Best Index ETF to Invest in Right Now – Beginners Guide 2021

Fact Checked by Gary McFarlane

Want to browse some index ETFs to invest in? Investing in a stock market index is a great way of gaining from the growth of an entire national economy, sector, or group of companies and an Exchange Traded Fund (ETF) offers a low-risk, low-cost vehicle to do this.

In this guide, we review three outstanding brokers which offer the best index ETFs to invest in. We look at the pros and cons of index investing and ETFs. We also review ETFs against other ways of trading indices.

Read on if you need to steady your portfolio with a low-cost, long-term hold.

#1 Index ETF Broker – eToro

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How to Invest in an index ETF – Step-by-Step Guide 2021

To invest in an index ETF, follow this easy four-step strategy:

  • Step 1: Open an eToro account: Go to Press the ‘Join Now’ button. The dialogue box asks you for some simple details: username, email, password. Once completed, press the ‘Create Account’ button.
  • Step 2: Verify your Identity: You will need Proof of Identity (passport, ID card, driving license) as well as Proof of Address (bank/credit card statement, utility bill). Scan them and upload. When you are verified, you will be informed via email as well as receive a green tick against your profile picture.  
  • Step 3: Fund your account: Once verified, press the blue ‘Deposit Funds’ button. Then you can fund your account via bank transfer, e-wallet or credit/debit card. Deposit options vary by country of residence.
  • Step 4: Invest in an index ETF: Review 250+ ETFs with eToro – here’s how. Press the ‘Trade Markets’ button on the left of the screen. Then select the ‘ETFs’ button on the top toolbar. Browse until you find an ETF that matches the index you want to trade. To buy into an ETF (or even go short on it), click on a logo and press the blue ‘Trade’ button that comes up on the right of the screen for more options.

Where to Invest in an index ETF – Top ETF Brokers

Index ETFs are available through online brokers. Which broker you choose will depend on which country you live in. Premium brokers Hargreaves Lansdown in the UK, for example, only accept UK clients. TDAmeritrade of the USA largely only accept investors from the US and the Asia Pacific. Whether a broker accepts investors from your country is the first thing you should check. Otherwise, you may be tantalised by a tempting choice of ETFs, only to find that the broker cannot accept your business. 

1. eToro – Best Overall index ETF Broker

Global broker eToro offers its services to over 120+ countries. Since its creation in 2006, eToro has developed a user-base of 20 million investors. A full range of trading is offered by eToro – stocks, ETFs, crypto, indices, commodities and currencies. eToro is famed for its easy-to-use interface, 0% commission and global regulation.

With eToro, there are two convenient ways of exposing your portfolio to indices:

  • Trade indices direct with eToro CFDs.
  • Trade eToro index ETFs.

Trade indices direct with eToro CFDs

You can trade 13 indices direct using CFDs (Contracts-For-Difference) with eToro. As well as allowing you to gain exposure to a rise in the price of an index, CFD index trading means you can go short on an index (ie. bet that its price will go down). CFDs also allow you to leverage your position.

Overnight fees apply for CFD index trading. So CFDs are most suitable for day-trading indices. eToro also charges a spread fee on your CFD index position. The size of the fee depends on the index you are trading in:

Trade eToro index ETFs

Index ETFs are a simpler way of trading indexes than straight CFDs. ETFs are suitable for long-haul investing with low risk. Investing in an index means you are investing in a range of stocks at once, which reduces risk through diversification. And an index ETF allows you to achieve this investment with low fees. On eToro, trading a conventional ETF is free of charge (but a spread fee of 0.09% applies for CFD ETFs).

A good example of an index ETF on eToro is the very first ETF to have come to market – the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index of the US (the top biggest 500 companies listed in the US). This mammoth ETF started the ball rolling for ETFs in 1993. SPY now has $386 billion USD under management. It boasts a splendid annual average return of 10% since its inception.

Best of all, SPY offers a low expense ratio of 0.09%. Expense ratios apply to ETFs and other funds. They have nothing to do with the broker trading the ETF, but are priced into the ETF.

The term used for expense ratio is sometimes TER: Total Expense Ratio. This indicates how expensive a fund is to run. For ETFs, TER is an invisible fee. It gets deducted from the price of the ETF at source, with any change in the ETF’s unit price reflecting Net Asset Value (NAV) minus TER. So if the assets under management rise in price by 15%, we investors will receive an increase of 14.91%. Another way of looking at expense ratio is this: if we invest $1000 in SPY (expense ratio of 0.09%), that means $0.9 of our investment goes on running costs for the ETF. Keep an eye out for TER when you are scouring index ETFs for a good deal!


250+ ETFs are offered by eToro. Many are index ETFs, which follow an established stock exchange index in a particular country – such as the FTSE 100 (UK) or the DAX 40 (Germany). Other established indices which track particular sectors rather than entire national markets are also represented. Further, other ETFs are available with eToro, including leveraged ETFs, inverse ETFs, bond ETFs, real estate ETFs and commodity ETFs:

If you want to go short on an ETF – ie. invest in the expectation that its price will fall – eToro allows you to achieve this via a CFD (Contract-For-Difference). This means that you will be able to leverage your trade too. But, because CFDs are contracts, you will not physically own a share in the ETF; a technicality, really.

If you want to go long on an ETF – ie invest in the expectation that its price will rise – then eToro does not use a CFD. In this case, this means that you will own a share in the ETF. There is an exception to this arrangement: if you are based in Europe or the UK, any buy or sell orders with eToro for an ETF based outside of these jurisdictions will be offered via a CFD.


eToro is continually updating its range of investor services. Two progressive developments are eToro’s CopyTrader and CopyPortfolios.

CopyTrader allows you to copy other investors for free by setting up a portion of your funds to be automatically traded in line with the activity of the trader you are copying. This happens in real-time, with plenty of control over risk management features. You can copy many traders at once.

CopyPortfolios are like mini-ETFs which eToro has created itself. Each CopyPortfolio feature baskets of stocks grouped under a particular theme, or relating to a particular business sector or country. And that is not all. Some CopyPortfolios group top eToro traders together, so you can copy the best en masse. Expect to see more developments with eToro CopyPortfolios.


In the UK, eToro is regulated by the Financial Conduct Authority (FCA). In Cyprus, regulation comes under the Cyprus Securities & Exchange Commission (CySEC). In Australia, eToro is regulated by the Australian Securities and Investments Commission (ASIC).

eToro Fees

Fee Type Fee Amount
Commission Fee 0% (for European and UK clients)
Deposit Fee $0
Withdrawal Fee $5
Inactivity Fee $10 monthly fee applies after 1 year of inactivity 
ETF $0 – except for CFD ETFs, where a 0.09% spread fee will apply



  • 20 million investors in 120+ countries.
  • Regulated by CySEC, FCA and ASIC.
  • 250+ ETFs: most of the index ETFs.
  • Trade indices direct via CFDs.
  • CopyTrader – for copying successful traders.
  • CopyPortfolios – for investing in baskets of assets.
  • Fees are very clearly explained.
  • Well-designed, clear interface.


  • 0.09% fee on CFD ETFs.
  • No Metatrader 4/5 access.
  • Not covered by FSCS in the UK – but client funds are held separately for safety.

67% of retail investor accounts lose money when trading CFDs with this provider.


2. AvaTrade — Best MT4 & MT5 CFD Broker for index ETFs

Founded in 2006, AvaTrade has made a name for itself as a broker offering regulation across 7 jurisdictions as well as great platform support including MT4/MT5, DupliTrade and ZuluTrade. Like eToro, AvaTrade offers a truly global reach but does not allow trading to residents of Belgium, Cuba, Iran, Syria, the US, and New Zealand.

AvaTrade accepts deposits via credit card, wire transfer and – for non-EU investors – various e-wallet options including PayPal.

AvaTrade runs user accounts on a margin basis and offers leveraged trades only. New investors would be better suited to eToro, where CFD trading is optional rather than the norm.


As well as the normal broker offering of stocks, crypto, forex and commodities, AvaTrade currently offers 60 ETFs – including index ETFs. All ETFs are traded as CFDs, which means you can go short. A standard leverage of 5:1 applies. AvaTrade charges a 0.13% spread fee for all ETF positions. (eToro, by comparison, only charges a 0.09% spread fee on CFD ETF positions.)


AvaTrade offers two proprietary platforms: AvaSocial (for copy trading on your mobile phone) and AvaOptions (options trading platform). Just as with eToro, you can with AvaTrade forgo the convenience of ETFs and risk trading indices direct with CFDs:



AvaTrade is regulated in the EU by the Central Bank of Ireland, and also in Cyprus by CySEC; in Australia by ASIC; in Japan by the FSA; in South Africa by the SAFSCA; in the Middle East by the Abu Dhabi Global Markets (ADGM) Financial Regulatory Services Authority (FSRA); in Israel by the ISA; and internationally by the British Virgin Islands FSC.

AvaTrade fees

AvaTrade covers the cost of your ETF trade using spread fees. A small overnight fee applies to ETF positions. Other non-trading fees apply.

Fee Type Fee Amount
Commission Fee NA
Deposit Fee $0
Withdrawal Fee $0
Inactivity Fee $50 per quarter after 3 months inactivity
ETF Fee A spread fee of 0.13%



  • Low-ish spread fee for ETFs.
  • Great range of index ETFs.
  • Regulated on 5 continents.
  • Can trade indices directly with CFDs (just like with eToro).
  • MT4, MT5, ZuluTrade and DupliTrade platforms supported.
  • Great for forex trading too.
  • Good help materials and FAQ search.



  • High non-activity fees.
  • CFD trading and margin account only.

71% of retail investor accounts lose money when trading CFDs with this provider.


3. — Established CFD Broker for index ETFs

Like AvaTrade, is a regulated CFD broker with a strong offering in forex trading in particular. Almost 800,000 traders from 183 countries use In 2020,’s user-base increased by 700%, with 80,000 active clients per month and a monthly investing volume of $50 million. A good selection of commodities, shares (including crypto) and indices is available, plus spread-betting. also offers a simple, clear way of trading ETFs as CFDs. accepts deposits vis bank transfer for all countries covered, and bank cards and e-wallets for many countries. is a dedicated CFD trader. This means accounts are run on a margin basis and trades are leveraged. Although safety nets exist, this sort of trading is suitable for the more experienced investor. The beginner investor would be advised to select a broker like eToro where conventional trading is the norm.

ETFs offers roughly 100 ETFs, including many index ETFs. ETFs are offered as CFDs, which means you can go short on ETFs, and your position is leveraged automatically. As you can see from the image below, spread fees vary from ETF to ETF:

Features offers all sorts of facilities for the confident CFD trader. As well as trading index ETFs, you can trade indices direct – as you can with eToro and AvaTrade – using CFDs. Overnight fees apply.

Regulation has offices in the UK, Cyprus, Gibraltar and Belarus. It is regulated by the UK’s Financial Conduct Authority (FCA), the Australian Securities and Investments Commission (ASIC), the National Bank of the Republic of Belarus (NBRB) and the Cyprus Security and Exchange Commission (CySEC). fees

Fee Type Fee Amount
Commission Fee 0%
Deposit Fee $0
Withdrawal Fee $0
Inactivity Fee $0
ETF fee spread fee: varies depending on ETF



  • Regulated in Cyprus, the UK, Belarus, and Australia.
  • Covered in the UK by the Financial Services Compensation Scheme (FSCS).
  • Almost 800,000 users.
  • 100+ ETFs with many index ETFs.
  • Great range of educational materials offered on its platform Investmate.
  • Customer help provided via phone (UK number).
  • Good choice of currency deposit methods (depending on country of residence).



  • Technical help difficult to track down onsite (find it under ‘contact us’).
  • CFD trading and margin account only.

77% of retail investor accounts lose money when trading CFDs with this provider.


Invest in index ETFs – Broker Price Comparison

Broker ETF Fee Deposit Fee Withdrawal Fee Inactivity Fee
eToro 0.09% spread fee on CFD ETFs $0 $0 $10 monthly (after 12 months inactivity)
AvaTrade 0.13% spread fee on all ETF positions $0 $0 $50 per quarter after 3 months inactivity Variable spread fee on all ETF positions $0 $0 NA


What is an index ETF?

An ETF is an Exchange Traded Fund. In investing in a whole basket of assets at once, an ETF is like a traditional mutual fund. Unlike a mutual fund, an ETF offers the advantages of lower fees and better liquidity.

So what is an index ETF? Most ETFs are index ETFs. That means they buy the stock that an established stock market index is already based on.

Most stock market indices are based on national stock markets. One national stock market may host many indices, with each index taking a different scope of that market.

The FTSE 100, for example, in the UK tracks the top 100 companies by market capitalisation. The FTSE 350, on the other hand, tracks the top 350 companies by market capitalisation.

Whichever scope a particular index takes, the advantage of indices is that they reflect the average movement in price across a select range of stocks. This lowers investor risk by diversification.

Is Investing in an index ETF a Good Investment? 

The simple answer is yes – provided you are prepared to hold your position for a while. ETFs generally offer good liquidity, which means you can come in and out of them. But they work best if you invest and let time do the work for you. Remember that, over time, stock markets tend to rise in value; the S&P 500 is worth over 22,000% more than it was valued back in its inception in the 1920s.

Investing in an index ETF – What are the Risks?

The main risk of investing in an index ETF is that an index will suddenly take a tumble. All stock market indices, for example, were gravely hit in early 2020 by the onset of Coronavirus and the market uncertainty it brought. But most bounced back. Indices aside, ETFs as an instrument are considered to be low-risk.

How to Invest in an index ETF with eToro

Here’s your four-step strategy to invest in an index ETF with eToro:

Step 1: Open an account with eToro

  • Go to Fill in the simple form with the desired username, your email address and a password. (As good practice, do not use a password that you use elsewhere). Tick the two acknowledgement boxes. Press the blue ‘Create Account’ button to continue.

67% of retail investor accounts lose money when trading CFDs with this provider.


Step 2: Verify your account

Like all reputable brokers, eToro follows strict KYC (Know Your Customer) rules. This means verifying the identity of all investors. Top tip: to get verified fast with eToro, use a scan of your passport for Proof of Identity.

For Proof of Address, you can use a scan of your bank/credit card statement, tax bill/letter, a letter from your council/municipality, internet/phone/council tax/electricity/water/gas bill.

It is sensible to wait for eToro verification before depositing funds in your account. Once you are verified, you will be notified via email, and receive a green tick against your profile picture on the eToro site.

Step 3: Fund your account

Press the ‘Deposit Funds’ button at the lower left of your screen. Depending on which country you live in, you can use online banking with Trustly and POLi, Klarna/Sofort Banking, iDEAL, Rapid Transfer, Skrill, Neteller, PayPal, bank transfer or credit/debit cards. You can deposit in any of 15 currencies: USD, EUR, GBP, AUD, THB, RMB, IDR, MYR, SEK, PHP, DKK, PLN, CZK, VND and NOK. There is no deposit fee. But a currency conversion fee will apply when depositing with any currency other than USD. That’s because all eToro trading prices are denominated in USD.

Step 4: Invest in an index ETF!

To review your ETF options with eToro, press the ‘Trade Markets’ button on the left of your screen. Then press ‘ETFs’ on the top ribbon:

You will then be presented with a list of all 250+ ETFs available. Clicking on an ETF’s box will take you to its main screen:

Here you can access a chat feed about the ETF, stats, charting tools – and, of course, trading options. To investigate your trading options, press the blue ‘Trade’ button at the top right:

Because this particular ETF (the oldest and biggest SPDR S&P 500 ETF (SPY)) is from the US and the account holder is based in the UK, eToro makes it available as a CFD. This means the investor can go short on the ETF, as well as leverage their investment. Note that eToro allows investors to go short on all ETFs via a CFD. But, when going long on an ETF, a CFD is not used. eToro also uses CFDs to offer international ETFs to EU and UK investors.


All three brokers under inspection here – eToro, AvaTrade and – offer a good choice of index ETFs, strong regulation and established user bases.

eToro takes the crown for your best bet to invest in an index ETF. There are 250+ ETFs to choose from. And we would expect eToro’s selection of index ETFs, which is already excellent, to broaden over time. Another key positive factor is that eToro allows you, under some circumstances, to buy into an ETF without incurring a spread fee.

Best index ETF Broker – eToro

$50Exclusive promotion
Our score10
  • Buy over 800 stocks with 0% commission
  • Social trading network
  • Copy over 12 million traders and investors
0% Commissionstart TradingOur score 10


Where can I invest in an index ETF?

What is an ETF?

What is an index ETF?

Is an ETF safe in the long term?

What is the advantage of buying an ETF as a CFD?

About Jules Blundell PRO INVESTOR

Jules is an experienced finance writer. He leverages his First Class degree from Cambridge University and his time at banks such as Goldman Sachs, Credit Suisse First Boston and Deutsche Bank to crunch complex financial topics for easy, educational reading.