Avoid stockmarket pitfalls with ETFs

Britain's stockmarket is suffering from short-term trading and investor apathy, says a recent review. But exchange-traded funds (ETFs) could offer just the solution, says Paul Amery.

The British stockmarket must change if we want it to serve the long-term interests of businesses, investors and the economy. That's the conclusion of an interim review from economist and Financial Times columnist Professor John Kay. The good news is that exchange-traded funds (ETFs) already offer the ideal tool to get around many of the problems he identifies.

Firstly, costs. Kay says that a major long-term goal of his review is to cut the cost of intermediation. Fifty years ago, individuals typically owned shares directly. Now most of us invest via intermediaries, such as pension and mutual funds.

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Paul Amery

Paul is a multi-award-winning journalist, currently an editor at New Money Review. He has contributed an array of money titles such as MoneyWeek, Financial Times, Financial News, The Times, Investment and Thomson Reuters. Paul is certified in investment management by CFA UK and he can speak more than five languages including English, French, Russian and Ukrainian. On MoneyWeek, Paul writes about funds such as ETFs and the stock market.