5 ETFs that will turbocharge your ISA!

Exchange Traded Funds (ETFs) have revolutionised investing. Unlike traditional unit trusts offered by fund managers they have no initial charge (aside from dealing costs), and have a low annual management fee - sometimes of less than 0.5%. There are also rarely any other fees such as performance fees.

ETFs are bought and traded through internet share trading stockbrokers just like shares in companies. This means that they can be bought and sold at any time, unlike unit trusts which can be hard to sell at times, especially if the fund manager is underperforming and everyone else is heading for the exits!

ETFs normally have a low spread between the buying and selling price. This makes it much easier to trade them like a share in a company.

ETFs now exist for a wide variety of investment objectives, markets and investment themes. There are now a whole range of ETF providers. The whole investment world has gone ETF crazy!

All of these ETFs can be held within a stocks & shares Individual Savings Account (ISA). They can also be held in a Self Invested Personal Pension (SIPP).

This ETF contains a basket of interest paying corporate bonds and is one of the most popular UK based fixed income ETF. The bonds are issued by larger companies and businesses with a large weighting in the financial sector. The ETF lost significant value in the 2008 credit crisis, but recovered well in 2009. The ETF pays out quarterly dividends.

The annual management charge for holding this fund is a very low 0.2%, which is significantly less than the usual 1-1.5% normally charged by the range of corporate bond unit trusts offered by fund managers.

Related ETFs are the iShares Corporate Bond ETF holding bonds denominated in Euros (London Stock Exchange ticker IBCX) and the iShares Corporate Bond ETF holding bonds denominated in US dollars (LQDE).

This ETF (stock exchange ticker symbol IUKD) contains a selection of around 50 high yielding equities selected from the FTSE 250 index of larger companies. Dividends are paid out on a quarterly basis.

The annual management charge for holding this equity fund is a very low 0.4%, which is significantly less than the usual 1-1.5% normally charged by typical equity income funds.

A similar investment strategy is also available for the Asia Pacific Region (iShares DJ Asia/Pacific Select Dividend; stock symbol IAPD) and the Euro zone (iShares DJ Euro STOXX Select Dividend; stock symbol IDVY).

The iShares BRIC 50 (ticker symbol BRIC) gives exposure to some of the biggest companies in the emerging markets of Brazil, Russia, India and China. The ETF holds shareholdings in big established businesses such as PetroBras of Brazil, China Mobile and the Russian energy company Gazprom. There is a large weighting in financial services companies and the energy sector. The annual charge for this fund is just 0.74%, which is significantly less than what most fund managers charge for their emerging market funds.

Dividends are paid semi-annually, although the purpose of this ETF is capital growth rather than income.

When building a balanced portfolio it's always nice to be able to include commercial property. This property ETF (stock symbol IUKP) invests in the shares of property companies and real estate investment trusts (REITS). It pays out a quarterly dividend. The current dividend is quite low, but there is a good possibility of long term capital growth. Property is also a good hedge against the much feared threat of inflation.

The advantage of this ETF over commercial property unit trusts is that it is easy to trade in and out of the ETF. During the property price crash of 2007-2008, many commercial property funds stopped investors cashing in their investments in commercial property funds as investors all rushed for the exits!

This ETF has the stock symbol PHPP. This ETF is a good way of preserving wealth. It invests in the four most popular precious metals - gold, silver, platinum and palladium. The biggest weighting (~40%) is in gold. I like this ETF because it saves putting all your eggs in the gold basket. Gold is the traditional store of wealth, and through the ages it has maintained its purchasing power regardless of what paper currency is in use. Silver, platinum and palladium all have industrial uses, and their value normally increases in line with economic activity. Platinum is used in catalytic converters, as well as being highly prized by the jewellery industry.

Note that a similar ETF is available that is priced in US dollars. It is of course possible to invest in ETFs that contain just one precious metal - ETFs are available for investing in gold, silver, platinum and palladium as well as commodities such as natural gas.

All of the physical metal bars owned by ETFS Securities are stored in secure bank vaults! There is a low annual charge of less than 0.5% for holding this ETF.

This hub gives a few ETF investment ideas for a stocks & shares ISA. Any comments or suggestions? Have I missed some good ETF investment ideas? Add feedback below...

The author of this article is not authorised by the UK authorities to give financial advice. This article does not consitute financial advice. Before making investment decisions consult an independent financial advisor.