Are these the best UK ETFs to watch in Q2 2025?

Investing in Exchange Traded Funds (ETFs) is an incredibly popular trading strategy, especially among newer investors. ETFs allow you to buy into a ‘basket of securities’ based on a specific sector or investing approach, without having to buy the assets individually.

Investing in an ETF allows for increased exposure to a diversified range of investments, the trading liquidity of equity instead of the rigidity of a mutual fund, and the ability to manage risk by trading futures just like an individual stock.

Of course, ETFs can contain all sorts of investments, from stocks to commodities to bonds. Other than the convenience, ETFs usually offer low expense ratios and lower broker commissions than buying the constituent assets individually.

And with the UK economy still on an uncertain footing, the diversification of ETFs appears more attractive than ever.

However, it’s worth nothing that an ETF will only ever perform as well as its underlying constituents. We do offer an ETF screener that can help to inform your investing decisions. But remember, past performance is not an indicator of future returns.

Open an account and start trading or investing in ETFs today.

Best UK ETFs to watch

Here are some of what we think might be the best UK ETFs to watch. Always do your own research.

1. Vanguard FTSE All-World UCITS ETF
2. iShares S&P 500 Information Technology Sector ETF
3. Invesco Utilities S&P US Select Sector UCITS ETF
4. iShares S&P 500 Consumer Discretionary Sector UCITS ETF
5. Invesco Physical Gold ETC

Vanguard FTSE All-World UCITS ETF

The Vanguard FTSE All-World UCITS ETF is one of the most popular in the world, as it aims to track the performance of the FTSE All-World index, made up of large and mid-sized companies in both developed and emerging markets.

This index offers possibly the most diversified portfolio of stocks possible, providing exposure to almost 4,000 companies from across 50 countries at a low annual fee.

However, it does have a geographical bias, with 64% of companies in the ETF based in the US. And because of the relative size of the US tech giants, the FTSE All-World’s biggest sector is usually technology — which can be volatile given the sensitivity of tech stocks to monetary policy. Further, over the longer term the index is usually beaten by the S&P 500.

But it’s worth noting the benefits of diversification — investors may wish to protect themselves from unpredictable global events, such as the occasional US stock market bubble, and also benefit from emerging markets.

iShares S&P 500 Information Technology Sector ETF

The iShares S&P 500 Information Technology Sector ETF seeks to track the performance of an index composed of U.S. Information Technology Sector companies as defined by the Global Industry Classification Standard. It boasts diversified exposure to titanic US tech stocks including top holdings Apple, Microsoft, and NVIDIA — but with the caveat that it only invests in the US.

US information technology stocks have dropped in value over the past couple of months due to uncertainties around the tariffs Trump may put in place. These tariffs are likely to negatively impact companies who conduct business outside of the US. Despite this, hopes that generative AI could drive further capital growth remain. Of course, as noted above, tech shares — even the blue chips — are more volatile than other sectors.

Invesco Utilities S&P US Select Sector UCITS ETF

The Invesco Utilities S&P US Select Sector UCITS ETF is designed to track the S&P Select Sector Capped 20% Utilities Index after accounting for fees and expenses. No stock in the index can exceed 19% of the total weight of the ETF.

Given the defensive nature of utilities stocks, they are often seen as a safe investment due to the constant need for services like electricity and water. 2024 saw the utilities sector surge, this was largely driven by the increased energy needs required to power the AI boom. This is likely to continue throughout 2025.

The expectation that interest rates will continue to drop, thereby lowering borrowing costs also contributed to its increase.

iShares S&P 500 Consumer Discretionary Sector UCITS ETF

The iShares S&P 500 Consumer Discretionary Sector UCITS ETF tracks the performance of US consumer discretionary companies on the S&P, consisting of a diverse set of industries ranging from household goods to automobiles, to hotels and restaurants.

In the first few months of 2025, the consumer discretionary sector has performed well, as economic uncertainty and concerns over tariffs have resulted in investors turning to safer stocks that remain in demand when the economy slows down.

With the threat of the US potentially slipping into a recession, consumer staples are likely to perform well during this period.

Invesco Physical Gold ETC

Invesco Physical Gold ETC seeks to replicate the performance of the London Gold Market Fixing Ltd PM Fix Price/USD, with the fund backed one-to-one with gold bullion held by JP Morgan Chase in London bank vaults.

Since January 2024, the price of gold has increased by over 40%. Throughout 2025, it’s expected to continue rising potentially reaching $2,890 by the end of the year. This anticipated price increase is largely driven by the growing demand from central banks, who have been buying huge amounts of the precious metal since 2022 when Russian central bank assets were frozen following their invasion of Ukraine.

And of course, gold is seen as a safe haven asset during times of economic and geopolitical uncertainty. With the war in Ukraine, the increased tensions between China and the US and the tariffs Trump’s looking to impose, many investors have turned to gold.

How to invest or trade in UK ETFs with us

1. Learn more about UK ETFs
2. Decide if you want to trade or invest
3. Download the IG Invest app or open an account online
4. Search for your chosen ETF on our app or web platform
5. Select your opportunity
6. Place your trade or investment and monitor your position

Investing in funds gives you exposure to a diverse collection of investments including shares. The value of these investments can fall as well as rise, which means you could get back less than your original investment.

You can also trade ETFs. This takes a shorter—term approach and uses leverage. With leverage, your position size is far greater than your deposit.

With 5:1 leverage, you can put down a £1000 margin and trade a position of £5000. A 10% market movement would magnify your losses or gains by 5 times. This would result in a 50% price change in your initial margin.

Whilst negative price protection will prevent you from losing more than your initial deposit, financial markets can be unpredictable and you could lose the full amount you put in.

Learn more about the differences between trading and investing here.

Top UK ETFs summed up

Based on the current economic climate these are some of the best UK ETFs to watch as they track indexes and sectors that tend to perform well in periods where interest rates are falling.

As they track a range of investments, they are a good way to diversify your portfolio, particularly in this uncertain economic environment.

These are just a small selection of some of the best UK ETFs to invest in. Always do your own research. Past performance is not a guide to future performance.