How to invest in ETFs in the UK
If your goal is simply to buy ETFs that track US markets, the process is relatively straightforward.
Step 1: Choose the type of exposure you want
Are you investing for the long term, or trading shorter-term price movements? This decision determines whether you should use a share dealing account or a leveraged trading product.
For long-term investing, you may prefer a traditional share dealing account.
For shorter-term speculation, you might consider ETF trading using CFDs, which allows you to trade price movements without owning the underlying asset.
Remember that leveraged products carry higher risk and losses can exceed deposits.
Step 2: Select a UCITS ETF
Look for a UK or European-listed ETF that tracks your desired US index, such as:
- S&P 500
- Nasdaq 100
- Dow Jones Industrial Average
These products are often available in sterling and dollar share classes.
Step 3: Consider costs and currency exposure
When investing in US-focused ETFs, you should factor in:
- Platform fees
- Spread and commission
- Ongoing fund charges
- Currency conversion costs
- Exchange-rate risk
Even if you buy a UK-listed ETF, the underlying assets are usually priced in US dollars. Sterling investors are therefore exposed to currency movements.