💷Pound Power & British Picks

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If you've enjoyed a cup of English breakfast tea, admired London's charm, or wondered about the significance of the British pound in global finance, today's topic will interest you. We're diving into the QuickList of UK ETFs, a diverse part of the investing world.

This weekend's article will cover what makes UK ETFs appealing and why they might belong on your watchlist. Grab a biscuit, get comfortable, and let's learn together!

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Why UK ETFs?

When people think of the United Kingdom, they often envision London, the royal family, or the typical rainy weather. However, behind the scenes, the UK is home to some of the largest and most globally connected companies in the world.

Many of the largest companies listed on the UK stock exchange, such as Unilever, Shell, and HSBC, generate the majority of their revenue from international markets. Therefore, when you invest in a "UK ETF," you're not solely focused on the UK economy. Instead, you're gaining exposure to regions such as Asia, Europe, the U.S., Africa, and beyond.

Sterling may not be the U.S. dollar, but it is one of the most-traded currencies globally. Its role in the global financial system gives UK investments an intriguing currency aspect that can be advantageous when the pound strengthens against other currencies.

The UK ETF market is more diverse than many expect. Whether you're looking for broad exposure, something more specific, or a currency play, there's probably an ETF that suits your needs.

🫖Top UK ETFs

Today, we present a selection of UK ETFs for different investment needs. Choose from large-cap equity ETFs for stability, currency ETFs for pound exposure, or small-cap ETFs for growth. Whatever your investment goal, there’s a UK ETF for you.

1. iShares MSCI United Kingdom ETF (EWU)

Inception: 1996-03-12

Expense Ratio: 0.50%

Provider: iShares

Past 5 Years Annualised Performance: 14.80%

If UK ETFs were a sightseeing tour, $EWU ( ▲ 0.37% ) would be your iconic red double-decker bus. It's the most well-known, the most straightforward, and it takes you to all the big landmarks of the UK stock market. This ETF holds about 70 of the UK's largest and most established companies, including household names like AstraZeneca, Shell, and HSBC.

EWU emphasises dividends, as British companies are known for generous payouts. It offers a steady income and broad access to global British businesses without the hassle of picking individual stocks. Think of EWU as your reliable "core" UK ETF—steady and predictable.

2. Franklin FTSE United Kingdom ETF (FLGB)

Inception: 2017-11-02

Expense Ratio: 0.09%

Provider: Franklin Templeton

Past 5 Years Annualised Performance: 16.48%

Next is FLGB, the Franklin FTSE United Kingdom ETF. If EWU is the red double-decker bus, consider FLGB the sleek electric cab—same destination with a modern twist. FLGB targets large and mid-cap UK companies but uses a different methodology that some investors prefer.

With a lower expense ratio, more of your money stays invested rather than paying fees. FLGB also offers a slightly different sector weighting, providing a fresh perspective on the UK market. For newer investors seeking cost-effective UK exposure, FLGB delivers great value—like enjoying the British experience at a budget-friendly price!

3. Invesco CurrencyShares British Pound Sterling Trust (FXB)

Inception: 2006-06-21

Expense Ratio: 0.40%

Provider: Invesco

Past 5 Years Annualised Performance: 1.88%

$FXB ( ▲ 0.02% ) , the CurrencyShares British Pound Sterling Trust, provides exposure to the value of the British pound (GBP) against the U.S. dollar. If you believe the pound will strengthen, FXB offers a simple and regulated way to capitalise on that view without the complexities of direct currency trading. It's an excellent option for investors looking to hedge against currency fluctuations or who are optimistic about the pound's future. Think of FXB as an easy entry into currency investing—no forex account needed!

4. First Trust United Kingdom AlphaDEX Fund (FKU)

Inception: 2012-02-14

Expense Ratio: 0.80%

Provider: First Trust

Past 5 Years Annualised Performance: 14.37%

As a smart beta ETF, $FKU ( ▲ 0.32% ) doesn't just track the largest companies. It uses a rules-based process to select stocks based on factors like growth, value, momentum, and returns. This leads to a unique portfolio that may differ from standard UK ETFs, potentially offering higher returns, though not guaranteed.

Ultimately, FKU combines the active investment feel of an actively managed fund with the simplicity of an ETF, making it beginner-friendly and a smarter option for UK investments.

5. iShares MSCI United Kingdom Small-Cap ETF (EWUS)

Inception: 2012-01-25

Expense Ratio: 0.59%

Provider: iShares

Past 5 Years Annualised Performance: 3.45%

Last but not least, we have $EWUS ( ▲ 1.02% ) – the iShares MSCI United Kingdom Small-Cap ETF. EWUS often emphasises sectors like industrials and consumer discretionary, which include hundreds of small-cap British stocks across a wide range of industries. For example, companies you may never have heard of, but that play important roles in the UK economy. This variety allows you to choose the small-cap approach that fits your investment style.

📊Discovering the UK ETF Universe

What have we learned about British ETFs? They offer more than just UK investments; they provide access to global companies with UK headquarters and leverage the strength of the pound. One of the benefits of ETFs is that you can mix various types to achieve balanced UK exposure.

Investing should be enjoyable, not daunting. At ETF UNO, we strive to make it straightforward, letting you explore your investments like discovering new favorite books, rather than tackling complex math.

As we conclude this weekend's reading, I hope you've found a UK ETF that interests you. The ETF UNO community offers valuable insights and investment strategies in a simple, engaging style to help you build confidence in your journey.

Join thousands of investors who receive clear, actionable insights through our newsletter, making complex market movements easy to understand. Become part of ETF UNO today, and let's explore the world of ETFs together. Happy investing from all of us at ETF UNO!

DISCLAIMER: This article is for informational purposes only and does not constitute investment advice. Always conduct your own research and consider consulting with a financial advisor before making investment decisions.