Top 50 ETFs

With over 1,500 Exchange Traded Funds to choose from, compiling our Top 50 ETFs was never going to be a straightforward choice. 

The value of investments can fall as well as rise, and you may get back less than you invested. Past performance is no guarantee of future results
Source: Bloomberg

Investors have different investment objectives, face different tax rates, and have foreign exchange and re-investment costs that vary from provider to provider. For example, someone allocating to their SIPP may dislike dividends due to re-investment costs, while another investor may find that dividends make up a crucial component of their annual income.

See our Top 50 ETFs

In compiling this list we wanted to avoid naming numerous ‘thematic’ trading ideas which change from month to month, and also steer clear of listing leveraged and inverse ETFs which can only be held for a very short time. Subject to availability we opted for ETFs listed in GBP to reduce foreign exchange transaction costs.

Our Top 50 ETFs is split into the following categories for easier reference:

  • Portfolio building blocks
  • Sources of alpha
  • GBP currency hedging ETFs
  • Market hedging ETFs
  • ETFs for income seekers

Portfolio building blocks

With incredibly low ownership costs over the long run, all investors should consider holding a selection of these as long-term portfolio holdings.  These ETFs make up the core positions of an institutional asset allocator, and in the right weights they give investors almost all of the diversification they might need. 

Where possible we listed a distribution and total return ETF. Some parts of the marketplace, such as the FTSE 100, are well covered by various providers and so competition in the space is intense. To differentiate between the competing offerings, we assessed similar ETFs by TER, Bid-Ask Spreads, NAV Tracking Error and market cap. Where we had the option of a synthetic or physically replicated ETF, we tended to go for the latter, though we have no fundamental issue with the former and are confident that investors are safe-guarded against all but the most improbable default scenarios.

Sources of alpha

In addition to the traditional portfolio building blocks we list a series of ETFs where investors can get exposure to small caps, short- and long-duration bonds, as well as pure currency exposure to US TIPS and local emerging market debt.

Currency hedging instruments

Sterling has suffered a significant depreciation due to Brexit and weakening economic fundamentals (experiencing both current account and budget deficits, plus a rising national debt). Should sentiment begin to improve, GBP hedged ETFs will make a useful addition to an investor’s armoury and could help avoid large foreign exchange losses in the future.

Market hedging ETFs

With equity markets and bonds at or close to new highs, these are completely out of fashion at the moment, but when bearish sentiment returns we think these short ETFs will once again be a valuable portfolio diversifier.

ETFs for income seekers

Where the market yield is not enough, or simply to add some diversification in a yield-scarce environment, we have selected some high dividend ETFs. They are not necessarily the highest yielding in the market-place, but do have a good degree of diversification throughout their holding.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.