance against the index.
The Key Investor Information Document
This is a document of the key information about an investment, summarised into a few different sections. These are designed to be quick reads – at no more than 2 or 3 pages each, depending on the investment type, so they’re hardly competing with Harry Potter for page count.
The Key Investor Information Document is split into a few different parts:
Are ETFs better than investing in individual shares?
In some ways, yes. ETFs are a much quicker and cost efficient way to invest in lots of different shares without the faff or costs of making every individual transaction.
The main downsides of ETFs against buying individual shares is that you don’t get a say in the individual shares that it includes. Of course, you can choose one that suits you closest, but it won’t necessarily match what you might’ve done if you did it yourself.
Global ETFs
If you’re just looking for an ETF which is broadly exposed to the whole world, which you might want to do for simplicity’s sake, then these are some of the ones you could take a look at. Of course, these don’t invest in every single share…
Invesco MSCI World UCITS ETF
This ETF replicates the performance of the MSCI World Index, which has exposure to more than 1,600 stocks across 23 countries. It is over £2 billion in size (in the UK) and has a total expense ratio of 0.19%. It was launched in 2009.
The MSCI World Index reflects the performance of global stock markets in recent years, which means that it has a high weighting in technology, with its largest holdings in Apple, Microsoft, Amazon, Facebook and Alphabet. This doesn’t make it “just like any other technology ETF, as these holdings aren’t as concentrated as they would be on something like an S&P 500 ETF. As such, it is a good way to gain diversified exposure to global stock markets at low cost.
iShares MSCI Europe SRI UCITS ETF
If you’re interested in socially responsible investing, then this fund from iShares follows the MSCI Europe SRI Select Reduced Fossil Fuels index, tracking companies from across Europe. Only companies with high environmental, social and governance (ESG) ratings relative to their sector peers make it through the screening process.
The ETF avoids companies that mine or produce fossil fuels through extraction and production activities. The weight of each company is capped at 5%. It has a total expense ratio of 0.2%. The fund’s top holdings include Roche, Siemens and Unilever.
Vanguard FTSE All-World UCITS ETF
This ETF tracks the FTSE All World Index, which has around 3,900 holdings in nearly 50 countries. The holdings include emerging markets and covers more than 95% of the global investable market capitalisation. The fund is well-established, having run since 2012 and is now $5.3 billion (around £4.02 billion) in size.
The ETFs ongoing charge is approximately 0.20%. Vanguard employs partial physical replication to match the performance of the index, which means that it partially replicates the holdings on the underlying index. Its largest holding is Apple, but it also includes Chinese technology giants Alibaba and Tencent.
Dividend ETFs
Dividend ETFs are ones which invest in companies that pay dividends. Dividend investing has become popular in the US and the UK, with investors keen to generate an income from their portfolios. If that sounds like you, then check out the following ETFs.
WisdomTree Global Quality Dividend Growth UCITS ETF
This WisdomTree ETF tracks the WisdomTree Global Developed Quality Dividend Growth Index. It’s $45 million (£34 million) in size and has a total expense ratio of 0.38%. Unlike many dividend strategies, it retains a weighting to relatively low-yielding, but high growth companies such as Apple and Microsoft. This gives it a dividend yield of around 2.4% and good capital growth.
Fidelity Global Quality Income UCITS ETF
The Fidelity Global Quality Income UCITS ETF follows a similar approach to the WisdomTree fund, focusing on companies that can grow their dividends rather than those that are paying a high dividend today. Its income yield is a little higher, at 2.54% and its total expense ratio is similar at 0.4%.
The fund tracks the Fidelity Global Quality Income Index and is almost two-thirds weighted to the US. Information technology is the largest weighting, at around 20%.
Xtrackers MSCI World High Dividend Yield UCITS ETF
The Xtrackers MSCI World High Dividend Yield UCITS ETF has been one of the best in a tough environment. It is a small fund, just £31 million in size and has an annual management fee of 0.19%.
This ETF has a sustainable income screen, which means it avoids any companies where dividends look too high and are likely to be cut. It doesn’t have the same weighting in technology names as the other two dividend ETFs, with its top holdings including Proctor & Gamble, Verizon Communications, Roche and Merck. It still has more than half of its holdings in the US, but healthcare, consumer staples and financials each form a significant chunk of the portfolio.
Buy and hold ETFs
Buy and hold ETFs are precisely what they sound like: you buy them to hold for a significant period of time, with the hope that you’ll see some good growth. Here are some ETFs to consider.
iShares NASDAQ 100 UCITS ETF
It’s thought that any portfolio that hopes to capture future trends needs to have a decent weighting in technology. The right time to buy technology is always 10 years ago and the asset class is likely to be volatile. That said, a diversified holding in blue-chip technology companies will hopefully offer some good growth.
The NASDAQ stock exchange is a proxy for the technology sector. The iShares NASDAQ 100 UCITS ETF aims to replicate the performance of its 100 largest stocks, with a total expense ratio of 0.33%. Its largest holdings are the familiar FAANG names – Meta (Facebook), Amazon, Apple, Microsoft and Alphabet (owner of Google). The fund is $5.9 billion (around £4.47 billion) in size.
Vanguard FTSE Emerging Markets UCITS ETF
The Vanguard ETF tracks the FTSE Emerging Markets Index, which comprises 1,722 companies, and has an ongoing fee of around 0.20%. Around half the fund is in China, which has seen stronger growth than any other emerging market in recent years. It is also heavily weighted to a number of Chinese technology names – Alibaba and TenCent are its two largest holdings. That said, no company makes up more than 8% of the index, so it provides access to a broad range of countries and sectors.
iShares Ageing Population UCITS ETF
This ETF tracks the performance of the STOXX Global Ageing Population Index, which invests in developed and emerging market companies generating significant revenues from the growing needs of the world’s ageing population — talk about silver linings. The pandemic has served to highlight the political and healthcare difficulties created by ageing populations and this looks set to be a theme for the long term.
Around half of the fund is invested in the US, with a high weighting in pharmaceutical companies, including Novocure, Mirati Therapeutics and Varian Medical Systems. However, it is broader-based than a healthcare-only fund. It has an ongoing fee of 0.4% and is currently $280 million (£211 million) in size.
Growth ETFs
If you’re targeting growth above all else, these ETFs are a good place to start your search.
Invesco KBW Nasdaq Fintech UCITS ETF
The challenge with any technology investment is to find it before it takes off. Many sector-specific technology ETFs are in exciting, high growth areas like cloud computing and artificial intelligence – but they have already seen significant share price growth and, in some cases, look expensive. Fintech appears to have a bright future ahead — the sector is ripe for disruption and greater efficiency – but has not yet seen the share price growth of some other key sectors.
The Invesco KBW Nasdaq Fintech UCITS ETF has an ongoing fee of 0.59% and is invested predominantly in US-based financial technology companies. Its largest holdings are groups such as payment systems provider Block (formerly Square) and data provider CoreLogic.
Lyxor MSCI Disruptive Technology ESG Filtered UCITS ETF
“Disruptive” is a catch-all term for any technology with the ability to profoundly change the sector in which it operates. This means the ETF is more diversified than many of its technology peers. It aims to track the MSCI ACWI IMI Disruptive technology ESG Filtered Index, which in turn tracks those companies expected to derive significant revenue from areas such as 3D printing, the “Internet of Things”, cloud computing, Fintech, digital payments, healthcare, robotics, clean energy and smart grids, and cybersecurity.
The wider fund is now almost £8 billion in size, with an annual management fee of 0.15%. It is well-diversified, with the largest holding representing just 1.5% of the fund. Its top holdings include solar panel company Sunrun, biotechnology groupArena Pharmaceuticals and hydrogen fuel cell group Plug Power.
Invesco Global Water ETF
Clean water may yet prove the most precious commodity of the future. Some pension funds are already asking companies to report on their water strategies, viewing it as a key long-term business risk. Water assets can be a good source of diversification for a portfolio, but also a long-term capital growth story.
The Invesco Global Water ETF is now $24.7 billion (£18.68 billion) in size. It tracks the NASDAQ OMX Global Water Index, which follows those companies creating products designed to conserve and purify water for businesses, homes and industries. Its largest three holdings are Danaher, Geberit and Ecolab.
Bottom Line
As with all investments, the best for one person might not be the best for everyone. Take a look at our guide to choosing the best ETF above to help you find one that suits your investment style.
There are plenty of options available to choose between — most investment platforms have a stock screener that helps you narrow down your search, typically by performance, keyword and charges.
Best ETFs: a summary
Global ETFs
- Invesco MSCI World UCITS ETF
- iShares MSCI Europe SRI UCITS ETF
- Vanguard FTSE All-World UCITS ETF
Dividend ETFs
- WisdomTree Global Quality Dividend Growth UCITS ETF
- Fidelity Global Quality Income UCITS ETF
- Xtrackers MSCI World High Dividend Yield UCITS ETF
Buy and hold ETFs
- iShares NASDAQ 100 UCITS ETF
- Vanguard FTSE Emerging Markets UCITS ETF
- iShares Ageing Population UCITS ETF
Growth ETFs
- Invesco KBW Nasdaq Fintech UCITS ETF
- Lyxor MSCI Disruptive Technology ESG Filtered UCITS ETF
- Invesco Global Water ETF
Compare ETF investing platforms
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All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Past performance is no guarantee of future results. If you’re not sure which investments are right for you, please seek out a financial adviser. Capital at risk.
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