Exchange-traded funds (ETFs) have grown in popularity among investors over the past decade, with asset under management across the ETF universe now amounting to nearly $6 trillion.
ETFs are essentially closed-ended funds, which can invest in a variety of assets such as stocks, bonds and commodities. There are both active ETFs, with portfolio managers picking stocks, and passive ETFs, which track an underlying stock or bond index.
One of the reasons why ETFs are so popular is because their shares can be bought and sold on the stock market, making it easy for investors to trade them as and when they please.
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What’s more, ETFs tend to carry far lower fees. The lower the fee, the more of your money you get to keep.
Here are three ETFs to invest in today.
3 ETFS to buy now
iShares FTSE 100 UCITS ETF
The FTSE 100 has started the year off on a high. The index, which tracks the 100 largest UK listed companies, has performed well thanks to its heavy weighting towards resource stocks.
It’s worth keeping in mind that even though the index has been closing at record highs lately, this isn’t an indication of future performance.
But still the iShares Core FTSE 100 UCITS ETF remains a popular choice among investors for want to track the index without paying too much to buy the exposure.
By investing in an ETF that tracks the FTSE 100, investors can profit from the huge gains seen by some of its biggest companies. These include BP, Shell, Glencore and BAE Systems.
It has an ongoing charge of 0.07% and a dividend yield of 3.54%. It pays dividends quarterly.
Invesco Physical Gold ETC
The gold price recently hit an all-time high. At MoneyWeek we’ve always recommended holding a small amount of gold in your portfolio.
The price of gold isn’t tied to the price of other assets, so it makes for a good hedge against macroeconomic headwinds such as inflation.
Investing in gold via an ETF, or an ETC (ETCs work similarly to ETFs, but they invest in a commodity) is an easier way to do so than purchasing physical gold.
Invesco Physical Gold ETC is fully backed by physical gold bars stored in the vaults of JP Morgan Chase Bank. It has an ongoing charge of 0.12%, allowing investors exposure to the metal for a low fee.
L&G Quality Equity Dividends ESG Exclusions UK UCITS ETF
This fund tracks the performance of the FTSE All Share index, but screens out companies with poor ESG qualifications.
But note that it holds British American Tobacco, which some investors don’t consider an ESG-friendly investment.
The ETF invests in companies that distribute their income consistently and are able to sustain dividend payouts, so it might appeal to income investors.
The ETF has a 12 month yield of 5.59%, and it pays out its dividend quarterly. It carries an ongoing charge of 0.25%.
Nic studied for a BA in journalism at Cardiff University, and has an MA in magazine journalism from City University. She joined MoneyWeek in 2019.
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