Important information - investment values and income from investments can go down as well as up, so you may get back less than you invest.
Exchange-traded funds (ETFs) emerged about 30 years ago as a cheap way to track the world’s biggest indices. They have exploded in popularity since then and have extended their reach accordingly. ETFs now invest in all kinds of asset classes and offer exposure to everything from global stocks to specific sector themes.
They have also expanded beyond passive investing. There are now active ETFs that try to beat their benchmarks and achieve other benefits for shareholders, such as reduced volatility.
Whatever type you choose, ETFs tend to be relatively low cost and fuss free - and some are particularly popular with Fidelity’s retail customers.
Gold
This year’s most popular exchange-traded product is the iShares Physical Gold ETC. This isn’t surprising. Gold is now worth more than $3,800 per troy ounce - a record high, and almost 50% more than this time last year.1 Past performance is not a reliable indicator of future returns.
The iShares fund aims to track the gold price by providing exposure to physical gold. In other words, actual gold bars, locked away in a vault, back your investment. It features on Fidelity’s Select 50, a list of favourite funds picked by experts.
Gold is often viewed as the ultimate safe haven during difficult times and this is largely why it has done so well recently. Concerns about America’s level of debt, trade wars, inflation and - most recently - the shut-down of the US government have all driven up the price of the precious metal.
According to the World Gold Council, total gold ETF holdings are now approaching the record highs reported during the pandemic.2
US trackers
Following close behind the gold fund is Vanguard’s S&P 500 UCITS ETF. As its name suggests, it tracks the performance of America’s 500 biggest companies, weighted by size.
The fund linked to above is an ‘accumulating’ ETF, meaning it reinvests dividend income. The distributing version - which pays out dividends to shareholders - also appears on the best-sellers list, however. It features on Fidelity’s Select 50 too, and we like it for a couple of reasons: Vanguard is an expert in index tracking and the fund is relatively cheap, with an ongoing charge of just 0.07%.
America’s biggest stocks have yielded some staggering returns in recent years, which is good news for index trackers. Over the past decade, the S&P 500 has delivered annualised returns of 13%.3 Please remember past performance is not a reliable indicator of future returns.
2025 has been a little rockier, as America’s role on the global stage has come under scrutiny. The falling US dollar, tariff uncertainty, and the country’s huge debt pile have all sown doubt among investors. As a result, America has lagged some of its international rivals this year.
Many investors still want plenty of exposure to the region, however, and are using ETFs to achieve this.
Global stocks
The best-sellers list is also packed with global index trackers. The Vanguard FTSE All-World, the SPDR MSCI All Country World and the Invesco FTSE All-World all feature in the top 10 for 2025.
Their portfolios look very similar. About 63% of each ETF is invested in the US, and about 7% is invested in the Eurozone.
However, different charges apply. The SPDR ETF has the lowest ongoing charge of 0.12%, while Vanguard has an ongoing charge of 0.22%. The Vanguard has far more net assets, however, meaning it has a narrower bid-ask spread.
Defence
ETFs are also a good way to tap into specific industries without the hassle of picking individual stocks. Given the war in Ukraine, tensions in the Middle East, and Europe’s rearmament push, the defence sector is attracting particular interest.
HANetf’s Future of Defence fund invests in companies that generate sales from NATO defence spending. Top holdings include German arms giant Rheinmetall and US software company Palantir Technologies, which counts the US Department of Defense as a key client.
Another sector favourite is the VanEck Defense ETF. Having launched less than three years ago, this fund aims to track the overall performance of companies serving national defence industries. These include Palantir, Italian aerospace giant Leonardo, and French player Thales.
The defence market is expected to exceed $700bn by 2027 - and the cybersecurity market is growing even faster. This has been driving up shares in the sector. However, volatility is a key risk when it comes to thematic ETFs as there is little diversification within the funds.4
Bonds
It’s not all about equities, of course. Some ETFs focus on fixed income, and the iShares £ Ultrashort Bond UCITS ETF is very popular with retail customers this year.
This ETF is low risk and invests in a diversified range of bonds with very short maturities. As such, it aims to deliver slightly better than cash-like returns. In the year to 30 June 2025, for example, it achieved growth of 5.13%, compared with 4.8% achieved by the Fidelity Cash Fund.
Best-selling ETF’s year-to-date
- iShares Physical Gold ETC
- Vanguard S&P 500 UCITS ETF
- Vanguard FTSE All-World UCITS ETF
- SPDR MSCI All Country World UCITS ETF
- Vanguard S&P 500 UCITS ETF
- Vanguard FTSE Developed World UCITS ETF
- VanEck Defense ETF
- HANetf ICAV - Future of Defence UCITS ETF
- iShares £ Ultrashort Bond UCITS ETF
- Invesco FTSE All-World UCITS ETF
Source: Fidelity International. Net sales 1 January to 30 September 2025, for Personal Investors only.
| (%) As at 30 Sept |
2020-2021 | 2021-2022 | 2022-2023 | 2023-2024 | 2024-2025 |
|---|---|---|---|---|---|
| iShares Physical Gold | -11.4 | 14.9 | 1.2 | 29.1 | 45.2 |
| MSCI World | 29.4 | -19.3 | 22.6 | 33.0 | 17.8 |
| FTSE 100 | 25.4 | 0.9 | 14.7 | 12.4 | 17.5 |
| FTSE Emerging | 18.9 | -24.2 | 11.1 | 28.5 | 16.2 |
| S&P 500 | 30.0 | -15.5 | 21.6 | 36.4 | 17.6 |
| STOXX Europe 600 | 29.3 | -12.0 | 19.9 | 20.0 | 10.3 |
Past performance is not a reliable indicator of future returns
Source: total returns, from 30.9.20 to 30.9.25. Excludes initial charge.
1 Gold.co.uk, October 2025
2 World Gold Council, October 2025
3 S&P Global, October 2025
4 HANEtf, 31 May 2025
Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. This information is not a personal recommendation for any particular investment. Overseas investments will be affected by movements in currency exchange rates. Investments in emerging markets can be more volatile than other more developed markets. There is a risk that the issuers of bonds may not be able to repay the money they have borrowed or make interest payments. When interest rates rise, bonds may fall in value. Rising interest rates may cause the value of your investment to fall. There is no guarantee that the investment objective of any Index Tracking Sub-Fund will be achieved. The performance of the sub-fund may not match the performance of the index it tracks due to factors including, but not limited to, the investment strategy used, fees and expenses and taxes. Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.
Share this article
Latest articles
Watch - Week in the markets - 17 November 2025
This week in the markets
Tom Stevenson
Fidelity International
17 November 2025
Men: Be invested in your health and your wealth
Why waiting rarely pays off
Oliver Griffin
Fidelity International
17 November 2025
Harvesting gains - the week ahead
What’s driving your investments this week?
Tom Stevenson
Fidelity International
17 November 2025
