Best CFD ETF Brokers
An ETF or an exchange-traded fund is a basket type of investment security that operates like mutual funds. As the name suggests, investors can trade these assets on different stock exchanges, unlike mutual funds. Broadly, there are two types of ETFs, passive and actively managed. Passive ETFs have a target index of securities whose performance they replicate. On the other hand, active ETFs have a team of managers determining which securities to include in the ETF’s portfolio. More specifically, ETFs can cover different asset classes including bonds, currencies, commodities, stocks, and more.
Today, we want to look at some of the best CFD ETF brokers that exist. But before we jump right in, it is important to understand the advantages and disadvantages of ETFs.
Advantages of Trading ETFs
- A single ETF can host a plethora of different assets bringing great diversity to traders.
- ETFs lower the overall cost of trading single assets which is a welcomed upside by traders.
- Some ETFs target a specific industry and as such investors can speculate on the overall performance of an industry.
- Most ETFs offer great transparency as they disclose their holdings on a regular basis.
Disadvantages of Trading ETFs
- Actively managed ETFs can have higher fees as they incur greater operational costs.
- Industry-focused ETFs can lower diversification compared to trading individual stocks, bonds or other assets.
- While ETFs disclose their holdings, some traders may not fully research all the assets under the ETF. This introduces hidden risks when investing.
Now that we are through with the introductory portion of this article, let’s look at some of the best CFD ETF brokers in the world. We are going to start off with eToro.
eToro is one of the most popular Forex and CFD brokers in the world today. This trading platform allows its clients to trade over 3,000 different assets from a variety of markets. These include CFDs on 52 different currency pairs, 74 different cryptocurrencies, and 420 different ETFs, stocks, commodities, and indices, among others. The ETF CFDs that eToro provides its customers cover a wide range of industries and asset classes. Consequently, they offer traders great ability to diversify their portfolios. Notably, they include ETFs like the SPDR S&P 500 ET, the SPDR Gold ETF, the Vanguard Total Stock Market ETF, and the ProShares UltraPro QQQ, among many others. Further, for those interested, eToro also offers real ETFs and not just CFDs on ETFs.
When trading CFDs on ETFs, eToro primarily charges spreads to traders. For non-us ETFs and stocks, the spread is a flat 0.15%. In contrast, US-based instrument spreads are configured in two main categories. If the market price is above $3, a 0.15% spread applies. If the price is $3 and below, then a total of 2 cents spread is charged per unit held. Other fees that apply include overnight fees for positions held overnight. Investors pay triple fees for leaving any positions open on Fridays.
The only trading platform available to use on this broker site is the eToro platform. This platform is versatile and comes with the proprietary CopyTrader technology that allows investors to replicate the moves of top-performing traders on the site.
On regulations, eToro does not disappoint. This broker operates under the strict rules of some of the most reputable organizations. These include the FCA in the UK, the CySEC in Cyprus, and the ASIC in Australia among others.
76% of retail investor accounts lose money when trading CFDs with this provider.
Pepperstone provides its clients with over 100 different ETF CFDs to invest in. These ETFs track the performance of various sectors including mining, energy, technology, bond markets, and retail. Broadly, they cover markets from 35 different countries across 6 continents. Pepperstone passes spreads from the underlying exchange straight to the trader with no markups. However, it charges a small commission of $0.02 per share per trade. Another fee that applies is an overnight fee charged for holding positions over consecutive days. However, Pepperstone provides its clients with an Islamic Account for Muslim traders who cannot pay rollover fees.
There are four different world-class trading platforms traders can choose from on Pepperstone. These include MetaTrader 4, MetaTrader 5, cTrader, and TradingView. Additionally, it is important to note that Pepperstone allows investors to trade a variety of other markets other than ETF CFDs. Investors can also trade CFDs on forex, commodities, cryptocurrencies, shares, currency indices, and indices.
Now let’s look at Pepperstone’s regulatory status. This broker hotels regulatory licenses from various organizations from around the world. These include the CySEC in Cyprus, the ASIC in Australia, the FCA in the UK, the BaFin in Germany, and the CMA in Kenya, among others.
74.6% of retail CFD accounts lose money
FP Markets promises its clients ultra-low spreads when trading ETF CFDs starting from as low as 0.0 pips. However, there is a small commission of 2 cents per share that applies. There are different types of ETFs available to trade on FP Markets. These include Currency ETFs, Gold ETFs, Equity ETFs, and Factor ETFs, among others. In total, there are over 490 different ETF CFDs to trade. There are four main trading platforms to choose from on this broker site. These include MetaTrader 4, MetaTrader 5, cTrader, and Iress. Further, FP Markets provides clients with a variety of trading tools. As an example, it is one of the brokers that supports Trading Central.
Further, FP Markets also provides traders with a variety of markets to invest in. These markets include forex, commodities, metals, indices, shares, cryptocurrencies, and bonds. This allows traders to further diversify their portfolios.
Finally, let’s look at the regulatory status of FP Markets. This broker is subject to regulation and examination by the CySEC in Cyprus, the ASIC in Australia, the FSCA in South Africa, and the FSA in Seychelles. The CySEC and the ASIC are two recognized tier-one regulators in the market. This helps build a good name for FP Markets in the market.
73.85% of retail CFD accounts lose money
XTB offers its traders direct market access when trading ETF CFDs. This means that investor orders reach the order book of the underlying exchanges. Additionally, XTB offers trader smart order routing meaning that orders are routed to the exchange offering the best execution price. The spreads for trading ETF CFDs on this broker site are from as low as 0.08%.
The only trading platform available to use is the proprietary xStation 5 platform. This trading platform is intuitive enough for beginner traders to use. Notably, XTB allows traders to invest in a variety of other markets that include forex, indices, commodities, cryptocurrencies, and stocks. Additionally, XTB offers real ETFs to traders and not just CFDs on ETFs. On another good note, XTB is one of the brokers that offer an instant execution model.
We always insist that investors should only invest with well-regulated brokers. Luckily, XTB has regulations from two reputable organizations including the FCA in the UK and the CySEC in Cyprus. Additionally, this broker is regulated by the FSCA in South Africa.
78% of retail investor accounts lose money when trading CFDs with this provider.
Admiral Markets provides its clients with over 500 different ETF CFDs to trade. The broker also offers real ETFs and not just ETF CFDs. The fees for trading these ETF CFDs are competitively low. The spreads are as low as 0.01 pips with commissions. Notably, the commissions charged depend on where the asset is from. Specifically, US-based ETFs require a commission of $0.02 per side per transaction. In other regions, the commission ranges from 0.1 to 0.15 % of trade value. A rollover fee also applies for positions held overnight. An Islamic account is available for traders who cannot pay swap fees.
There is great diversity in the trading platforms that traders can choose from. Specifically, traders can choose between MetaTrader 4, MetaTrader 5, MetaTrader WebTrader, and Admirals Mobile App. There is also diversity in the markets that traders can invest in. Aside from CFDs on ETFs, investors can also trade CFDs on forex, indices, shares, commodities, and bonds.
Remember that regulations alone are not enough to recommend a broker. However, it is always refreshing to see a company with regulations in multiple reputable jurisdictions. In this case, Admiral Markets has regulations in the UK by the FCA, in Cyprus by the CySEC, and in Australia by the ASIC.
Saxo Bank offers one of the deepest collections of market instruments that traders can find anywhere in the market. In total, there are over 72,000 financial instruments that include over 1,100 ETF CFDs from tech, healthcare, environment and other major sectors. The trading commissions charged on ETFs are competitively low starting from as low as $0.02 per share with a minimum of $5 depending on the underlying exchange, the trading account, and the region. Note that Saxo Bank also charges overnight fees on positions left open over the night. On a sad note, this broker has one of the highest minimum deposits anywhere in the market at $2,000.
Saxo provides traders with its proprietary software to use when placing orders. They can choose between SaxoTraderGO and SaxoTraderPro. These two platforms are fully customizable and offer professional-grade execution. Some of the other markets investors can trade using these platforms include forex, stocks, bonds, crypto, and mutual funds, among others.
Further, the regulations of this broker help it win the trust of investors. The company has licenses from the FCA in the UK, the ASIC in Australia, and the FINMA in Switzerland. These are three organizations with tough rules to follow. Moreover, this broker has over 30 years of providing brokerage services to investors.
AvaTrade is another broker that is well-regulated in the market. This broker operates under the supervision of the Central Bank of Ireland, the CySEC in Cyprus, the ASIC in Australia, and others. While regulations alone are never enough, these are reputable organizations with strict laws that encourage fair trading environments.
Notably, AvaTrade also provides CFD ETFs to its clients alongside a plethora of other assets. Under the most traded ETFs section, traders can view the top ETFs that other investors are trading the heaviest and get their foot into the game. Further, AvaTrade offers competitive spreads when trading ETFs. The spreads start from as low as 0.13%. Another fee that applies is overnight fees for leaving positions open over the night. However, an Islamic account is available for traders who cannot pay swap fees. Further, AvaTrade also provides its traders with high-quality educational materials & daily market analysis to assist them on their trading journey.
There are various trading platforms available to use on AvaTrade. These include MetaTrader 4, MetaTrader 5, and AvaTradeGo. It is also important to note that there are various other markets available to invest in. These include forex, indices, cryptocurrencies, commodities, equities, and bonds.
HFM is the last broker we will feature on this list. The broker is well-respected with regulations from multiple organizations. Particularly, the broker is regulated by the CySEC in Cyprus, the FCA in the UK, the FSCA in South Africa, and the FSC in Mauritius. While regulations alone are not enough, brokers with licenses from tier-one regulators often offer the best services. In this case, it is refreshing to know that HFM has regulations from both the CySEC and the FCA.
On the HFM broker site, there are 33 different ETF CFDs available to trade. These ETFs cover various markets including Aerospace, Defense, Health Care, Mining, and pharmaceuticals, among others. Note that spreads on these ETFs are floating and provided by the respective exchange. A commission of $0.10 per share round turn is applied when trading CFDs on ETFs with HFM.
Some of the other markets traders can invest in on this broker site include forex, stock CFDs, energies, commodities, indices, physical stocks, bonds, and cryptocurrencies. The trading platforms available to use include MetaTrader 4, MetaTrader 5, and the HFM Platform.
In this article, we saw the advantages and disadvantages of investing in ETF CFDs. One of the upsides of trading these instruments is the ability to diversify one’s portfolio using a single asset or just a few assets. Additionally, ETF CFDs can help lower trading fees as compared to investing in individual stocks. Notably, there are many brokers in the market that offer ETF CFDs. However, separating the best from the rest is where the hard work is.
In this piece, we presented some of the brokers that we believe have the best offering for traders of ETF CFDs. We mainly looked at the trading fees, the regulations, the trading platforms, and other assets available. Before you risk your money, make sure you understand the risks involved and the trading conditions that apply.