Buying an ETF within an ISA wrapper

donmaico

Hello.Can someone please tell me how I can go about this? Dont know much about ETFs except they appear to be a simpler and cheaper way of buying into stocks and shares then traditional funds. Thanks

jon3001

ETFs are traded on the stock exchange so you'll need an ISA account that allows such trading. These providers have been mentioned in the past on these forums:
http://www.selftrade.co.uk/
http://www.alliancetrust.co.uk/

To ascertain whether this would be cheaper than alternatives you'd need to take account of both TERs (Total Expense Ratios) and trading costs (initial purchase and annual rebalancing among holdings). OTH many unit trusts have the trading costs built in (although some will charge upfront fees).

You mention buying 'an ETF'. Just the one? Most ETFs will give exposure to just one sector of the marketplace so your risk would be higher than necessary. Ideally read about building a portfolio consisting of multiple sectors (e.g. UK [value, small], Europe, Asia-Pacific, etc) and multiple asset classes (such as equities, bonds, property and commodities).

Here's a good primer:
http://www.investorsolutions.com/v2content/book/index.cfm

Further reading:
http://www.amazon.co.uk/Asset-Allocation-4th-Roger-Gibson/dp/0071478094
http://www.amazon.co.uk/Intelligent-Asset-Allocator-Portfolio-Maximize/dp/0071362363

Good luck!

donmaico

jon3001 wrote: »

ETFs are traded on the stock exchange so you'll need an ISA account that allows such trading. These providers have been mentioned in the past on these forums:
http://www.selftrade.co.uk/
http://www.alliancetrust.co.uk/

To ascertain whether this would be cheaper than alternatives you'd need to take account of both TERs (Total Expense Ratios) and trading costs (initial purchase and annual rebalancing among holdings). OTH many unit trusts have the trading costs built in (although some will charge upfront fees).

You mention buying 'an ETF'. Just the one? Most ETFs will give exposure to just one sector of the marketplace so your risk would be higher than necessary. Ideally read about building a portfolio consisting of multiple sectors (e.g. UK [value, small], Europe, Asia-Pacific, etc) and multiple asset classes (such as equities, bonds, property and commodities).

Here's a good primer:
http://www.investorsolutions.com/v2content/book/index.cfm

Further reading:
http://www.amazon.co.uk/Asset-Allocation-4th-Roger-Gibson/dp/0071478094
http://www.amazon.co.uk/Intelligent-Asset-Allocator-Portfolio-Maximize/dp/0071362363

Good luck!

many thanks for that.