Why add ETFs to your portfolio?

An outline of four of the key benefits of using exchange traded funds

Get started with our interactive courses

Learn more
Replay Video

Exchange traded funds (ETFs) have been utilised by institutional investors for several years and are now seeing increasing take up from individual traders. But why should you add them to your portfolio? 

1.  Diversity

Diversifying your investments is a crucial way of mitigating against risk, as it enables you to hedge against negative movements in a single market or sector. ETFs offer access to multiple markets with a single trade, and can be used to trade several different asset classes including equities, bonds, and commodities. 

2.  Transparency and ease of use

ETFs are bought and sold on exchanges, just like shares. This makes them easier to buy and sell than other types of fund, as well as giving you instant visibility of how your fund is performing and what assets you have exposure to. With ETFs, institutional and individual investors have access to the same level of real-time insight.

3.  Lower costs

The costs associated with investing in the number of assets you can get exposure to with a single ETF would be prohibitive. With ETFs, you can build your portfolio with fewer individual trades, and avoid the higher fees associated with actively managed funds.

4.  Range 

With 1000s of funds to choose between, the range of strategies you can employ using ETFs is staggering. Whether you are pursuing long-term goals like saving for retirement or growing your wealth, mitigating against volatility, or hunting for new investment opportunities, you are likely to find an ETF to suit you.

Get started with our interactive courses

Develop your trading knowledge with free step-by-step online courses, webinars and seminars from IG Academy.

You might be interested in...

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.