Best ETF platforms in the UK

Keen to invest in ETFs (exchange-traded funds)? We’ve got you covered. ETFs are super popular for investors, and for good reason – they make building an investment portfolio super easy and very low cost.

Here’s the best ETF platforms:

Best ETF trading platform overall

Best ETF platform for beginners

Best ETF platform with an ISA

Our criteria for determining the best ETF platforms

Investing in ETFs (exchange-traded funds) is a very popular way of investing, and lots of investment platforms have made buying, selling and holding ETFs very easy, and very low cost.

Our criteria for reviewing ETF platforms include:

• Fees
• The platform experience
• Range of ETF investments
• Customer reviews

There’s quite a few ETF platforms out there, however we’re just showing you the best. Ones we recommend to our friends and family, and use ourselves here at Nuts About Money. So, whichever one you choose, you can be confident you’ll be using one of the best.

What is an ETF?

An ETF, or exchange-traded fund is a type of investment fund. These are a collection of lots of different investments, and these collections can be made up of stocks and shares, bonds, other investment funds and property (and sometimes even more). These are called asset classes, and we’ll cover what each of those are below.

Investment funds make it much simpler to build a strong portfolio that's well diversified (a wide range), as part of a long-term investment strategy, rather than buying all the individual investments themselves (e.g. stocks and shares, like Microsoft or Google).

Not only does it save a lot of time, but it also saves a lot of money too – often you’d have to buy all the individual investments and pay a fee (called a dealing fee) for each one, which can really add up!

ETFs are simply investment funds that can be easily bought and sold on the stock market (exchange-traded funds).

There’s lots of types of investment funds, such as an index fund (described below), or funds that pay an income instead of growing in value (fixed income funds), and more. Mutual funds are also very popular and very similar to ETFs, but not traded on a stock exchange – you can still buy them, but you’ll need to use a large stock broker (e.g. AJ Bell¹).

Stocks and shares

A share is part of the ownership of a company, you own a ‘share’ of the company. All of the shares combined represent the total value of the business, and so their individual price can go up or down, normally depending on how the business performs.

Shares can be bought and sold on stock exchanges (the stock market) across the world, and there’s normally at least one in every country, for instance in the UK, we have the London Stock Exchange (LSE), and in the US, there’s the New York Stock Exchange (NYSE), plus others.

Nuts About Money tip: if you’re only looking to buy individual stocks and shares, check out the best UK share dealing accounts.

Bonds

A bond is effectively loaning your money to a government or large corporation, in return for interest payments. They’re typically seen as lower risk than other types of investments, but your money is expected to grow much less over time.

Property

Sometimes ETFs can hold property, often commercial property, such as shops and offices that provide a rental income.

What’s an ETF trading platform?

An ETF trading platform, also often known as an ETF broker, is simply a place to buy and sell ETFs, and hold them for you (hopefully as they gain value). You need a broker to handle this for you, as you need to be licensed to buy investments from stock exchanges (a place to buy and sell investments).

That’s if you want to make your own investments of course (like buying ETFs). This isn’t your only option, you could simply let the experts manage your investments for you (highly recommended). They’ll put together the right investment strategy to grow your money over time – all you need to do is add your money.

If this sounds interesting, we recommend Moneyfarm¹, they’re the best performing Stocks and Shares ISA in the UK, have low fees, and have experts on hand to help you every step on the way. You could also check out the best expert-managed investment platforms too.

Trading ETFs

If you’re looking to trade ETFs over a short time frame, such as day trading, rather than buying and holding as part of a long term investment strategy, you might want to consider trading CFDs.

These are ‘Contract For Differences’, and instead of buying the actual ETF (or any asset), you’ll trade the price instead. You’ll open a contract with a broker (an agreement), about the price of the asset in the future. When you decide to close the trade, you’ll either pay or receive the difference in price.

Trading CFDs are often much cheaper than buying the underlying asset directly (if you trade frequently), and allow you to trade both price directions (e.g. you can bet the price goes down too). Plus, you can often trade with borrowed money from the broker. 

However, these are more suited to advanced traders – and trading platforms often have great trading tools to help make better decisions.

We won’t go into them too much now, but if this is what you’re looking for, check out the best UK CFD brokers.

Is an ETF the same as an index fund?

You might hear index funds and ETFs thrown about in the same conversation, but they’re not quite the same thing. An index fund can be an ETF, but an ETF cannot be an index fund…

An index fund is an investment fund put together to track an index, and an index is a set measurement of something, and in finance, it’s the financial markets.

Confused? Let’s look at an example. 

An index fund can track any index that exists, and there’s lots out there, but let’s make it simple. A very popular index is the FTSE 100 – the top 100 companies in the UK. So, with a FTSE 100 index fund, the fund will buy shares of all the top 100 companies, and therefore, it tracks (almost identically) the performance of the top 100 companies. This is why they’re also called tracker funds. Make more sense?

So, if you have a FTSE 100 index fund that’s listed on a stock exchange, available to buy and sell to the public, it’s an ETF too (a collection of investments). But ETFs can be more than just index funds and cover a whole range of different investments (more on that below).

There’s lots of index funds out there, some other popular ones are the S&P 500 (the top 500 companies in the US), some with just large companies, some with small companies, and others that track whole stock markets in a country.

Passive vs actively managed funds

Investment funds can either be passive or actively managed. A passive fund means there’s less involvement from the experts (the ETF providers), as they’ll simply adjust the investments to keep the ETF tracking the desired index.

For example, the FTSE 100 index tracks the top 100 companies in the UK. If a company drops out of this, the fund will be updated.

In addition to passive funds, there’s also actively managed funds. These are where the experts are very much hands-on, often daily, and actively reviewing and making changes to the investments within the ETF to help achieve the ETFs goals. The goals are often unique to the ETF itself.

Actively managed funds normally have higher fees than passive funds. However, just because there's more expert involvement with active funds, that doesn’t always mean they will outperform passive, or index funds.

Can you buy ETFs within a Stocks & Shares ISA?

Saving within a Stocks and Shares ISA is one of the best ways to grow your money over time (with the right investment strategy). You’ll be able to save completely tax-free, forever!

There’s no Capital Gains Tax, Income Tax or Dividend Tax to pay on any of your investments, which can really make a difference to your total balance over time.

And you can invest up to £20,000 per tax year (April 6th to April 5th the following year). Although only into one Stocks and Shares ISA each year. This is called your ISA allowance.

You can buy any investments you like within a Stocks and Shares ISA (as long as they’re listed on an ETF trading platform, or with a stock broker in general).

We highly recommend investing within a Stocks and Shares ISA if you aren’t saving into one already. And check out InvestEngine¹, you can invest in ETFs fee-free within an ISA.

Can you buy ETFs within a pension?

You can also invest in ETFs within a personal pension. These are amazing accounts, perfect for building up a nice big pension pot and retirement income.

With contributions into your pension, you’ll receive a massive 25% bonus from the government (yep, we’re serious!), and you can even claim back more tax if you’re a higher rate taxpayer (40%) or additional rate taxpayer (45%). You’ll do this on your Self Assessment tax return.

You won’t be able to access the cash until you’re at least 55 years old (57 from 2028), although ideally you’d keep it growing until you actually retire.

You can save as much as your total income each year, or £60,000, whichever is lower. And you can have as many pensions as you like.

Nuts About Money tip: although you can have as many pensions as you like, it's often a good idea to consolidate your pensions. You could save on fees and benefit from higher investment growth.

It’s often a good idea to have experts manage the majority of your pension pot, and we highly recommend PensionBee¹ for this – they’ve got a great track record, low fees and are easy to use. Here’s our PensionBee review to learn more.

And then in addition, make your own investments, via a self-invested personal pension (SIPP). This is where you make the investment decisions, and can buy and sell the ETFs you’d like to – there’s no experts involved. If you’re keen to do this, here’s the best SIPP providers. AJ Bell¹ is a great choice, the ETF range is huge and the fees are reasonable.

ETF trading platform fees

Unfortunately investing in ETFs isn’t entirely fee-free, although some ETF brokers are really bringing the cost down (like our top platforms above). There’s typically a platform fee, and then fees within the ETF itself.

Platform fee

The ETF platform itself, or stock broker, will normally have an annual account fee. This is to hold your investments, and is a percentage of your total investments, and traditionally is in the region of 0.25% to 0.45%. However, with more modern ETF trading platforms, such as InvestEngine¹ and Trading 212¹ (free share worth up to £100, use code NUTS), there’s no account fees at all. In fact, InvestEngine is the cheapest ETF broker out there.

ETF fees

ETFs themselves will also have fees, and this goes to the experts managing the investment fund, not the ETF trading platform you use (broker). These are often called the ETF fund manager, or ETF provider.

These can vary a lot. A low maintenance index fund can have very low fees (for instance 0.1%), and actively managed ETFs can have fees up to 1.5% and sometimes more. It all depends on the type of investment you’d like.

ETF trading fees

There’s also another more hidden fee you should be aware of, and that’s the ETF spread fee. This is the difference between the cost of buying an ETF vs the cost of selling the ETF.

It’s a bit confusing, but the two prices (buying and selling) won’t be exactly the same, as when you buy an ETF, you won’t be able to immediately sell it again at the same price, you’ll have to sell at a very small loss – this is because of how financial markets and stock markets work, where you’ll need a buyer and a seller in order to make a transaction.

These spread fees are often very small (around 0.04%), but if you’re trading ETFs a lot, they could add up. That’s why frequent traders often use more advanced brokers, such as CFD trading platforms.

Currency conversion fees

And finally, if you’re buying ETFs not in your local currency (e.g. Pounds), the investment platform will often charge you a currency conversion fee, which is simply a fee to exchange your money in order to buy the investment. For instance buying Amazon shares in US Dollars. This fee can be very low, from 0.15% (with Trading 212¹ get a free share worth up to £100. Use code NUTS.), all the way to 1.5%.

Is it safe to invest in ETFs?

It’s perfectly safe to invest in ETFs within an ETF platform.

Every legitimate ETF platform must be authorised by the Financial Conduct Authority (FCA) – they’re the people who make sure your money and investments are well looked after, and will regularly review and approve financial companies.

You can check the FCA register to confirm if a firm is FCA registered.

This also means your money is protected by the Financial Services Compensation Scheme (FSCS). This provides you with up to £85,000 compensation should anything happen to the ETF platform, such as going out of business.

Note: FSCS protection normally only applies to ‘retail’ investor accounts, rather than professional traders.

And your investments will normally always be held with a separate large bank, in your name, and can only be returned to you.

However, this doesn’t mean you can’t lose money if your investments go down in value. It’s always best to follow a sound investment strategy (or let the experts handle it).

Let’s recap

That’s it for the best ETF platforms. We hope we’ve made them a lot easier to understand and why ETFs can be a great option to build a successful investment portfolio – they’re a very low cost way to invest, easy to buy, save time, have lots of different investment themes (e.g. energy companies), and can vary from simple index funds to funds managed by experts.

If you are keen to let the experts handle things for you, we recommend Moneyfarm¹ – they’ve got a great track record, have low fees and are super easy to use.

And if you’re looking to make your own investments, here’s a recap of the best ETF brokers in the UK:

• XTB
• InvestEngine
• Trading 212
• eToro

Thanks for reading, and all the best investing in ETFs!