Nearly half of individually-owned ETFs are held in Isas, says stockbroker. Why are people ...

Investors stuff Isas and Sipps full of ETFs

Nearly half of individually-owned ETFs are held in Isas, says stockbroker. Why are people shifting their focus?

By Charlotte Beugge

British investors seem to have taken to exchange-traded funds (ETFs) with enthusiasm, according to research by Barclays Stockbrokers.

Analyst of its individual clients' accounts found that nearly half (48%) of ETFs they own were held in share Isas. In addition, 18% of its Sipp accounts hold ETFs. The figure for ETF holdings in Isas is up two percentage points year-on-year.

Of the ETFs held in Isas and Sipps, the most popular was the iShares FTSE 100 fund, which was also the most commonly-held in these tax-efficient homes last year.

Other popular ETFs include the iShares S&P 500, and there was also enthusiasm for those in commodities with both the US dollar denominated and the sterling version of ETFs Physical Gold popular.

ETFs are effectively tracker funds, as their aim is to follow slavishly a chosen index. Unlike tracker funds, investors buy shares in the ETF and they trade on the stockmarket.

The advantage of ETFs is that they are often cheaper than tracker funds. For commodity ETFs - which strictly speaking are exchange traded commodities - they are also an easy way to get exposure to this difficult to get into market.

Catherine Penney, product manager at Barclays Stockbrokers, says: "ETFs are an effective and accessible investment vehicle to capture short-term market movements, as well being used as part of investors' longer term portfolio construction and are a simple, transparent and flexible addition to a balanced investment portfolio.

As the end of the current tax year looms, our clients are taking full advantage of the tax-free allowances available through both Isas and Sipps when investing in products such as ETFs.