Three Scottish ETFs (Exchange Traded Funds) to keep an eye on in 2016

Would one of these Scottish ETFs be perfect for your portfolio?

An Exchange Traded Fund, more commonly referred to in its abbreviated form as an ETF, is an interesting security for those looking to invest.
It works by tracking an asset or basket of assets, such as an index, commodity, bonds, or an index fund.
People often make the mistake of likening ETFs to mutual funds, but they have one major difference: the former trade like a common stock on a stock exchange.
Those looking to invest in Scottish ETFs specifically should be aware of one point above all others: although the country is a small one, it is highly dependent upon its economic alliance with England, and is thus influenced by the rest of the U.K and its goings on.
As a result, a large number of Scottish ETFs track non-Scottish indexes, such as the FTSE 100 and FTSE 250. This is because these indexes hold the securities for many major Scottish companies, such as the Royal Bank of Scotland and Aberdeen Asset Management.
If you’re considering adding a Scottish ETF to your portfolio, then here are three for you to consider…
#1: iShares MSCI United Kingdom ETF
One of the most widely traded UK-based ETFs is the iShares MSCI. Although its key assets are predominantly based in England, such as HSBC and BP, it also boasts some prominent Scottish companies, including GlaxoSmithKline and the Royal Bank of Scotland.
Trading since 1996, with an average daily volume of around one million trades, it offers high yield semi-annual dividends, which can make it a very attractive proposition for potential investors. If you’re looking for stable exposure to companies across the UK, then this is one for you.
#2: CurrencyShares British Pound Sterling Trust
Investors searching for a stable Scottish fund often turn to the British Pound Sterling Trust, which offers a beta of 0.1 per cent and low expenses.
Designed to track and replicate the performance of the U.K currency against its American counterpart, it is the ideal hedge for those portfolios which are over-represented by US assets.
Although it may now experience some volatility in the wake of Brexit and the fluctuating value of sterling, it’s still one to bear in mind.
#3: SPDR MSCI United Kingdom Quality Mix ETF
Thirdly and finally, you might want to take a look at the Quality Mix ETF. Its low volatility may make it the perfect post-Brexit addition to your portfolio, and it is renowned for its diversity and stability.
Tracking three separate MSCI indexes, it has a gross expense ratio of 0.3 per cent, and a yield that sits around 3.5 per cent. Although relatively newly launched, it is well plotted out, with no single stock comprising more than 5 per cent of its assets.
Would one of these Scottish ETFs be perfect for your portfolio?
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Ben Barlow is a freelance finance writer specialising in stocks and shares, forex and ISAs. After studying business at Lancaster University, Ben worked at a number of financial institutions in London and New York and is now following his passion for writing.