ETFs, or exchange-traded funds, are often designed to track the performance of a specific index, such as the FTSE 100 Index in the UK or the S&P 500 Index in the US.
By buying one ETF, you can invest in many companies or bonds at once – diversifying the risk. They aim to offer the same return as an index by replicating it as close as possible, and there are different ways of doing that, depending on the index being tracked.
There are many aspects of ETFs that make them attractive choices for investors. Firstly, a single ETF can hold many different securities (stocks, bonds, commodities etc.), which reduces the impact of a weak performance from any one investment. With ETFs, you can invest in different sectors (such as technology or healthcare), countries (including some emerging markets which would otherwise have been difficult to invest in) or investment themes (such as Artificial Intelligence) without buying individual stocks.
In addition, ETFs provide access to a basket of investments for a lower cost than buying the individual investments yourself. They are also more tax-efficient than other investments because of their structure.
ETFs are also very flexible as they trade like stocks, meaning you can trade them any time during market hours. Prices also update in real time due to demand and supply, whereas mutual funds are priced once a day when the market closes.
They could be a great choice for long-term investors or those with shorter-term horizons. They can be particularly appealing for first-time investors as they do not require the time to research individual stocks.
ETFs are part of the wider family of ETPs (Exchange Traded Products). Other ETPs, which give investors access to other types of investments, include ETNs (Exchange Traded Notes) and ETCs (Exchange Traded Commodities), which track the performance of physical commodities like gold or silver. ETCs give investors access to the commodities market without trading directly in spot or derivatives markets.
Invesco provides a wide range of ETFs to help UK investors access indices confidently and in a way that suits their goals. To get started, explore Invesco ETFs on InvestEngine and see how easy it is to bring ETPs into your portfolio.
Investment risks
For complete information on risks, refer to the legal documents. The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations), and investors may not get back the full amount invested.
Important information
Data as at 4 November 2025, unless otherwise stated. This marketing communication is exclusively for use by investors in the UK.