ETFs
Choose from over 400 exchange-traded funds (ETFs)
to invest in commission-free.
When you invest, your capital is at risk.
Other charges may apply. See our full pricing table.
ETF investing
ETFs or exchange-traded funds are funds that trade on a stock market. Most ETFs track the performance of a market index or a basket of stocks, so they are an easy way to spread your money across different companies in one go. Because ETFs are listed on stock markets, you can buy and sell them throughout the day.
Exchange
ETFs are bought and sold on a stock exchange.
Traded
You can buy and sell ETFs throughout the day.
Funds
ETFs invest in a collection of stocks, bonds or other assets.
Why invest in ETFs?
ETF Advantages
Simple
Invest in a ready-made basket of stocks or other assets, you don’t have to choose each stock individually.Portfolio diversification
Spread your money across different companies and even different assets. All this should help you to reduce your stock-specific risk.Low cost
Index ETFs are generally less expensive than actively managed funds and they should also cost less than buying each individual share.Tax-efficient
Some ETFs are exempt from the UK’s 0.50% stamp duty. Hold your ETFs in an ISA or SIPP account and you could get extra tax efficiencies.
ETF Disadvantages
Market returns
Most ETFs track an index. By design, it will never aim to beat the index.Diversification not guaranteed
Sector-specific ETFs might actually concentrate your risk, as any external effect on that sector could move the price of all stocks in an ETF.Liquidity risk
Liquidity risk is the risk that an asset may be difficult to sell quickly or to sell at a reasonable price. Certain ETFs can suffer lower liquidity at times.Investment risk
Any investment you make can rise as well as fall in value.
Please remember any tax treatment depends on your individual circumstances and may be subject to change in future. ISA and SIPP rules apply.
Types of ETFs to invest in
How to buy and sell ETFs
A few tips to help you find the right ETFs for your portfolio:
- 1. Start with our ETF guide
- 2. Research and find ETFs to buy
- 3. Check you are using ETFs properly
- 4. Buy or sell ETFs via your Freetrade app
Exchange-traded funds FAQs
Are ETFs and index funds the same?
ETFs and index funds are not the same. They are similar because both ETFs and index funds tend to be passive and track the performance of a stock market or sector. But the way they are built makes them quite different.
You can think of an ETF as more like a share. ETFs trade on the stock market so you can buy and sell them at any point. Index funds are not exchange-traded, so you can only buy and sell your holdings at certain points each day.
For more information on what makes an ETF different. Take a look at our ETF guide.
Are ETFs good for beginners?
ETFs can be a good option for both beginners and experienced investors. They are a great way to invest in a group of companies or other assets like bonds in one go and without having to choose the companies yourself. As with any investment, a decision to invest or not should take into account your personal circumstances and goals.
Is investing in ETFs safe?
When you invest in ETFs, like with any investment, you have to be prepared that the value of your investment can go down as well as up. ETFs are not necessarily safer than any other investment, often they track an index so if that falls, so will the value of your investments. What ETFs do provide is the ability for you to spread your money across many companies in one go. This way you’re not relying on one company for growth and this can reduce the risk that your investments fall in value.
Can I buy fractional ETFs via the Freetrade app?
At the moment you can’t buy fractional ETFs via the Freetrade app. However, fractional ETFs are on our product roadmap and will be available in the future.
ETFs and index funds are not the same. They are similar because both ETFs and index funds tend to be passive and track the performance of a stock market or sector. But the way they are built makes them quite different.
You can think of an ETF as more like a share. ETFs trade on the stock market so you can buy and sell them at any point. Index funds are not exchange-traded, so you can only buy and sell your holdings at certain points each day.
For more information on what makes an ETF different. Take a look at our ETF guide.
ETFs can be a good option for both beginners and experienced investors. They are a great way to invest in a group of companies or other assets like bonds in one go and without having to choose the companies yourself. As with any investment, a decision to invest or not should take into account your personal circumstances and goals.
When you invest in ETFs, like with any investment, you have to be prepared that the value of your investment can go down as well as up. ETFs are not necessarily safer than any other investment, often they track an index so if that falls, so will the value of your investments. What ETFs do provide is the ability for you to spread your money across many companies in one go. This way you’re not relying on one company for growth and this can reduce the risk that your investments fall in value.
At the moment you can’t buy fractional ETFs via the Freetrade app. However, fractional ETFs are on our product roadmap and will be available in the future.
Have questions? Email us at hello@freetrade.io or reach out via in-app chat.
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Benefits
- Commission-free trades (other charges may apply. See full pricing table.)
- Trade USD & EUR stocks at the exchange rate + a 0.99% FX fee
- Fractional US Shares
- Access to more than 4,700 stocks, including the most popular shares and ETFs
- 1% AER on up to £1,000 uninvested cash
£59.88 billed annually
Billed monthly
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Everything in Basic, plus:
- Full range of over 6,200 US, UK and EU stocks and ETFs
- Trade USD & EUR stocks at the exchange rate + a 0.59% FX fee
- Automated order types, including recurring orders
- Advanced stock fundamentals
- 3% AER on up to £2,000 uninvested cash
£119.88 billed annually
Billed monthly
Accounts
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Everything in Standard, plus:
- Trade USD & EUR stocks at the exchange rate + a 0.39% FX fee
- Priority customer service
- Freetrade Web beta
- 5% AER on up to £3,000 uninvested cash
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