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What is an ETP?

Exchange Traded Products (ETPs) usually follow the price movements of a financial index or benchmark (e.g. the FTSE 100) and can offer an alternative way to gain exposure to a wide range of markets, without incurring all of the costs of investing directly.

There are 3 types of ETP

Exchange Traded
Funds (ETFs)

ETF

The most common type of Exchange Traded Product that tracks a sector, market or index

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Exchange Traded
Commodities (ETCs)

ETC

Track commodity indices, such as metals, natural energy resources, agricultural produce or livestock

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Exchange Traded
Notes (ETNs)

ETF

Unsecured debt obligations typically issued by a bank or other financial institution

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To trade ETFs, ETCs or ETNs you may need to complete an appropriateness assessment.

Benefits of trading ETPs?

Diversification – Invest over a whole market index or sector, spreading risk and increasing access to a range of securities.

Costs – As ETFs aren’t actively managed fees are typically lower than Investment Funds. There's also no stamp duty to pay. Until 31 May you can also buy ETFs online for zero commission with TD. Terms apply

Choice – Easily adjust your trading strategy with access to different global markets and asset classes like cash, equities or commodities.

Convenience – Simple to trade and priced like shares. You can also easily track performance and movements in price during trading hours.


Runs from 3rd May to 31st May 2016

Promotion Terms & Conditions

Defined Terms

  • "ETFs" means Exchange Traded Products available to trade electronically through our Website or the Trading Applications.
  • "Specific Account Terms" means the terms of service applicable to each of the following account types:
    • TD Trading Account;
    • TD ISA;
    • TD SIPP:
    • TD Junior ISA; or
    • TD Pension Trading Account.
  1. These terms & conditions should be read in conjunction with the TD Direct Investing (Europe) Limited (“TD”, “us” or “we”) Terms of Service and the relevant Specific Account Terms. In the event of a conflict between these terms, the Terms of Service and the relevant Specific Account Terms, these terms shall prevail.
  2. A commission rate of £0 is applicable to all buy orders of ETFs placed using our Website or the Trading Applications (the “Offer”). Orders must be executed between 3 May and 31 May 2016 inclusive (the “Offer Period”) in order to be eligible for the Offer. For the avoidance of doubt, any buy orders placed within the Offer Period but not executed until after the Offer Period has finished will not be eligible for this Offer.
  3. All other trades, including sales, placed during the Offer Period will be charged at our standard commission rates as detailed in our Rates and Charges.
  4. This Offer shall not apply to trades placed on TD Derivatives Accounts and TD Financial Spread Trading Accounts.
  5. This Offer is not available to anyone who is not a UK resident or anyone who is under 18 years of age.
  6. Orders placed via telephone dealing are not included in this Offer and will be subject to the commission rates set out in our Rates and Charges.
  7. After the Offer Period has ended you will be required to pay the commission rates as set out in our Rates and Charges.
  8. All other fees are not subject to this Offer and shall continue to apply notwithstanding.
  9. We reserve the right to alter, withdraw or amend this Offer at any time.
  10. Any orders that are cancelled before completion will not be eligible for the Offer.
  11. All participants to this Offer agree to be bound by these terms and conditions.
  12. This Offer is governed by the laws of England and Wales and is subject to the exclusive jurisdiction of the English courts.
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What’s the difference between Physical & Synthetic ETFs?

Physical ETFs

Replicate an index physically through buying a basket of shares.

Synthetic ETFs

Replicate an index synthetically with the use of derivatives.

For more information please refer to the Key Investor Information Document (KIID) and the Prospectus.

Learn more about ETPs

We've teamed up with one of our ETF providers to bring you 6 short ETF videos.

Take a closer look at ETFs in our online guide.

Find your ETF

Videos provided by
ETF Securities

These educational videos are provided by ETF securities and are for information purposes only and should not be viewed as a personal recommendation. If you are unsure about the suitability of a particular investment you should speak to a suitably qualified financial adviser.

The Risks

Tracking Error

Tracking error is the difference between the performance of the ETP and the investment it tracks. Tracking error depends on the market conditions at the time and can either be in the client's favour or against them.

Counterparty Risk

Certain ETPs use complex financial products such as swaps (see synthetic ETP for details), futures and options with other third party counterparties rather than purchasing the assets themselves to achieve investment performance. If the investment bank providing these complex products fails, the ETP may lose a part or all of the funds they had invested. Investors should consult the ETP's prospectus to understand the Counterparty risk associated with the product.

Liquidity Risk

In certain circumstances, it may be difficult for an ETP to trade particular investments within a reasonable time at a fair price, which may reduce the ETP's returns. Also, during periods of reduced market liquidity or in the absence of readily available market quotations for particular investments in the ETP's portfolio, the ability to produce an accurate daily value to these investments may be difficult.

Stock Lending (Collateral)

ETP providers can generate further revenue by lending their holdings (collateral) out to other third party institutions, such as investment banks. If these third parties fail and the holdings are unable to be recovered, investors could suffer a potential loss. Different ETPs have different exposures to stock lending and the ETP prospectus should be consulted to determine the Collateral Policy for that product.

Currency Risk

If the ETP's underlying holdings are in a currency different to the denominated currency, investors will be affected by fluctuations in foreign exchange rates.

Leverage & Short ETPs Risk

The more an ETP invests in leverage derivative instruments, the more this leverage will magnify any losses on these investments. For leverage index-based ETPs, the value of the ETP's shares will tend to increase or decrease more than the value of any increase or decrease in its underlying index. ETPs that offer leverage are highly complex financial instruments with a high degree of risk and are not suitable for all investors. Investors should carefully consult the prospectus before investing so they understand the risks associated with these products before trading.

Concentration risk

To the extent that an ETP's Underlying Index or portfolio is concentrated in the securities of a particular market, country, industry, sector or asset class, the ETP may be adversely affected by the performance of those securities, subject to increased price volatility and may be more susceptible to adverse economic, market, political or regulatory occurrences affecting that particular market, country, industry, sector or asset class.

Tax

The tax treatment of an ETP is determined by your individual circumstances and the continued status of the ETP. The returns from trading ETPs could be subject to income tax rather than Capital Gains Tax. If you are unsure whether an ETP is suitable for your own individual circumstances you should consult a qualified tax advisor

Understanding the Risks

ETPs can use complex financial techniques, meaning that these types of products may not be suitable for all investors. The value of an ETP is not guaranteed and can go down as well as up and you may get back less than you invested. If you are unsure of their suitability please seek independent financial advice. The protections available under the Financial Services Compensation Scheme (FSCS) may not be available for all types of ETPs domiciled outside of the UK.

Before you invest in an UCITS ETF you should make sure that you read the Key Investor Information Document (KIID) and Key Features Document (KFD) or other supporting information. For other types of ETP you should make sure that you read the Prospectus for the ETP you are intending to invest in, to make sure that it fits in with your investment goals.

The information we provide in TD Recommended ETFs is an opinion provided by TD or one of its partners on whether to buy a specific investment. Please note that none of the opinions we provide are a personal recommendation, which means that we have not assessed your investing knowledge and experience, your financial situation or your investment objectives. Therefore you should ensure that any investment decisions you make are suitable for your personal circumstances. Remember that stock market investments can rise and fall in value and returns are not guaranteed, which means that you may get back less money than you originally invested. If you are unsure about the suitability of a particular investment or think that you need a personal recommendation, you should speak to a suitably qualified financial advisor.

Which TD account do I need?

You can invest in Exchange-Traded Funds with a TD ISA, TD SIPP or TD Trading Account:

Exchange Traded Funds

Learn more and get started today

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