Want to grow your money without spending hours picking individual stocks? For beginners in the UK, learning how to invest in exchange-traded funds (ETFs) is a smart way to build a diversified portfolio with minimal effort.ETFs form the foundation of many investors’ portfolios, with the European ETF market taking in around £170 billion in inflows during 2024.
Some even choose to invest entirely in ETFs. Whether you’re starting from scratch, just dipping your toes, or completely sold on the idea of an ETF portfolio, this guide explains how to invest in ETFs in the UK, with straightforward, step-by-step advice tailored for beginners.
Because ETFs are listed on stock exchanges, the best way to invest is by using a share dealing platform (aka a brokerage account). These allow you to access ETFs which are trading openly on stock exchanges, acting as a middleman for you to buy them.
There are several platforms offering free ETF investing, which is ideal. We’ve set out which ones do this, below.
ETFs trade just like stocks, meaning you can access them easily on most of the best trading apps. Here are some of the UK’s best places to buy ETFs.
To make comparing even easier we came up with the Finder Score. Costs, features, ease and range of investments across 30+ platforms are all weighted and scaled to produce a score out of 10. The higher the score the better the platform – simple.
Read the full methodologyAll 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.
It can be. However, the process of investing in an ETF will depend on the platform you’re using.
Some investing platforms are designed with new investors in mind. And seeing as ETFs are typically seen as a suitable investment for beginners, some platforms make buying ETFs a piece of cake.
Unfortunately, that’s not the case with all providers. A rule of thumb is that if buying individual stocks on a platform is complex, it’s likely to be the same for ETFs.
Platforms target different types of investors, so you might want to pick a beginner-friendly platform with a great user interface, such as Freetrade, InvestEngine, or Trading 212.
"When I first learnt about investing, I was completely sold on the idea of using exchange-traded funds (ETFs), but lots of people leave out the details on where to invest in them. Now that I’ve found a low-cost platform with a decent choice of options, investing regularly has become part of my routine on payday.
If there’s one thing you’d tell a friend who’s thinking of investing in ETFs, what would it be?
Setting up a direct debit or regular investment for ETFs makes the process so much easier and stress-free; everything happens automatically and I barely have to think about it."
This depends on your goals, risk tolerance, and time horizon. ETFs can play a useful part in your portfolio because:
So, there are plenty of reasons why you might want to invest in ETFs, but the final decision comes down to what you want as an investor and your long-term plans for your portfolio.
Typically, beginner investors should look for cheap and diverse ETFs from developed markets. So, some of the most popular options for UK investors will be ETFs that mirror the FTSE 100 index, the S&P 500 index, or a global index. To help kickstart your research, here are some of the best beginner ETF in these categories.
Here are some of the best, and most popular S&P 500 ETFs available in the UK:
Here are some of the best-performing FTSE 100 funds according to JustETF:
Here are some of the largest and most popular global equity ETFs available to UK investors:
It can be, but it depends on the ETF you invest in. Over the years, plenty of markets and industries have grown, and ETFs tracking those sectors would have been profitable.
For example, a low-cost ETF tracking the S&P 500 index would have outperformed over 90% of actively managed large-cap funds between 2007 and 2022.
However, some markets – like Japan – and some investing themes – such as certain emerging market stocks – failed to grow significantly during that period, so that flat (or negative performance) would result in a less profitable ETF investment.
"When you start shopping around for ETFs to invest in, you'll notice that almost every option you see will have the letters, "UCITS" at the end of the name.
This stands for "Undertakings for Collective Investment in Transferable Securities". Rolls off the tongue doesn't it? It's an EU framework created to make sure funds are being advertised and marketed properly, reaching a certain standard.
Primarily, this means including a "key investor information document" (KIID). These rules are technically voluntary, but most ETFs abide by them. If you find an ETF that isn't UCITS compliant, it's wise to do even more due diligence and research.
Many popular US ETFs aren't available to UK investors because they don't comply with UCITS."
Investing in ETFs can lay a solid foundation for your portfolio, and it can add some versatility around the edges – covering all sorts of themes, sectors, and industries.
Learning how to invest in ETFs is straightforward enough. But the challenge is finding suitable ETFs for what you need, and a platform that lets you invest in the ETFs you want. Remember that although ETFs can play a leading role in your portfolio, you still need to consider the wider picture along with the pros and cons.
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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