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Best FTSE 100 ETF UK – Compare Top ETFs 2021

The FTSE 100 is one of the most popular equity indices worldwide, with many investors incorporating it into their portfolio to gain exposure to the UK market. One of the easiest and most cost-effective ways to invest in the FTSE 100 is through a FTSE 100 ETF, which are available on many stock exchanges.

This guide will discuss the Best FTSE 100 ETFs UK, highlighting the critical information you need to know and showing you how to invest in one of these ETFs commission-free.

Best FTSE 100 ETF UK 2021 List

If you’re looking for a quick rundown of the best FTSE 100 ETFs UK, then look no further. In the section that follows, we will examine each of these ETFs in detail, providing you with all the information you need to make an informed investment decision.

  1. iShares Core FTSE 100 UCITS ETF (Dist) – Overall Best FTSE 100 ETF UK – Invest Now
  2. Vanguard FTSE Europe ETF – Best FTSE 100 ETF for Diversification – Invest Now
  3. Vanguard FTSE 100 UCITS ETF – Best Low-Cost FTSE 100 ETF UK – Invest Now
  4. HSBC FTSE 100 UCITS ETF – Best FTSE 100 ETF UK to Minimise Tracking Error
  5. Xtrackers FTSE 100 UCITS ETF 1C – Best FTSE 100 ETF UK for High Yields
  6. iShares Core FTSE 100 UCITS ETF GBP (Acc) – Best FTSE 100 ETF UK for Capital Growth
  7. Invesco FTSE 100 UCITS ETF – Best FTSE 100 ETF UK for Risk-Adjusted Returns
  8. Lyxor FTSE 100 UCITS ETF (Acc) – Best FTSE 100 ETF UK for Long Term Investing
  9. UBS FTSE 100 UCITS ETF (Dist) – Best FTSE 100 ETF UK for Passive Income
  10. SPDR FTSE UK All Share UCITS ETF Acc – Best FTSE 100 ETF UK for Total UK Market Exposure

Best FTSE 100 ETFs UK Reviewed

As you can see from the list above, there are many FTSE 100 ETFs to choose from, offered by a variety of fund providers. With so many funds available, it may seem a daunting prospect to analyse each one individually to determine which ETF is the best for your investment goals.

In the section below, we will examine each of the best FTSE 100 ETFs in detail, providing you with the critical information you need to make the best investment decision.

1. iShares Core FTSE 100 UCITS ETF (Dist) – Overall Best FTSE 100 ETF UK

The first fund on our list is the iShares FTSE 100 UCITS ETF (Dist). This is one of the best ETFs for FTSE 100 investing and is a favourite of investors across the globe. With over £9 billion worth of assets under management, this ETF aims to provide exposure to the 100 largest companies on the UK stock market, in order to promote long term growth.

iShares Core FTSE 100 UCITS ETF (Dist)

Through smart weighting strategies employed by the fund managers, the iShares FTSE 100 UCITS ETF looks to emulate the FTSE 100 index in terms of performance. Looking at recent returns, this ETF did suffer an 11.64% loss in 2020 – however, the Coronavirus pandemic had a large part to play in this. The fund returned a solid 17.18% in 2019 and is already up 7.41% in the YTD. Also, this ETF provides a quarterly dividend payment to investors, equating to an annual yield of 2.83%. If you’re interested in investing in the iShares FTSE 100 UCITS ETF, you can do so with eToro – completely commission-free!

67% of retail investor accounts lose money when trading CFDs with this provider.

2. Vanguard FTSE Europe ETF – Best FTSE 100 ETF for Diversification

One of the best FTSE 100 ETFs when it comes to diversification is the Vanguard FTSE Europe ETF. This ETF invests in the stocks of companies listed on a variety of European exchanges, including the FTSE 100. Through these investments, the best European fund provides a geographically diversified asset that can help improve your portfolio’s risk/return profile.

Vanguard FTSE Europe ETF

Using a passively managed, full-replication investment strategy, this ETF charges a very low ongoing charge of 0.08% per year – meaning that if you invested £1000 in this fund, you’d only have to pay 80p each year in fees! Looking at returns, this ETF has performed admirably in recent times, generating an average annual return of 8.76% over the past five years. Finally, with an annual yield of 2.09%, the Vanguard FTSE Europe ETF even provides a solid passive income stream for investors.

67% of retail investor accounts lose money when trading CFDs with this provider.

3. Vanguard FTSE 100 UCITS ETF – Best Low-Cost FTSE 100 ETF UK

Vanguard is known for its cost-effective asset selection, and the Vanguard FTSE 100 UCITS ETF is no different. This fund charges a minuscule expense ratio of 0.09% each year, meaning it is one of the most inexpensive funds on our list. Furthermore, the fund aims to fully replicate the FTSE 100 index’ performance, emulating its returns and volatility.

Vanguard FTSE 100 UCITS ETF

This ETF has generated a positive return for investors in three of the last five years, even delivering an 11.7% return in 2019 – far higher than what you can expect to get from other assets such as ISAs. However, the fund did produce a negative return for investors in 2020; again, much of this was down to volatility caused by the lockdown. Finally, the Vanguard FTSE 100 UCITS ETF even offers an attractive price yield of 2.76% annually. So, if you are looking for an ETF that is inexpensive but also provides a healthy passive income stream, then this fund might be worth checking out.

67% of retail investor accounts lose money when trading CFDs with this provider.

4. HSBC FTSE 100 UCITS ETF – Best FTSE 100 ETF UK to Minimise Tracking Error

If you’re looking for an ETF that most closely resembles the FTSE 100 index, then the HSBC FTSE 100 UCITS ETF might be a good option for you. This fund focuses on providing the lowest possible tracking error – this refers to the difference between the fund’s performance and volatility and the FTSE 100 itself. This ensures that this ETF is one of the best investment funds for replicating the FTSE 100 index accurately.

HSBC FTSE 100 UCITS ETF

Much like other ETFs on our list, this fund requires a very low annual charge, costing only 0.07% per year. Using its full-replication approach, this ETF has successfully emulated the FTSE 100’s performance in recent times, returning 17.42% in 2019 but experiencing a negative return in 2020. However, since the beginning of the year, this fund is already up 7.41%. The combination of low tracking error and a small expense ratio means that this ETF is an attractive option for various investor types.

67% of retail investor accounts lose money when trading CFDs with this provider.

5. Xtrackers FTSE 100 UCITS ETF 1C – Best FTSE 100 ETF UK for High Yields

The Xtrackers FTSE 100 UCITS ETF 1C is one of the best FTSE 100 ETFs if you are in the market for high yields. Featuring an impressive dividend yield of 3.65%, this fund provides investors with a solid level of current income, along with the potential for capital growth. In fact, if you invested £1000 in this fund, you could expect to receive £36.50 each year in dividend payments – which rivals the income received from some of the best bond funds.

Xtrackers FTSE 100 UCITS ETF 1C

On top of the passive income stream it provides, this ETF also replicates the FTSE 100 as closely as possible, generating a positive return in three of the last five years. This fund also has the potential to generate impressive returns, having made 17.28% in 2019 and 18.83% in 2016. Finally, with a modest expense ratio of only 0.09% per year, this fund is ideal for investors looking for high yields cost-effectively.

67% of retail investor accounts lose money when trading CFDs with this provider.

6. iShares Core FTSE 100 UCITS ETF GBP (Acc) – Best FTSE 100 ETF UK for Capital Growth

Another of the best FTSE 100 ETFs offered by BlackRock under their iShares umbrella is the iShares FTSE 100 UCITS ETF GBP (Acc). The critical distinction between this fund and the one earlier on this list is that this ETF operates under an accumulation strategy. This means that any dividend payments that would normally be distributed to investors are instead reinvested back into the fund. In turn, this increases each investor’s position size, providing an avenue to more significant capital growth.

iShares Core FTSE 100 UCITS ETF GBP (Acc)

So, although you do not get a passive income stream through this fund, it is ideal for investors who are happy to forgo current income in exchange for increased capital growth down the line. Since the start of the year, this ETF is already up 7.40% and has previously made double-digit returns in 2016, 2017, and 2019. Much like other funds in this list, the iShares FTSE 100 UCITS ETF GBP (Acc) charges an extremely low expense ratio of 0.07% per year, which is much less than some other fund types. If you’re someone who is looking to gradually increase their position size over the long term, this fund is an option worth exploring.

67% of retail investor accounts lose money when trading CFDs with this provider.

7. Invesco FTSE 100 UCITS ETF – Best FTSE 100 ETF UK for Total Returns

The Invesco FTSE 100 UCITS ETF differs slightly from the other ETFs on this list because it attempts to replicate the performance of the FTSE 100 Total Returns Index. This index is a variation of the standard FTSE 100 index and instead focuses on the companies’ total returns (capital growth and dividend reinvestment). Although this may make the fund slightly more volatile, it does open up the possibility of more significant annual returns than other FTSE 100 ETFs.

Invesco FTSE 100 UCITS ETF

Looking at past performance, this fund suffered an 11.72% loss in 2020, much like all of the other FTSE 100 ETFs. It has bounced back strongly in 2021 though, up 4.64% in the YTD so far. As this ETF measures total returns, it does not distribute a dividend to investors – choosing instead to reinvest it back into the fund. Finally, with an expense ratio of 0.09% per year, this ETF offers an inexpensive way to track the total returns of the FTSE 100 index.

67% of retail investor accounts lose money when trading CFDs with this provider.

8. Lyxor FTSE 100 UCITS ETF (Acc) – Best FTSE 100 ETF UK for Long Term Investing

Another FTSE 100 fund that operates under an accumulation model is the Lyxor FTSE 100 UCITS ETF (Acc). By reinvesting any dividend payments, this fund automatically increases each investor’s position size, opening up the possibility of greater returns. This accumulation strategy is ideal for investors who are willing to place their capital in an ETF over many years and are happy to miss out on a passive income stream.

Lyxor FTSE 100 UCITS ETF (Acc)

This ETF’s performance falls in line with most other funds on the list due to its close tracking of the FTSE 100 index. The fund has generated 17.06% for investors in 2019 and 11.87% in 2017; furthermore, the fund is already up 7.91% since the beginning of January. Much like other FTSE 100 ETFs, the fund weights its holdings based on the company’s size – to follow the same strategy that the FTSE 100 index employs. Offering an accurate replication of FTSE 100 returns, combined with an automatically increasing position size, this ETF is an excellent option for investors on both ends of the risk spectrum.

67% of retail investor accounts lose money when trading CFDs with this provider.

9. UBS FTSE 100 UCITS ETF (Dist) – Best FTSE 100 ETF UK for Passive Income

If you’re looking for one of the best performing FTSE 100 ETFs, which also provides a passive income stream, then the UBS FTSE 100 UCITS ETF. This fund operates under a distribution model, which means that any dividend payments are distributed to the fund’s investors through its price yield. Offering an annual yield of 2.93%, this fund is a great way to gain exposure to the UK equity market and generate an additional stream of income.

UBS FTSE 100 UCITS ETF (Dist)

Much like other FTSE 100 ETFs, this fund experienced a negative return in 2020. However, this ETF has produced a positive return in six of the last nine years, making over 10% in four of those years. Additionally, the UBS FTSE 100 UCITS ETF charges a modest expense ratio of 0.2% per year. Although not as cheap as some other funds, it’s still relatively inexpensive than many other assets.

67% of retail investor accounts lose money when trading CFDs with this provider.

10. SPDR FTSE UK All Share UCITS ETF Acc – Best FTSE 100 ETF UK for Total UK Market Exposure

The last fund on our list is the SPDR FTSE UK All Share UCITS ETF Acc, which differs slightly from the other ETFs in terms of holdings. This fund invests in the companies that make up the FTSE 100 and those included in the FTSE 250 and the FTSE SmallCap Index. Through these investments, this ETF aims to provide exposure to the entire UK equity market, rather than just the top 100 firms.

SPDR FTSE UK All Share UCITS ETF Acc

As this ETF has different holdings than other ETFs in this list, its performance in recent years has differed slightly. In 2019, the SPDR FTSE UK All Share UCITS ETF Acc returned a remarkable 19.28% to investors. Furthermore, this ETF made less of a negative return in 2020 than other FTSE 100 ETFs and has returned 22.53% in the last six months. Finally, this fund operates under an accumulation strategy, meaning that dividend payments are reinvested back into the fund, which will automatically increase your position size and provide an avenue to greater future results.

67% of retail investor accounts lose money when trading CFDs with this provider.

What are FTSE 100 ETFs?

FTSE 100 ETFs are one of the best passive investments to gain exposure to the UK equity market. These exchange-traded funds work by pooling capital from many investors and then investing that money into the assets that comprise the FTSE 100 market index. By doing this, these FTSE 100 ETFs aim to replicate the performance and volatility levels of the FTSE 100.

According to Hargreaves Lansdown, the FTSE 100 index currently has a market capitalisation of £1.6 trillion and comprises the UK’s largest companies. Surprisingly, the FTSE 100 index actually constitutes 101 companies – this is because some companies are split into two different share classes. By tracking all these assets’ performance, the FTSE 100 aims to provide an overview of the state of the UK equity market and is often used as a benchmark index to compare other assets to.

Ftse 100 index

As it would be difficult for investors to invest in all the companies that make up the index, FTSE 100 ETFs provide an inexpensive solution to this problem. Most of the ETFs will ensure that the weightings of each security they hold are the same as they are for the FTSE 100 index – meaning that larger companies receive more investment than the smaller companies. However, there are some FTSE 100 ETFs out there that invest in all the companies equally.

Overall, these ETFs are a great way to gain exposure to the UK market and tend to be offered by many brokers such as eToro. Most of the time, FTSE 100 ETFs only charge a very minimal expense ratio, making them attractive to beginner investors. Furthermore, they are a great way to invest your money long term to generate bigger returns than you would expect to receive in a savings account.

Are FTSE 100 ETFs a Good Investment?

FTSE 100 ETFs are the investment of choice for a wide variety of investor types, and it’s easy to see why. In the section below, we touch on three of the main reasons why FTSE 100 ETFs can be considered a good investment.

Diversification Across Various Sectors

According to Fidelity, diversification can help mitigate the risk and volatility of your portfolio, allowing you to optimise the risk/return characteristics of your holdings. By investing in a FTSE 100 ETF, you gain access to an asset that is already diversified across various UK sectors, such as healthcare, financials, and industrials. Furthermore, as the equities included in these ETFs are UK-based, it also allows you to diversify geographically, especially if your portfolio is biased towards US-based assets.

ftse 100 diversification

When holding an asset that is diversified across various industries, it ensures that your holdings are not biased towards one area of the market. If this was the case, it could leave you open to significant losses if that area experienced a downturn. By holding a diversified asset such as one of these ETFs, the chances of all holdings crashing at once is extremely unlikely – this is because when one sector goes down, another uncorrelated sector will typically go up. Thus, investing in a FTSE 100 ETF is a great way to add an extra layer of diversification to your portfolio.

Long Term Capital Growth

Another reason to invest in a FTSE 100 ETF is the potential for long term capital growth. ETFs such as this are considered some of the best long term investments as they tend to increase the value of your investment over a more extended period. The thing to note with these ETFs is that, if you do decide to invest for the long term, you should not worry too much if the fund ends one year with a negative return; over the course of five or ten years, ETFs such as this tend to make a positive return on average which will more than compensate for that.

To highlight this consistent long term growth, the FTSE 100 index has returned an average of 7.75% per year since its inception. Again, some years may have been negative, whilst others might have been positive – but the fact that it has averaged out at 7.75% showcases how appealing this asset will be over a more extended period of time. As the best FTSE 100 ETFs attempt to replicate this performance, they make an excellent investment option for people aiming to experience capital growth over many years.

Low-Cost Investing

A third reason why FTSE 100 ETFs are a good investment is due to their low-cost nature. As we highlighted in our list earlier in the guide, most of these ETFs charge a minimal expense ratio. Taking the Vanguard FTSE 100 UCITS ETF as an example, this fund only charges 0.09% of your position size each year. So, if you invested £1000 into this ETF, you’d only have to pay 90p each year in fees!

Fees this low are one of the main reasons why FTSE 100 ETFs are such an attractive investment – especially for retail traders. Furthermore, if you were to invest in these funds with eToro, you can save yourself even more money as they allow you to open a position without paying any commissions. Combining these factors, it’s clear to see that when it comes to ETF trading, the best FTSE 100 ETFs are some of the best options out there for cost-effective investing.

Best FTSE 100 ETF UK Investment Platforms 2021

One of the essential steps on your investment journey is choosing a reliable broker that allows you to invest in the best FTSE 100 ETFs. You must consider many factors when choosing a good broker, such as regulations, fee structure, and deposit methods.

In this section, we discuss two of the best stock brokers available in the UK, helping you decide which is right for you.

1. eToro – Overall Best Broker for Investing in FTSE 100 ETFs

Best UK Passive funds at eToroWhen it comes to investing in FTSE 100 ETFs, we recommend using eToro. eToro is one of the world’s most popular brokers, with over 20million registered users across the globe. As they are regulated by both the FCA and FSCS, eToro are known for having the highest levels of security for your capital, allowing you to trade with confidence.

etoro invest in FTSE 100 ETFs

One of the best things about eToro’s platform is that they allow you to trade ETFs without paying any commissions. Many brokers will charge between 1-3% of your position size when you place a trade, resulting in a lot of money spent on fees if you trade actively. eToro does not charge this commission, meaning you can invest in as many assets as you’d like without incurring fees.

In addition to letting you invest in the best FTSE 100 ETFs, eToro also offers a revolutionary CopyPortfolio feature. These CopyPortfolio’s are actively managed by eToro’s investment team and allow you to invest in a bundle of assets that provide exposure to many different sectors. Furthermore, unlike many other portfolio providers, there are no management fees associated with investing in these CopyPortfolio’s!

etoro invest in copyportfolio

Finally, eToro ensures that the account opening process is quick and easy, allowing you to be up and running in around ten minutes. Deposits are easy too – you can fund your account via credit/debit card, bank transfer, or even e-wallet.

Pros:

  • Ideal for beginners with its easy-to-use interface
  • Invest in a wide range of the best FTSE 100 ETFs with 0% commission
  • Trade CFDs in the form of stocks, indices, commodities, forex, and more
  • Copy-trade expert traders
  • Invest in thematic portfolios that give exposure to future trends
  • Deposit funds with a debit/credit card, e-wallet, or UK bank account
  • FCA and FSCS protection

Cons:

  • No ISAs or SIPPs

67% of retail investor accounts lose money when trading CFDs with this provider.

2. Capital.com – Trade CFDs on the Best FTSE 100 ETFs with Leverage

As an alternative to eToro, we’d recommend checking out Capital.com. Regulated by both the FCA and CySEC, Capital.com has a reputation for being one of the safest brokers and offers traders an easy to use investment platform with attractive fees.

Capital.com predominantly focuses on CFD trading, which involves purchasing a contract based on an asset’s price rather than buying the asset itself. The great thing about CFDs is that you can utilise leverage when trading them to boost your position size. Capital.com offer 5:1 leverage when trading ETFs, meaning that you can essentially increase your position size by 5X!

etoro invest in ftse 100 etfs

In terms of fees, Capital.com utilise a spread structure rather than commission. The spread is the difference between the bid and ask prices listed on tradeable assets – this difference is essentially the ‘commission’ you pay to invest in a security. Luckily, this spread is usually pretty small and remains competitive with other brokers within the industry.

With a minimum deposit of only $20, Capital.com ensure they are accessible to a wide range of beginner investors. Account opening can be fully completed online and usually only takes one working day. Finally, you can fund your account using various options, such as credit/debit card, bank transfer, or e-wallet.

Pros:

  • Cost Effective Investing in FTSE 100 ETFs
  • Offers tight spreads, leverage, and options
  • Advanced charting and analysis interface
  • AI assistant spots weak points
  • Has a minimum deposit of £20

Cons:

  • Cannot build custom trading strategies
  • CFDs only

71.2% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider.

How to Buy the Best FTSE 100 ETFs UK

Now that you have all the information you need, it’s time to take a look at how to invest in one of the best FTSE 100 ETFs. The section below presents a step-by-step guide that will allow you to do this in under ten minutes with FCA-regulated broker eToro.

Step 1: Open an Account

The first thing you need to do is open an account. Head to the eToro website and click ‘Join Now’ in the top right. After this, simply enter your email address and choose a username and password.

etoro sign up

Step 2: Verify your ID and Address

eToro requires new users to verify themselves before they can invest. Luckily, this is quick and easy to do. Once you have entered the relevant personal details needed, upload proof of ID (a copy of your driver’s license or passport) and proof of address (a copy of a bank statement or utility bill). eToro will then verify the documents, which usually takes minutes.

Step 3: Make a Deposit

To fund your account, you can deposit via credit/debit card, bank transfer, or e-wallet. If you’re looking to invest as quickly as possible, we recommend using a credit/debit card as the funds will be deposited immediately.

Step 4: Search for FTSE 100 ETF

Click into the search bar at the top of the screen and type in the name of the FTSE 100 ETF you wish to invest in. For the purposes of this guide, we are looking to invest in the iShares FTSE 100 UCITS ETF. When it appears, click on it, and then click the ‘Trade’ button on the next screen.

etoro invest in best ftse 100 etfs

Step 5: Invest in FTSE 100 ETF

In the order box that appears, all you have to do is enter the amount you’d like to invest (minimum of $50). After this, make sure to double-check everything is correct, and click ‘Open Trade’.

invest in top performing ftse 100 etfs etoro

And that’s it! You’ve just invested in a FTSE 100 ETF – commission free!

eToro – Buy the Best FTSE 100 ETF UK with 0% Commission

Throughout this guide, we have discussed ten of the best FTSE 100 ETFs UK, highlighting key features you need to be aware of and providing insight into past and future performance. Incorporating one of these ETFs into your portfolio can increase your chances of capital growth and boost diversification through exposure to many different UK sectors.

If you’d like to invest in a FTSE 100 ETF, we recommend partnering with eToro. They allow you to invest in their ETF selection without having to pay any commissions. In addition to this, their account opening process only takes around ten minutes to complete, and you can begin investing from as little as $50 (around £36).

etoro

67% of retail investor accounts lose money when trading CFDs with this provider.

FAQs

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About Connor Brooke PRO INVESTOR

Connor is a Scottish financial expert, specialising in wealth management and equity investing. Based in Glasgow, Connor writes full-time for a wide selection of financial websites, whilst also providing startup consulting to small businesses. Holding a Bachelor’s degree in Finance, and a Master’s degree in Investment Fund Management, Connor has extensive knowledge in the investing space, and has also written two theses on mutual funds and the UK market.

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