HOW TO BUY iSHARES ETFs

Investing in ETFs can be an affordable way to access global financial markets, but there are different costs to consider, which may vary from provider to provider. Broadly, those costs fall into two main categories: ongoing and transactional.

Ongoing costs are the fees that investors pay to the ETF provider to manage and operate the fund. Often called expense ratios, these costs are usually expressed as a percentage of the fund's net asset value and are deducted from the fund's gross returns. The lower the expense ratio, the less your investment is spent on administrative fees and other operating costs. The ongoing costs are usually disclosed in the fund's fact sheet or product page.

Transaction costs are fees and expenses that investors pay to the bank or broker when they buy or sell ETFs. These vary on the provider and are often called commissions or exchange fees.

Just like all financial investments, investing in ETFs involves risk.*

Liquidity risk

The high liquidity of ETFs – that is the speed with which they can be bought and sold – refers to the markets on which they are traded. This cannot be guaranteed as the liquidity of the underlying securities which make up the product on the primary market may vary. In extreme cases, this could prevent a trade from being realised at the latest market price or at a price considered fair.

Diversification

Although diversification can lower certain types of risk, it cannot fully protect from market risk. Different types of ETF will involve different elements of risk. Before making any investment, it is important to understand the specific risks.

Currency risk

International ETFs sometimes invest a large proportion in values denominated in a foreign currency. Therefore, changes in the applicable exchange rate will affect the value of the relevant fund shares and your investment.

* The risks identified are not exhaustive.

Tax treatment depends on the individual circumstances of each client and may be subject to change in the future.

In the UK, dividend income from ETFs is subject to tax and its treatment depends on various factors. Shares in ETFs are treated as 'offshore funds' for UK tax purposes. If an investor holds a share in a 'non-reporting' fund, any profits made upon selling the share are taxed as income rather than under capital gains tax. For shares in 'reporting funds', dividends are taxed as income and any gains from selling the share are subject to capital gains tax. Information on reportable income is available on our website and is taxable annually.

Distributions from dividends and reported income are considered Dividend income from foreign companies except when from Bond Funds. Distributions from Bond Funds, which hold over 60% of their assets in interest-bearing securities, are classified as Interest income.

For individual UK taxpayers, there's a dividend exemption of £500 for the tax year 2025/2026. Any dividends over this amount are taxed at rates dependent on the taxpayer's bracket: basic rate (8.75%), higher rate (33.75%), and additional rate (39.35%).

Interest received above the personal savings allowance is taxed at rates dependent on the taxpayer's bracket: basic rate (20%), higher rate (40%), and additional rate (45%).

For UK residents, in the tax year 2024/2025, the first £3,000 of total chargeable gains is tax-exempt. Capital gains above this threshold will incur a tax charge of 20%.