Savvy investors attracted by benefits of ETFs

Demand for Exchange Traded Funds (ETFs) by UK investors has risen steadily in recent years, yet over a third (35 per cent) of investors still do not know what they are, according to research by Barclays Stockbrokers. A further five per cent of investors are confused by them and mistakenly believe they are a type of cash deposit or commodity.

The poll amongst Barclays Stockbrokers clients, reveals 16 per cent of respondents think ETFs are great for diversified exposure, and 15 per cent think they are cost effective instruments. Yet despite this, over a third (34 per cent) of those polled do not think ETFs are suitable for them.

Barclays Stockbrokers offers iShares direct to retail investors iShares represent 90 per cent of all ETFs traded on the London Stock Exchange.

Barbara-Ann King, Head of Proposition at Barclays Stockbrokers says: "Given the rise in global demand for ETFs since their launch seven years ago, it is evident that some investors in the retail space remain confused as to what they are. However, recent trends have shown that this investment vehicle is increasing its visibility in the world of retail and offers instant benefits to our clients. iShares can be accessed at relatively low cost and offer the combination of portfolio diversification of a fund and the liquidity of a share, and for this reason are ideal for self directed investors looking to enjoy flexibility and control, and tap into markets and strategies that are harder to access through single stock selection. iShares are simple and transparent which will appeal to investors wanting to take advantage of new and well priced markets given the current market conditions."

ETFS are traded like shares and may not be for everyone. They closely track the performance of an index and as such their value can go down as well as up and you may get back less than you invested.