Investing in an ETF is a great way to gain access to a diversified portfolio, and one of the most popular ETFs is the iShares FTSE 100 UCITS ETF.
In this article, we take a closer look at how to invest in iShares FTSE 100 UCITS ETF. We will also cover a choice of brokers that you can trade iShares FTSE 100 UCITS ETF with. Read on for a detailed look at the price history, dividend history, and top exposures and sectors.
If you’re looking as how to invest in iShares FTSE 100 UCITS ETF, we recommend choosing eToro to open a commission-free position. The FCA-regulated broker offers commission-free trading on over 2000 financial assets, as well as exclusive trading functions such as the eToro copy trader. You can open both a virtual and real money-funded account with ease. Here’s a quick look at how to do so in 4 simple steps:
- Step 1: Open an account by visiting our top recommended broker eToro
- Step 2: Verify identity by uploading passport or driver’s license and recent utility bill.
- Step 3: Fund your account by making a minimum deposit of $50.
- Step 4: Search for iShares FTSE 100 UCITS ETF and open your position.
It’s as simple as that!
Choose an ETF Broker
When looking at how to invest in iShares FTSE 100 UCITS ETF, it’s important to choose the right broker to suit your investment needs. Some important broker considerations should include commission, minimum deposit, and regulations. To save you the time of researching the right broker, we have compiled a list of some of our best stock brokers. Read on for a closer look at each.
Our top pick to invest with is eToro. The platform is easy to navigate around and open trades with, making it great for beginner traders. What’s more, when opening a new non-leveraged position with eToro, you pay zero commission. The broker gives you access to over 2000 financial assets where you can buy shares, stocks, cryptocurrencies, indices, commodities, and some of the best ETFs.
eToro is great for social investors. Its social treading function gives you the ability to connect with the 20 million other eToro users in over 140 countries. In addition to this, the copy trader function allows investors to copy some of eToro’s highest-rated investor’s portfolios. These can be filtered for growth, return, and risk as required. The broker is FCA registered meaning your deposited funds are covered by the FSCS Scheme.
Being commission-free, eToro makes most of its money off of its fixed spread charge. In addition to this, accounts that are left inactive for over 12 months will face an annual charge of $10 thereafter. Also, a fee of $5 is applied when funds are withdrawn from your account. These are the only costs investors must consider when trading with eToro, making it a very competitive broker to trade with.
In terms of opening an account, this can easily be done through their website or investment app. Traders can begin with a virtual account but must fund their account with a minimum of $50 before opening any real positions. Funds can be added using a variety of payment methods including debit and credit card and bank transfer. The platform also accepts e-wallet payments such as PayPal and Skrill. Once your funds are successfully added you can begin trading the iShares FTSE 100 UCITS ETF.
- 0% commission and spread-free stock CFD trading
- Over 2000 stocks with tight spreads
- FCA, ASIC, and CySEC Regulated
- User-friendly online trading platform
- supports social and copy trading
- Not great for technical analysis
67% of retail investor accounts lose money when trading CFDs with this provider
Capital.com is our next best broker to trade with. It also offers a 0% commission alongside zero hidden fees. This is purely a CFD trading platform and is great for both beginners and expert traders. The site offers huge access to over 3000 financial assets, giving you a broad range of stocks, commodities and the best ETFs to choose from.
This includes a massive 142 forex pairs! The broker is a good choice for investors looking to fund small accounts as it only requires a £20 minimum deposit. However, when investing in an ETF that tracks a slow growth index like the FTSE 100, you may want to consider funding your account with a greater sum than this!
Another great thing about Capital.com is the variety of online courses and articles it provides for beginner investors. They equip novice traders with all the necessary skills to open profitable trades, including volatility, risk management, and much more. The platform also posts daily market insights which cover some of the current hottest stocks. This is great for new trade ideas. Capital.com also offers advanced tools for technical analysis. This is done through their integration through TradingView, whose unique software allows more advanced investors to measure and track current market trends, as well as future forecasting.
The platform also allows investors to access securities in foreign markets like Asia, Australia, the US, and Europe. Capital.com also offers the option to open leveraged positions. This is good as it allows for the potential for greater future returns. However, it also increases the risks of investment as if your ETF decreases in value, your losses are multiplied by your leverage. A good way to practice investing before opening leveraged positions is to play around with Capital.com’s virtual trading account. This is a great tool for beginner investors.
Capital.com is also regulated by both the Financial Conduct Authority (FCA) and the Cyprus Security and Exchange Commission (CySEC), making it a highly reputable broker to trade with. If investors do encounter any problems, Capital.com offers free 24/7 support via phone, email, and a live chat function.
- Charges an overnight lending fee when trading with leverage
- Doesn’t support price alerts
71.2% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider.
Now we have looked at the best brokers to trade iShares FTSE 100 UCITS ETF with, let’s dig a little deeper into the ETF itself. In order to give you a good understanding:
The iShares FTSE 100 UCITS ETF tracks the performance of the FTSE 100 Index Fund and so is a good way in if you’re looking at how to invest in FTSE 100. This is comprised of the largest 100 UK listed companies in the world, giving investors massive diversification. iShares is an ETF-specific provider parented by BlackRock, the global investment management firm. BlackRock is one of the largest and most profitable investment management firms in the world, and iShares ETFs benefit directly from this.
In terms of how the ETF works, It tracks the FTSE 100 like for like. This means its portfolio is comprised and weighted just like the FTSE 100. Investing in the ETF will give you indirect ownership of all 100 companies.
For example, if you invested £1000 you would indirectly own £56.10 worth of Unilever shares- the largest company in the FTSE. This is because Unilever makes up 5.61% of the FTSE 100 and therefore the same amount is invested into the iShares ETF. The second-largest holding is healthcare giant AstraZeneca (5.15%) and the third is multinational bank HSBC (4.55%).
The ETF gives investors portfolios exposure to the 100 largest listed UK companies. iShares suggests using this investment at the core of a portfolio to seek long-term, steady returns on investment. The ETF offers globally diversified growth through sector-leading companies. This diversity is great as it means you don’t have to try and construct your own portfolio of a few UK companies. It also means if one sector is declining, it will likely be offset by growth in another sector.
As we mentioned above, the price of the iShares FTSE 100 ETF fluctuates in line with the FTSE 100 share price. For example at the time of writing the FTSE has jumped above £7000 for the first time since March last year. As a result, the iShares FTSE 100 ETF risen to a share price of £6.90, also its highest value since the pandemic struck.
Looking at the price history, the FTSE 100 has delivered a return of 103.98%. This represents an annualized figure of 5.19% and the benchmark for the ETFs growth. The iShares FTSE 100 ETF has grown at an annualized rate of 5%, showing the like-for-like returns that the iShares ETF offers.
Looking at more recent price movements, the 1-year annualized return of the FTSE 100 is 21.88%. This is largely in line with the coronavirus pandemic recovery, as at the end of the FY2020 Q4, the UK was in full lockdown. The iShares 1-year return is also exactly 21.88%, making it a hugely profitable investment in the last year.
The pandemic sent share prices of most publicly traded companies downhill. This was represented by the market crash of March last year, where the FTSE stooped to a 10 year low of £4500. This downtrend was reminiscent of the 2008 financial crisis, which sent prices crashing to as low as £4000.
However, as many stocks have recovered in share price since this crash, the FTSE has seen huge growth. It has risen over 20% in the past 6 months, proving a great recovery index. Since the iShares FTSE 100 ETF directly tracks the index its share price has also increased over 20% in the past 6 months, making it a good investment.
67% of retail investor accounts lose money when trading CFDs with this provider.
The FTSE 100 is renowned for being one of the most stable and for it’s growth making it a good long-term investment. The re-opening of the UK economy is underway, which is largely why the index has been creeping up in recent weeks. The vaccine roll out is good news for the FTSE as it is moving the world back to normality. As more of the global economy reopens, the various sectors of the FTSE are likely to climb accordingly.
However, it is worth noting that the FTSE is likely to provide more long-term returns as opposed to short-term gains. Though the index has risen a huge 21.88% this financial year, this is largely due to unprecedented market conditions provided by the pandemic. Moving forward the iShares FTSE 100 ETF is likely to provide slower returns, more in line with its 10-year 5% annualized return rate. Though this return is smaller it is also a lower risk investment strategy. This is due to the diversity of the portfolio – if one sector falls, it can be offset by another’s growth.
This is why the iShares FTSE 100 is a good investment for an investor’s portfolio. It provides stable, low-risk returns. This means investors can afford to add riskier potential higher short-term return shares to the remainder of their portfolio.
The iShares FTSE 100 ETF pays dividends as many of the FTSE 100 firms pay a dividend. This is a great incentive for investors as it provides extra returns for their portfolios. These dividends will be paid every 3 months to investors. Its current dividend yield is 2.88%. The last dividend paid was on 11 March 2021 and was 0.0562p per share.
This was lower than both the 2020 and 2019 dividend amounts, however, this is largely due to FTSE 100 companies freezing dividend payments during the pandemic, as they simply didn’t have the spare capital to pay them. The dividend price is usually in line with the FTSE 100’s value – as it increases in value when its constituent companies perform well. When these companies perform well, they turn over more revenue and can pay a higher dividend.
67% of retail investor accounts lose money when trading CFDs with this provider.
The iShares FTSE 100 ETF is made up predominately of financials and consumer staples. These make up 18.95% and 17.78% of the ETF respectively. Other predominant sectors include materials (14.11%) and industrials (10.42%), giving broad exposure to different sectors.
At the time of writing, the two largest holdings are Unilever which makes up 5.61% of the portfolio, and AstraZeneca, which makes up 5.15%. However, 3 of the top 10 holdings are in the energy sector, namely BP PLC, Royal Dutch Shell, and Royal Dutch Shell Class B. A detailed list of all holding can be found on the iShares website.
In terms of currency exposure, over 99% of the ETF is held in British Pounds. This is because the FTSE 100 deals in UK firms listed on the London Stock Exchange, and a large amount of them are UK companies. The US dollar and Euro also represent some holdings of 0.68% and 0.17% respectively. Although this seems like a tiny amount, the net assets of the fund are £9.6bn, meaning only 1% is equal to £96m! The FTSE 100 company makeup accounts for about 80% of the London Stock Exchange’s market cap. This highlights the exposure that the iShares FTSE 100 ETF has to the UK market.
Below you can find a fact sheet from the iShares website that lists some of the fundamental information on the ETF. These key facts offer a good insight into some of the more advanced metrics that investors consider before buying securities.
Now we have had an in-depth look at the iShares core FTSE 100 UCITS ETF you might think it could be a good addition to your portfolio. We are now going to take you through a comprehensive guide on how to invest in iShares FTSE 100 UCITS ETF using our top broker pick eToro, including opening accounts, making deposits, and opening new positions.
Step 1: Open an account
The first step is opening an account with eToro. It’s quick and easy to do, simply visit the website or the investment app and follow the onscreen instructions. You will need to fill in a short financial questionnaire to assess your previous trading knowledge. This is so eToro can tailor your experience based on if you are a beginner or a more advanced trader. eToro will also require you to fill in some personal information including a mobile phone number for authentication purposes.
Step 2: Upload verification documents
To authenticate your account, you will have to upload some official verification documents. This needs to be done before you can fund your account and begin trading. These documents include a photocopy of your passport or driver’s license and a recent utility bill. eToro’s verification system is very effective and in most cases, your documents will be verified within minutes.
Step 3: Make your deposit
eToro offers you the option to trade with a virtual account containing $100,000 equity. However, if you want to earn real returns then you must fund your eToro account. The minimum deposit is $50, which equates to £145 at current conversion rates. The broker allows for a variety of payment methods including debit and credit card and bank transfer. The platform also supports e-wallet payments including Paypal and Skrill. All funds are covered by the FCA’s Financial Services Compensation Scheme (FSCS). This means if the broker is ever unable to pay back your funds, you should be liable for compensation.
If you have got this far through our guide, you may be wanting to open a position in the iShares FTSE 100 UCITS ETF. All you need to do is search for the ETF in the onscreen search bar. eToro gives you access to over 2000 other financial assets too, including many other iShares ETFs.
Once you have chosen your ETF, click on the ‘Trade’ button in the top right. This will open up an order form. You must then fill in this form, and use your funds to select the amount you want to invest. Once you have decided this, click the ‘Set Order button and your position will be opened.
In conclusion, the iShares FTSE 100 UCITS ETF is a top choice to consider when looking for ETFs. Tracking the FTSE 100 index the ETF has provided historically near-identical annualized returns. Compromised of the UK’s largest 100 countries, it offers investors a chance to massively diversify their portfolio, provided a solid core of stability to build around.
The ETF has exposure to some of the biggest industries in the world including Energy, Financials, Consumer Staples, Materials, and much more. This gives traders a chance to own an indirect slice of huge company shares such as AstraZeneca, BP, and Unilever, which are some of the ETF’s largest holdings. The ETF also pays a dividend that is in line with FTSE 100 firms’ total dividends. This adds another great incentive to owning this ETF.
That being said, in the past 6 months, the iShares FTSE 100 ETF has risen a whopping 21.88% in line with the strong FTSE 100 pandemic recovery. However, these are unprecedented market conditions and arent likely to be seen again for some time. The annualized growth of 5% is more in line with what investors should expect from the FTSE 100 in years to come.
If you are ready to invest in the iShares FTSE 100 UCITS ETF, then we recommend choosing eToro as your broker. The platform offers commission-free trading with minimal fees thereafter. The website is beginner-friendly and it’s super easy to get an account set up. You can also deposit funds using a variety of payment methods. The platform also offers the iShares core FTSE 100 UCITS ETF!
67% of retail investor accounts lose money when trading CFDs with this provider.
What is the FTSE 100 forecast?
What’s the difference between an ETF and index fund?
Does the iShares FTSE 100 UCITS ETF pay dividends?
How much does the iShares FTSE 100 UCITS ETF cost?
How do Index tracking ETFs work?
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Investing in an ETF is a great way to gain access to a diversified portfolio, and one of the most popular ETFs is the iShares...