Frequently asked questions

Here we answer the most commonly asked questions about ETFs. After browsing our explanation of how they work you should feel better prepared to embark on your investing journey.

  • Exchange Traded Funds (ETFs) are open-ended collective investment schemes, like investment Funds (Unit Trust, OEIC), investing in many individual securities. ETFs aim to track the performance of a particular index. They are traded throughout the day and can be bought and sold in the same way as stocks & shares during normal trading hours. 

  • There is a minimum age requirement of 18 to trade.

  • The key attractions of investing in ETFs are the low cost, transparency and immediate prices. An ETF tracking a developed equity market such as the FTSE 100 can cost as little as 0.1% per year, compared to a typical cost of between 0.75% and 1.0% for an actively managed Fund. Unlike a Unit Trust, which trades at one set price point during the day, ETFs can be traded whenever the stock exchange is open. This makes them a flexible way of investing. 

    There is a dealing cost when investing in an ETF, as opposed to purchasing a traditional index tracker Fund, which generally has no up front charge. However, over time, the lower annual cost of an ETF can compensate for the initial trading costs. The point in time when the lower annual costs overcome the higher upfront costs, compared to a traditional index Fund, is called the break-even point. The cost structure may be less attractive for frequent traders or those with a small investment outlay.

  • An Index is a statistical indicator reflecting the value of the securities that constitute it e.g. the FTSE 100. Indices often serve as barometers for a given market or industry and are used as benchmarks against which financial or economic performance is measured. You cannot invest directly in an Index.

  • Yes, once you have successfully opened an account. If you want to buy ETFs simply fund your product e.g. ISA, SIPP and start trading.

  • The Willis Owen dealing service is a purely online offering. Having decided on the ETFs you wish to purchase you can simply set up an online account, if you haven’t already done so, and select those you wish to buy.

    When buying ETFs there is a twenty second window to decide whether to accept the price on offer to you. During that time, the price offered is usually ‘held’ even if the underlying Share price moves.

    As Willis Owen’s dealing service is entirely online, you will not receive any paperwork in respect of your deals. By using this method, the ETFs are held electronically and securely in nominee names by Winterflood Securities, our dealing and custody service provider, until you are ready to sell. 

    Remember to read the relevant KIID before purchase which can be found within our : explore ETFs area.

  • You may already know exactly what you want to invest in. If so, we’ve made registering or logging in to our online service as simple as possible.

    You can find a plethora of information on the World Wide Web. Willis Owen does offer an ETF toolkit called : explore, providing prices and charts for the range of ETFs offered. However, you may also find the London Stock Exchange website as a useful source of information.

    Remember to read the relevant KIID before purchase which can be found within our : explore ETFs area.

  • Trades are charged at online rates of just £7.50. See our full charges here. Unlike Shares, ETFs do not incur stamp duty or PTM levy.

  • You can trade during normal London Stock Exchange market hours – from 8.00am until 4.30pm, Monday to Friday (excluding Bank Holidays), and obtain live market prices. Outside these hours you can choose to place an order which will be monitored and dealt at ‘best price’ when the market next opens.

  • The buying process is simple. Once you have decided which stock you wish to buy:

    • In : invest summary, under the 'select an action' drop down, select Purchase Equity
    • Type in the name of the Share you would like to buy and select it from the drop down list
    • Enter the amount to invest and confirm you would like to proceed and press 'Get Price'
    • If your deal is within the market opening hours you will be given a firm quote (price at which to buy) with a 20 second countdown
    • If you decide to accept the quote within that time you will be taken to the Equity Trades page where you can see the cost breakdown. 
    • A contract note will be placed within the 'my documents' area confirming the trade details.

      Outside market open hours you can choose to place an order that will be dealt at 'best price' when the market next opens. 

      Share purchases are changed at normal online rates of just £7.50. See details of our full charges here.
  • The selling process is simple. Once you have decided which stock you wish to sell:

    • In valuation, select the Share you want to sell by clicking 'Sell'
    • Enter the quantity you want to sell and confirm you would like to proceed and press 'Get Price'
    • If your deal is within the market opening hours you will be given a firm quote (price at which to sell) with a 20 second countdown
    • If you decide to accept the quote within that time you will be taken to the Equity Trades page where you can see the cost breakdown. 
    • A contract note will be placed within the 'my documents' area confirming the trade details.

      Outside market open hours you can choose to place an order that will be dealt at 'best price' when the market next opens. 

      Share sales are changed at normal online rates of just £7.50. See details of our full charges here.
  • We offer a range of ETFs that track different markets, you can search for these within :explore ETFs

  • Yes. The minimum trade order is £100.

  • Every type of investment involves a degree of risk, and ETFs are no exception. The risks involved in investing in ETFs depend on the underlying market:

    • When the market rises, so does your investment.
    • When the market falls, so does the value of your investment.
     

    ETFs invest in a number of asset classes including equities and may therefore be subject to high fluctuations in value. For this reason, an investment horizon of at least five years, as well as corresponding risk tolerance and capacity, is required. All investments are subject to market fluctuations. Each Fund has its own specific risks, which may increase considerably in unusual market conditions.

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