For those who engage in derivative trading ETF’s offer a great opportunity. Both from an arbitrage point of view and as a way that trader can take exposure to a particular market or gain niche exposure to a certain group of companies. Unfortunately many providers of CFD’s do not provide the opportunity to trade ETF’s. This is partly cause their is less demand for ETF’s in CFD form and also ETF’s can often be less liquid than other asset classes. Meaning that providers of Contracts for Differences can find it more difficult hedge in the external market especially during periods of high market volatility. This being said their is still a good range of ETF’s to trade from a numerous number of providers. Today I’m going to outline some of the places where you can trade ETF’s through contracts for difference.
IG Markets, offers by the far the largest range of ETF’s stating that they have a range of over 200 ETF’s available to trade. This choice makes trading ETF’s on IG Markets particularly attractive especially since IG Markets offer some pretty decent ETF’s which offer niche exposure. Allowing you to take on exposure to places such as China and Brazil, with ETF’s such as the China 25 Tracker and the MSCI Brazil. While I haven’t undertaken any personal research into the issue, I have heard that ETF Arbitrage can be a particularly effective tactic when it comes to ETF’s which track emerging markets. The other good thing about IG Markets is that there based and regulated by the FSA. IG Markets also has one of the better reputations when it comes to over the counter CFD providers. The full list of ETF’s available with IG Markets can be viewed or downloaded here.
FSA regulated CFD provider Plus500 also offers a number of ETF’s which are available to trade as Contracts for Difference. While Plus500 doesn’t have quite as good a reputation as IG Markets, you will still be protected by the FSA’s consumer protection regulations. The offer of ETF’s available at Plus500 is also not as good as the range of ETF’s available at IG Markets there still quite a good range of ETF’s on offer, it should also be noted that Plus500 has recently added a few new ETF’s. The most recent being the iShares Silver. While it should be noted that Plus500 offers mainly highly liquid ETF’s and doesn’t really offer much in terms of ETF’s that track emerging markets or very niche areas. Some of the spreads on offer at Plus500 are somewhat large, making it less attractive to trade here. The full list of ETF’s available to trade on Plus500 can be found here. For a full review of the service on offer at Plus500 check the review I undertook a while ago here.
Another FSA regulated firm and one I have personally had good experiences with, which offers ETF’s to trade through CFD’s is ETX Capital. The overall reputation of the firm is generally quite good. A decent range of ETF’s are available to trade on ETX Capital no number is listed on their website it appears that they offer a considerably larger range of ETF’s than are available at Plus500 but a smaller range than is available at rival IG Markets. The spreads and commissions on the ETF’s at ETX Capital are competitive making ETX a relatively good place to trade ETF’s through Contracts for Difference. It should be noted that a large number of the ETF’s available at ETX Capital track various sectors of the Dow Jones, while only a limited number offer more exotic opportunities. Though there is still a reasonably good mix of ETF’s on offer with a number of ETF’s covering Asia and Latin America. The full rang of ETX Capital’s ETF’s can be found on their website here.
While I am aware that other CFD providers offer ETF’s, the three providers I have picked today are the companies that I am most familiar with and therefore I feel I can write the most authoritatively on. I also decided to stick to companies that are regulated the FSA in the UK. There are several other providers of ETF’s through Contract for Differences and when deciding to pick a provider make sure you do your research and properly compare the offerings.