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Selftrade launches ETF comparison tool

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Written by:
10/07/2017
Online investment platform, Selftrade has launched a new exchange-traded fund selection tool, the ETF Select 100.

The list is designed to show the best-in-class ETFs available in the UK market. In compiling the list, Selftrade has joined forces with ETF experts ITI Group. The list is compiled using criteria such as cost of ownership, assets under management and average daily trading volumes.

Investors will be able to search and compare ETFs by geography, performance over one, three or five years and asset type.

ETFs are an increasingly popular choice with investors. Instead of a fund manager choosing different shares that they believe will do well, an ETF simply aims to replicate an index, such as the FTSE 100, or S&P 500. See YourMoney.com’s Investment glossary for more information.

They are hugely popular across the globe. Fund giant BlackRock saw $140bn (£109bn) of inflows into its ETF range in the first six months of 2017 alone. Global inflows into ETFs are estimated at $335bn (£260bn) for the year to date. It is now possible to find ETFs on almost every index across the world and Selftrade estimates that they attract $1 of every $2 invested.

Mark Taylor, CEO, Selftrade from Equiniti, said: “With over 1,500 ETF products on the UK market, many of which are duplicates, underperformers, or competing offers from different issuers, this market is needlessly overcomplicated. The ETF Select 100 confronts this problem and seeks to make investing simpler and more accessible for those who are put-off by the jargon.

“The names of the ETFs in ETF Select 100 have been simplified to make it easier for investors to understand what the ETF aims to track. This means investors can compare like-for-like ETFs”.

Why use an ETF?

  • ETFs aim to replicate the performance of an index. With the FTSE 100, for example, you would hold all companies in the same way they are held in the index – so 7.7% in HSBC, 5.2% in British American Tobacco.
  • It is a cheap and straightforward way to gain access to a diversified range of the major companies in an index. By buying a US S&P 500 tracker, you instantly gain a stake in the performance of companies such as Amazon, Google and Apple.
  • They are widely available and readily tradeable – you can buy and sell at any time.

What are the drawbacks?

  • Many indices are weighted according to market capitalisation; that means investors will have more investments in larger companies (such as BP or GlaxoSmithKline). Some critics of this approach say that means that you are always invested in yesterday’s winners.
  • If the market goes down, an ETF will simply follow it lower. A fund manager can, in theory at least, select companies that are less exposed to the market environment.
  • An ETF trades in the same way as a normal share. As such, some platforms will charge normal share dealing commissions, which can increase the cost of buying and selling.

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