Why spread bet on an ETF?

ETFs are simple, straightforward and effective. So why complicate them with spread betting? Tim Bennett explains.

Exchange traded funds are well known to many investors. They are shares that passively track an underlying index, sector or asset (say the price of gold). They benefit from being simple, cheap and usually very liquid. So why make life more complicated by combining an etf with a spread bet? The answer is to more accurately short sell (bet on falling prices).

ETFs that simply go long that is track say the FTSE 100 directly are very useful and do pretty much what it says on the tin. So for example, assuming there are no foreign currency considerations, a 1% movement in the underlying index will result in roughly a 1% movement in the ETF.

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Tim graduated with a history degree from Cambridge University in 1989 and, after a year of travelling, joined the financial services firm Ernst and Young in 1990, qualifying as a chartered accountant in 1994.

He then moved into financial markets training, designing and running a variety of courses at graduate level and beyond for a range of organisations including the Securities and Investment Institute and UBS. He joined MoneyWeek in 2007.