UK EQUITIES (2 ETFs)
Vanguard FTSE 250 ETF (VMIG)
This ETF does exactly what it says on the tin: it tracks the FTSE 250, giving investors exposure to domestic mid-cap companies.
It’s a good way to add diversification to your portfolio. Just keep in mind that the index can fall between two poles: on the one hand, many smaller UK companies are too tiny to make it into this index, and on the other, the FTSE 250 has tended to underperform the FTSE 100 by some measure in recent years.
This ETF has scale and liquidity and charges just 0.1 per cent.
SPDR S&P UK Dividend Aristocrats ETF (UKDV)
We like to include a selection of ETFs targeting income across different markets, which can be handy for investors who need to draw money from their portfolio. Dividend ETFs also tend to be quite different from a fund that tracks a market’s main index, so even investors focused on total returns or growth might find them useful for diversification purposes.
This one targets the 40 highest-yielding UK companies that have not cut their dividends in the past seven years. We like this focus on the stability of the income.
The ETF currently has an attractive distribution yield of about 3.5 per cent. It comes with a chunky exposure to financials (about a third of the total), and the portfolio doesn’t have a single top 10 holding in common with the FTSE 100. Instead, the largest holdings at the time of writing were Man Group (EMG), Schroders (SDR) and Investec (INVP).
US EQUITIES (2 ETFs)
SPDR Russell 2000 US Small Cap ETF (R2SC)
As we have discussed recently (‘The funds riding the US small-cap rally’, IC, 22 May 2026), US smaller companies have been performing especially strongly in the past year. They tend to be a good place to look if you are feeling bullish about the US economy.
It is worth keeping in mind that some companies that count as ‘smaller’ in the US would be considered large caps in the UK; the stocks in this ETF’s portfolio have an average market cap of $6.6bn (£5bn).
As the name suggests, the Russell 2000 is a very broad index, and concentration is low, with largest holding Bloom Energy (US:BE) accounting for just 1.8 per cent of the portfolio. With more than £4bn in assets, this fund also has plenty of scale.
iShares S&P 500 Equal Weight ETF (EWSP)
Equal-weight ETFs are arguably a little quirky, and investors should only buy them with their eyes open.
This ETF features the same companies as the S&P 500, but holds roughly the same amount of assets in each, rather than investing according to companies’ market cap weighting. In practice, this is a way to gain exposure to the US market without being concentrated in the top tech names. However, it will also come with additional exposure to the smallest companies in the index as a result.
This ETF has tended to seriously underperform the S&P 500 in the past, but has held up better in 2025 and 2026 so far, as the US market’s performance has been driven by a broader range of companies than just the Magnificent Seven. It isn’t intended to replace your core US allocation, but we keep it in the list as an alternative, less concentrated way to gain exposure to the market. You can pair it with a global or even a regular S&P index tracker.
GLOBAL EQUITIES (5 ETFs)
iShares Edge MSCI World Value Factor ETF (IWFV)
We continue to like this ETF’s focus on value investing, which makes it rather different to your regular global tracker. Less than half of its assets are in US companies and some 20 per cent is in Japan.
However, note that its index looks for developed market companies with “higher value characteristics relative to their peers” in the corresponding sector, meaning that, unlike most active value funds, it doesn’t have a bias to the standard ‘value’ sectors such as financials or energy. The characteristics are defined by looking at a company’s price-to-book value, forward price/earnings ratio and its enterprise value relative to its cash flow from operations.
Its exposure to technology companies is actually slightly above that of the regular MSCI World, at 32 per cent of the fund. The biggest holding is a chunky 11 per cent position in semiconductor company Micron Technology (US:MU), followed by networking equipment supplier Cisco (US:CSCO) at around 3 per cent.
For a more traditional value approach, you might need an active fund, but this ETF is still a handy way to tilt your portfolio towards cheaper stocks. Plus, value investing is having its time in the sun again after a difficult few years, and this ETF massively outperformed the MSCI World both in 2025 and in 2026 to date.
Click below to see our Top 50 ETFs
iShares MSCI World Small Cap ETF (WLDS)
With more than 3,500 holdings, this ETF offers broad exposure to smaller companies across the world. The theory goes that in the very long term, small caps should outperform large caps because they have more scope to grow. This has not played out in recent years, but if you believe in the philosophy, this ETF is a sound option, with ample scale at more than £6bn in assets and a competitive 0.35 per cent fee.
US shares do make up more than 60 per cent of this ETF, so having separate, more targeted exposure to UK or European smaller companies could make sense.
Xtrackers World Minimum Volatility ETF (XDEB)
The index tracked by this ETF sets itself the ambitious goal of creating a lowest-possible-risk version of the MSCI World index. Getting global equity exposure with much lower volatility is certainly an attractive proposition but, unsurprisingly, investors have had to sacrifice considerable amounts of return in exchange for a less bumpy ride. In the decade to May 2026, XDEB returned around 120 per cent, compared with 270 per cent for the MSCI World.
Stocks have not had many bad years over the past decade, so this ETF has had limited chances to prove itself. But it has done a convincing job when things did get rocky, finishing both 2018 and 2022 in the green as the MSCI World dropped.
Expect low levels of concentration, with the top holding, Cisco, accounting for just 1.5 per cent of the portfolio as at mid-June, followed by Johnson & Johnson (US:JNJ) at roughly the same level. US exposure is still very high at around 63 per cent, albeit this is still well below the levels of the MSCI World and the portfolio is also relatively underweight to technology.
In short, this ETF could potentially suit investors who want to reduce their portfolio risk without switching into bonds.
Xtrackers MSCI World ex USA ETF (XMWX)
The US continues to account for a huge portion of global markets, leading to some frustrations among investors. This ETF can be quite useful for portfolio construction purposes, providing broad exposure to all other developed markets. You can pair it with an S&P 500 tracker or even an active US fund and manage exposure levels between the two as you see fit.
The top holdings are mostly European and British companies, such as ASML (NL:ASML), HSBC (HSBA), Roche (CH:RO) and AstraZeneca (AZN), but the biggest market is actually Japan at more than a fifth of the portfolio. It only has about 8 per cent of assets in technology shares, so it can also be paired with a tech fund or tracker. The biggest sector exposure is financials at about a quarter of total assets. Removing the US also drastically reduces concentration – even ASML accounts for less than 3 per cent of the portfolio.
The ETF charges just 0.15 per cent and has about £4.6bn in assets.
NEW: VanEck Morningstar Developed Markets Dividend Leaders (TDGB)
We wanted to introduce a global income ETF to the list, and this one has the advantage of looking very different from your standard MSCI World tracker. It invests in the 100 biggest dividend payers across developed markets, with a screen excluding companies with excessive payout ratios and those that have cut their payouts over the past five years.
Less than a quarter of assets are invested in the US, with the UK, France and Switzerland accounting for around 10 per cent each. The ETF focuses on some of the classic ‘income’ sectors, with 31 per cent in financials and nearly a fifth in energy stocks. The caveat here is that the fund has performed exceptionally well in the past couple of years, and these sectors are no longer as cheap as they used to be valuation-wise, so more gentle growth is to be expected going forward.
The yield looks attractive at 3.2 per cent and, with £6.5bn in assets, liquidity is certainly not an issue. The 0.38 per cent fee is acceptable if not the cheapest.
JAPANESE EQUITIES (1 ETF)
iShares MSCI Japan Small Cap ETF (ISJP)
Japanese smaller companies are an exciting area at the moment, partly thanks to the corporate governance reforms taking place in the country. Investment trusts such as Nippon Active Value (NAVF) and AVI Japan Opportunity (AJOT) are arguably better equipped to truly take advantage of opportunities here, thanks to their active approach; in the past this has tended to be reflected in their performance, too. On top of that, this ETF is relatively expensive, with a 0.58 per cent fee.
But we like to give diehard passive investors an option to access this relatively niche area of the market, and this fund’s returns have been very good in the past year, with the shares up by about a third this year at the time of writing. The ETF also made a notable 0.25 per cent return from securities lending in the year to March 2026.
EUROPEAN EQUITIES (1 ETF)
iShares MSCI Europe Quality Dividend Advanced ETF (EQDS)
A higher-yielding take on the European market, the index tracked by this ETF combines a series of dividend, quality and environmental, social and governance (ESG) criteria. For example, companies with a poor history of dividend growth are excluded, and there’s a filter checking fundamentals such as return on equity, earnings variability and debt. What’s left is a portfolio of around 70 holdings. The screening process looks thorough, particularly for a fee of just 0.28 per cent.
Some overlap with MEUD, the broad European ETF we feature in our core section, is to be expected, but the two have only one top 10 holding in common – Novartis (CH:NOVN). EQDS yields around 3 per cent, and its biggest country exposures are to Switzerland and the UK, at around a fifth of the assets each. The largest UK-listed holdings are Unilever (ULVR) and National Grid (NG.).
Note that, partly due to the ESG filters, this ETF doesn’t have much exposure to some of the classic high-yielding sectors such as energy or tobacco. But it does favour financials, which account for about 28 per cent of the total. Because this isn’t quite a standard income fund, performance has suffered in the past year, falling well behind the MSCI Europe.
ASIA-PACIFIC EQUITIES (1 ETF)
SPDR S&P Pan Asia Dividend Aristocrats ETF (PADV)
Asia and emerging markets are fertile ground for income investors. This is another dividend ETF that values certainty of payouts rather than just yields, selecting companies that have increased their dividends every year for at least seven consecutive years.
More than a third of the assets are invested in Japanese companies, with China and Australia the next largest regions. Like many income portfolios, it has a bias towards financials, accounting for about 32 per cent of the fund.
It is quite pricey, with a fee of 0.55 per cent, but we like the fact it offers reliable dividends from companies that differ from the usual suspects.
EMERGING MARKET EQUITIES (5 ETFs)
iShares Edge MSCI Emerging Markets Minimum Volatility ETF (EMV)
Emerging markets are notoriously bumpy, so investors with a lower tolerance for volatility tend to steer clear of them, and in doing so miss out on many exciting companies. This ETF is a potential solution to the problem – but because you can’t have your cake and eat it, it tends to deliver much lower returns than the broader MSCI Emerging Markets index. Also, the portfolio currency is US dollars, so there will be some additional currency volatility for UK investors.
Still, the ETF cushioned most of the losses registered by the MSCI Emerging Markets index in 2018, 2021 and 2022. And it has captured at least some of the region’s rally over the past year.
It does have a very high exposure to technology (37 per cent at the time of writing), but with lower concentration at the top. TSMC (TW:2330), which dominates standard emerging market indices, is only the sixth-largest holding at about 1.5 per cent of the portfolio.
SPDR MSCI Emerging Markets Small Cap ETF (EMSM)
Investing in smaller companies within emerging markets is not for the faint of heart – expect this ETF to be volatile. With a fee of 0.55 per cent, it is not exactly cheap, either, but then both emerging markets and smaller companies ETFs tend to come with higher price tags, and this one combines the two.
On the plus side, it is very diversified, with more than 1,800 holdings. Taiwan is the biggest market at 28 per cent of the portfolio, followed by India at 20 per cent; somewhat surprisingly, China accounts for less than a tenth. Its exposure to technology is still notable (around 26 per cent) but much below the levels seen in the large-cap index, MSCI Emerging Markets.
Emerging smaller companies have struggled to keep up with their larger counterparts in the past three years, but performance is more reassuring if you look further back.
Franklin FTSE China ETF (FRCH)
AI has changed the profile of emerging market indices, with Taiwan and South Korea now being significantly larger than China and India. But both the Taiwanese and South Korean markets are incredibly concentrated at the top, with the largest company in each making up more than 20 per cent of assets. China and India are more mature markets, and for this reason we decided to stick with them when it comes to suggesting single-country ETFs in the region.
This is not to say that concentration isn’t an issue – combined, Tencent (HK:0700) and Alibaba (HK:9988) account for a fifth of this ETF’s portfolio.
China has not been at the forefront of the AI story in the same way as Taiwan, and you can expect some big swings in performance from this market – after an enthusiastic rally in 2024 and 2025, it is struggling so far this year. Still, if you want dedicated exposure, it doesn’t get cheaper than FRCH, which charges just 0.19 per cent and has around £1.2bn in assets.
Franklin FTSE India ETF (FRIN)
For a time, India was the darling of emerging market investors, while China floundered. But the past couple of years have been tougher for the country, which is also especially reliant on oil from the Middle East. On a five-year basis, however, this ETF is still up by around a third, while its China stablemate is down by 20 per cent.
Like FRCH, it charges just 0.19 per cent. India also has less of a concentration problem. Its top holdings are energy conglomerate Reliance Industries (IN:500325) and HDFC Bank (IN:500180), accounting for about 5.5 per cent of total assets each.
iShares MSCI EM ex-China ETF (EXCS)
Fund managers have occasionally argued that China is uninvestable due to state interference in the stock market and human rights violations. And this does make for a particularly volatile market that can have prolonged bear periods – it fell by double-digit percentages in 2021, 2022 and 2023.
So this ETF could come in handy for investors who want to steer clear of the country, or for those who prefer to manually manage their levels of exposure by pairing it with a China ETF or an active China fund. It charges just 0.18 per cent and has more than £5bn in assets.
However, note that excluding China leaves the ETF with Taiwan and South Korea as its main markets, and an outsized exposure to tech companies (more than half of the portfolio). Concentration is a real issue, too, with 36 per cent of assets invested in just three companies: TSMC represents a huge 18 per cent of the portfolio, and Samsung (KR:005930) and SK Hynix (KR:000660) are also very chunky positions.
BONDS (4 ETFs)
iShares $ TIPS 0-5 ETF GBP Hedged (TI5G)
Short-term index-linked bonds can be useful when inflation is high, while also being less vulnerable to interest rate hikes than their long-dated counterparts.
This ETF offers cheap exposure to US short-term linkers, with a fee of 0.12 per cent and a good level of scale, even for the hedged share class. That hedging should limit currency effects, which will be handy if the dollar weakens further.
Vanguard $ Emerging Markets Government Bond ETF (VEMA)
This is certainly a pretty niche option for your average private investor. The case for emerging market debt is that these securities diversify your fixed income portfolio and can deliver higher returns than developed market bonds, even once you account for the higher risk. Like most bond portfolios, this ETF suffered badly in 2022, but it is up by about a fifth in the past three years.
Note that the bonds in the portfolio are dollar-denominated. This should make them a little more stable compared with emerging market bonds issued in local currency, but it could become a headwind for UK investors in the event of dollar weakness.
Invesco US Treasury Bond 7-10 Year ETF GBP Hedged (TRXS)
There is a whole range of ETFs targeting specific maturities for US Treasuries, which can be very handy if you have a certain duration in mind for your bond portfolio. This ETF is one example, with a fairly middle-of-the-road level of interest rate sensitivity, a good level of scale and a low 0.1 per cent charge.
Some US Treasury exposure could be good for your portfolio if an economic downturn emerges, at a time when political risk might mean the likes of gilts could be more heavily impacted.
Amundi Smart Overnight Return ETF (CSH2)
This ETF aims for a return equivalent to the Bank of England’s base rate, and made a respectable 4.4 per cent in the year to 3 July. With a fee of just 0.1 per cent, it can be a useful place to park some cash.
It is worth keeping in mind that it uses swap contracts to track the index, which comes with some additional complications and potential risks. If you are not comfortable with that, the iShares £ Ultrashort Bond ETF (ERNS) is a suitable alternative – its exposure to bonds with an average maturity of less than a year will achieve similar returns.