Why ETFs are a great choice for your ISA

Are you looking to open a new ISA with the new tax year, or just reviewing ISAs that you already own? Find out why ETFs are a great choice for your ISA.

For the opportunity to earn decent returns, particularly over the longer term, ISA investors need to put their money to work in the stock market with a Stocks & Shares ISA.

But how to invest in the markets? That’s where exchange-traded funds (ETFs) come in.

Here are 5 reasons why ETFs can be a great choice for your ISA…

1. An easy way to invest in the stock market

Instead of trying to pick the best-performing shares in the stock market — which even the professionals struggle to do — with ETFs you’re invested in every share in your chosen market. Most ETFs simply aim to match the performance of a market index like the FTSE 100 (the ‘Footsie’), and generally do a pretty good job.

2. Less risky than investing in individual shares

Individual shares are volatile, and companies can go bust. However, with ETFs you’re buying into investment funds which commonly hold hundreds of different shares or bonds. This spreads investment risk in your ISA.

3. Shares, bonds, gold, climate change & more!

ETFs offer a huge range of choice for your ISA, from individual stock markets like the FTSE 100 or S&P 500, to regions such as Europe or Asia, to global market exposure. There are also ETFs for bonds, commodities like gold, and investment themes such as climate change or digitalisation. Plenty of ways to build the ISA you want. See InvestEngine’s range of hundreds of ETFs

4. Low costs

ETFs have some of the lowest investment costs around, so more of what you make goes in your (tax-free) pocket rather than someone else’s. The annual management charge on some ETFs is as little as 0.05% — equivalent to just 50p a year on a £1,000 investment to own some of the world’s biggest companies! That’s a fraction of the charges you could be paying with traditional investment funds such as unit trusts, Oeics and investment trusts.

5. NO stamp duty

With most share purchases in the UK, investors have to pay 0.5% stamp duty — even in an ISA. But with ETFs there’s no stamp duty. This additional tax saving gives your ISA investment a head start because you’re not losing half a percent of your money upfront.

Build your ETF ISA portfolio with InvestEngine and pay zero ISA fee!

With an InvestEngine ISA, you can get all the benefits of ETF investing plus no dealing charges or account fee! 

InvestEngine offers commission-free DIY investing across a choice of over 500 ETFs from iShares, Vanguard and other leading brands. We also offer professionally managed portfolios of ETFs where we’ll do all the hard work for you for just 0.25% a year (ETF costs also apply).

Ready to get started? Click the button below to get investing! 

Important information

Capital at risk. The value of your portfolio with InvestEngine can go down as well as up and you may get back less than you invest.

This communication is provided for general information only and should not be construed as advice. If in doubt you may wish to consult a professional adviser for guidance.