Important Information

You are visiting the international Vantage Markets website, distinct from the website operated by Vantage Global Prime LLP
( ) which is regulated by the Financial Conduct Authority ("FCA").

This website is managed by Vantage Markets' international entities, and it's important to emphasise that they are not subject to regulation by the FCA in the UK. Therefore, you must understand that you will not have the FCA’s protection when investing through this website – for example:

  • You will not be guaranteed Negative Balance Protection
  • You will not be protected by FCA’s leverage restrictions
  • You will not have the right to settle disputes via the Financial Ombudsman Service (FOS)
  • You will not be protected by Financial Services Compensation Scheme (FSCS)
  • Any monies deposited will not be afforded the protection required under the FCA Client Assets Sourcebook. The level of protection for your funds will be determined by the regulations of the relevant local regulator.

If you would like to proceed and visit this website, you acknowledge and confirm the following:

  • 1.The website is owned by Vantage Markets' international entities and not by Vantage Global Prime LLP, which is regulated by the FCA.
  • 2.Vantage Global Limited, or any of the Vantage Markets international entities, are neither based in the UK nor licensed by the FCA.
  • 3.You are accessing the website at your own initiative and have not been solicited by Vantage Global Limited in any way.
  • 4.Investing through this website does not grant you the protections provided by the FCA.
  • 5.Should you choose to invest through this website or with any of the international Vantage Markets entities, you will be subject to the rules and regulations of the relevant international regulatory authorities, not the FCA.

Vantage wants to make it clear that we are duly licensed and authorised to offer the services and financial derivative products listed on our website. Individuals accessing this website and registering a trading account do so entirely of their own volition and without prior solicitation.

By confirming your decision to proceed with entering the website, you hereby affirm that this decision was solely initiated by you, and no solicitation has been made by any Vantage entity.

I confirm my intention to proceed and enter this website Please direct me to the website operated by Vantage Global Prime LLP, regulated by the FCA in the United Kingdom

By providing your email and proceeding to create an account on this website, you acknowledge that you will be opening an account with Vantage Global Limited, regulated by the Vanuatu Financial Services Commission (VFSC), and not the UK Financial Conduct Authority (FCA).

    Please tick all to proceed

  • Please tick the checkbox to proceed
  • Please tick the checkbox to proceed
Proceed Please direct me to website operated by Vantage Global Prime LLP, regulated by the FCA in the United Kingdom.


Are you long or short on indices?

Trade Indices Now >
Long Or Short On Indices?


View More
  • All
  • Search
  • Forex Trading
  • Vantage Rewards
  • Spreads
  • facebook
  • instagram
  • twitter
  • linkedin
  • youtube
What are Exchange-Traded Funds (ETFs) and How to Trade Them?


What are Exchange-Traded Funds (ETFs) and How to Trade Them?

What are Exchange-Traded Funds (ETFs) and How to Trade Them?

Vantage Updated Updated Thu, 2022 September 22 09:28

What Are Exchange-Traded Funds (ETFs)?

As their name suggests, Exchange-Traded Funds (ETFs) are funds listed and traded on a stock exchange. Investors purchase units of an ETF, which are pooled together by a fund manager who then invests in order to replicate the returns of an underlying index.

In this article, we will delve into what ETFs are, how they work, and what are the advantages of trading them, especially compared to other equities like mutual funds and stocks.

Background of Exchange-Traded Funds (ETFs)

Over the past three decades, the market for Exchange-Traded Funds (ETFs) has grown exponentially – and continues to do so. Today, it is a multi-trillion-dollar industry with tens of thousands of funds that track all manner of CFDs on indices1.

As their name suggests, Exchange-Traded Funds (ETFs) are funds listed and traded on a stock exchange. Investors purchase units of an ETF, which are pooled together by a fund manager who then invests in order to replicate the returns of an underlying index.

An index is a basket of stocks that are selected and weighted based on a defined methodology. Indices are a useful indicator of the performance of the broad economy, particular sectors, or certain geographic areas.

Popular indices that are tracked by ETFs include among others the S&P500, FTSE 100, NASDAQ 100, and the Dow Jones Industrial Average.

How to Trade Exchange-Traded Funds (ETFs)?

There are many ways investors and traders can gain exposure to Exchange-Traded Funds (ETFs).

Trade Exchange-Traded Funds (ETFs) with a Brokerage Account

The most straightforward way to do so is to buy units of ETFs using your brokerage account, just like how you would invest in stocks, bonds and any other listed assets.

Trade Exchange-Traded Funds (ETFs) with a Robo-Advisor

These days, there are many robo-advisor platforms that also invest in ETFs. You can gain exposure to the underlying ETFs by putting money into robo-advisors. One drawback to this approach though is that you will be incurring additional fees from your robo-advisor, on top of any fees charged by the ETF.

Trade Exchange-Traded Funds (ETFs) using CFD

Another way you can gain exposure to the price movements of an ETF is by using a Contracts-For-Difference (CFD). A leading CFD provider like Vantage gives you access to top global indices with transparent prices and razor-thin spreads.

In addition to enjoying the inherent advantages of ETFs, trading through CFDs may allow you to use leverage if you so choose, which means you can amplify the exposure you receive from the price movements of the underlying ETF. Leveraged ETFs, however, come with considerable risk and are not appropriate for long-term investing because its amplified exposure can trigger steep losses in a short period of time. Investing in conventional ETFs and leveraged ETFs require very different investment strategies because the latter is designed to achieve only short-term investment objectives while ETFs usually perform much better over a long period of term. You are advised to seek professional advice and understand the risks associated with leveraged ETFs before making a commitment to trade ETFs through CFD.

ExchangeTraded Funds

Advantages of Trading ETFs

There are many reasons why ETFs are growing in popularity among investors.

Firstly, like actively managed Mutual Funds, ETFs give investors a convenient way to instantly diversify across hundreds or even thousands of stocks, just by purchasing one ETF unit.

Secondly, unlike mutual funds, ETFs typically have lower expense ratios compared to Mutual Funds, since ETFs are passive by design. Thus, fund managers are not attempting to actively invest to beat the benchmark, and rack up hefty transaction fees in the process.

Thirdly, because they are listed and traded on the stock market, ETFs can be bought and sold just like any other security. This means there is improved liquidity and price transparency for ETFs, compared to Mutual Funds and other non-listed investments.

Finally, because ETFs are managed, you do not need to deal with corporate actions like Rights Issues, handle dividend payouts from multiple companies, and handle tax matters across jurisdictions you are not familiar with.

Exchange-Traded Funds (ETFs) Are a Powerful Asset for Both Investors and Traders

The many benefits of ETFs make them an integral part of many investors and traders’ portfolios. It is not uncommon to see ETFs being traded actively on the market, and the ever-growing net asset value of leading ETFs bears witness to their popularity.

Active trading volumes make ETFs attractive subjects of technical analysis, providing traders with ample opportunities for executing their trading strategies.

Open an account and trade Exchange-Traded Funds (ETFs) with Vantage today.


  1.  “The trillion-dollar ETF boom triggered by the financial crisis just keeps getting bigger”. – Accessed 26 August 2022.
  • vantage academy open account

    Open Trading Account

    Discover the endless trading possibilities with our cutting-edge platform, designed to empower both beginners and seasoned traders alike.

  • vantage academy app

    Download Vantage App

    Trade on the go with the Vantage All-In-One Trading App, where smooth execution and market access come together in the palm of your hand.

  • vantage academy start trading

    Start Trading

    Are you an existing user? Login to your account to start trading 1,000+ products including forex, indices, gold, shares and more.