Over a third of UK investors still do not know what an Exchange Traded Fund (ETF) is, according to Barclays Stockbrokers.

Demand for ETFs by UK investors has risen steadily in recent years, yet 35 per cent of investors still do not know what they are and a further five per cent are confused by them, mistakenly believing they are a type of cash deposit or commodity.

The poll also reveals that only 16 per cent think the products are great for diversified exposure, and 15 per cent think they are cost-effective instruments. Yet, despite this, over a third do not think ETFs are suitable for them.

Barbara-Ann King, head of proposition at Barclays Stockbrokers, says, ‘Given the rise in global demand for ETFs since their launch seven years ago, it is evident that some investors in the retail space remain confused as to what they are. However, recent trends have shown that this investment vehicle is increasing its visibility in the world of retail and offers instant benefits to investors.’

iShares, the ETF arm of Barclays Stockbrokers, for example, are relatively low cost and offer the combination of the portfolio diversification of a fund and the liquidity of a share.

King adds, ‘For this reason, they are ideal for self-directed investors looking to enjoy flexibility and control, and tap into markets and strategies that are harder to access through single stock selection. iShares are simple and transparent which will appeal to investors wanting to take advantage of new and well-priced markets given the current market conditions.’