Are these the best UK ETFs to watch in Q1 2025?

Investing in Exchange Traded Funds[KL1] (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 recovered significantly across 2024 — rates across the pond may have peaked amid hopes that generative AI could drive further capital growth. 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 has seen the utilities sector surge, this was largely driven by the increased energy needs required to power the AI boom.

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.

The consumer discretionary sector saw mixed results throughout 2024 where home improvement and auto-parts stores struggled as consumers held of starting big projects, but hose building stocks increased as recent interest rate cuts are expected to result in lower mortgage rates. Large tech stocks such as Amazon and Tesla also performed well.

As interest rates continue to fall in 2025 and consumers gain more purchasing power, it’s expected that the consumer discretionary sector will perform well.

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.

Gold continues to flirt with near record $2,600/oz levels, as recent US interest rate cuts have made the precious metal seem more attractive as returns from shares or bonds seem less likely.

It’s worth noting that central banks bought a record 1,037 tons of the precious metal in 2023 and continue to buy huge amounts this year.

And of course, gold is seen as a safe haven asset during times of economic and geopolitical uncertainty. With wars in Gaza and Ukraine, coupled with the increased tensions between China and the US, many investors have turned to gold.

How to invest or trade in UK ETFs with us

1. Learn more about UK ETFs
2. Open an account with us or practise on a demo
3. Select your opportunity
4. Choose your position size and manage your risk
5. Place your deal and monitor your trade

You can either invest in ETFs directly or trade using spread betting or CFDs to benefit from leverage.

Keep in mind, leverage means you can gain or lose money faster than expected. Because your position size is far greater than your deposit, you could lose more money than you put in. Be aware also that past performance is not an indicator of future returns.

Learn more about the differences between trading and investing here.

Trade and invest in over 17,000 UK, US and global shares from zero commission with us, the UK’s No.1 trading provider.* Learn more about trading or investing in shares with us, or open an account to get started today.
*Based on revenue excluding FX (published financial statements, October 2021).

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.