Questions on ETFs and ISA wrappers

[bls1]

Hi all,

1. If I invest in a straightforward ETF (e.g. unleveraged FTSE100), does it just track the share price (without dividends), or will the fund value flex with equity price and dividends ? I guess its too much to hope for to reconcile fund value movement back to the movement in underlying shares ?

2. How do I invest in an 'ISA Wrapper' ? I'm wanting to buy & sell my own shares and ETF's, but for long-term gains rather than 'trading' : say total 10 transactions a year. I'm guessing I can't just self-declare my trading is within my ISA allowance.

3. Can anyone recommend a particular broker, based on what I'm looking to do ? Stocktrade, Barclays Stockbrokers, etc. I might be interested in US & Asia markets in future but realise that brings in the risk of FX movements on top of everything else. With (I think) relatively few trades, I'm more interested in a reliable company and access to markets, than counting the pennies on transaction charges.

4. Finally, anyone want to suggest I'm a total idiot to be even considering this ?

Thanks a lot in advance.

More info :
I'm wanting to invest a modest 5 figure sum plus future ISA allowances in equities. Been wanting to shift long-term savings from cash to something more serious, and low interest rates and higher inflation have finally forced me out of lethargy.

Its only my odd opinion, but I prefer the control from savings and ISA's, compared to pensions. And don't feel actively-managed funds will offer me any benefit over my own 'guesswork' !

I work in accountancy and am naturally risk-averse. I'm well aware prices go up, down and all-around and will be trying to avoid the temptation to check the prices every week !

[Beardy10]

bls1 said:

Hi all,

1. If I invest in a straightforward ETF (e.g. unleveraged FTSE100), does it just track the share price (without dividends), or will the fund value flex with equity price and dividends ? I guess its too much to hope for to reconcile fund value movement back to the movement in underlying shares ?

2. How do I invest in an 'ISA Wrapper' ? I'm wanting to buy & sell my own shares and ETF's, but for long-term gains rather than 'trading' : say total 10 transactions a year. I'm guessing I can't just self-declare my trading is within my ISA allowance.

3. Can anyone recommend a particular broker, based on what I'm looking to do ? Stocktrade, Barclays Stockbrokers, etc. I might be interested in US & Asia markets in future but realise that brings in the risk of FX movements on top of everything else. With (I think) relatively few trades, I'm more interested in a reliable company and access to markets, than counting the pennies on transaction charges.

4. Finally, anyone want to suggest I'm a total idiot to be even considering this ?

Thanks a lot in advance.

More info :
I'm wanting to invest a modest 5 figure sum plus future ISA allowances in equities. Been wanting to shift long-term savings from cash to something more serious, and low interest rates and higher inflation have finally forced me out of lethargy.

Its only my odd opinion, but I prefer the control from savings and ISA's, compared to pensions. And don't feel actively-managed funds will offer me any benefit over my own 'guesswork' !

I work in accountancy and am naturally risk-averse. I'm well aware prices go up, down and all-around and will be trying to avoid the temptation to check the prices every week !

If you've got questions about ETF's have a look at the iShares websiste...that should tell you everything you need to know http://uk.ishares.com/en/rc/

You need to find an ISA/Wrap provider (not a broker) that will let you buy ETF's....not all of them will. I use this company as a wrap provider https://www.transact-online.co.uk/ I own ETF's on their platform....you simply use them to execute the trade in your ISA which can be done online. They're pretty flexible in what they will let you buy...I've never had any problems.

[bls1]

Thanks a lot Beardy10. I can now answer my own questions.

1. Yes, dividends are re-invested - good
2. Thanks for your recommendation
3. Thanks for your recommendation
4. No - good !!

So , here's to a hopefully prosperous 2011 !

[ringram]

You will probably find a few different providers of ETF's some capitalise investments as you mention, others distribute them. So you can select an ETF to suit. I like taking dividends and using them to top up whats best value at the time, which isnt necessarily FTSE100. But on average reinvestment is probably fine as it will in effect be cost averaging.