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Top 4 Financial Instruments Currently Trending in the UK

 

As the landscape of stockbroker platforms opens up to retail investors, retail investors are becoming increasingly interested in different financial instruments. Whilst stock and commodity investing will always be some of the most popular instruments, let’s take a look at some of the alternative instruments that have had a big year in 2021:

 

Spread Betting

Spread betting is a popular tax-free way to trade. It’s an easy way to trade a wide variety of instruments - and whilst it’s not technically a financial instrument in and of itself, derivatives are, which spread betting is a subcategory of. This means you don’t actually own the underlying asset you’re betting on, but this makes it possible to go short and bet on an asset’s price dropping.

 

Leveraging trades has certainly become more popular. When browsing the best stock broker UK, it’s evident that it’s easier to open an account and spread a bet than it ever has been. It’s not accessibility alone that’s driving the popularity, though, but also the volatility of the market. During the pandemic, turbulent markets have meant that there are lots of shorting opportunities.

 

Indices

On the other end of the risk spectrum, we have indices. Index investing has been around for a very long time, but they’re a highly trending financial instrument. The biggest reason for this is due to the drive towards low-cost passive investing that’s popular among FIRE communities, among others.

 

During the pandemic, the global middle class had nothing to spend their disposable income on, yet had more time than ever to spend it. So, reading up about investing became a huge hobby, and has been ascribed to the Malaysian market boom and the V-shaped recovery from the 2019 Black Monday crash.

 

The influx of retail investors can be ascribed to the rise in many of these financial instruments - from meme stocks to cryptocurrency. However, the S&P 500, among many index ETFs, have soared on trading platforms in the past two years. Whilst the traders went to crypto and equities, long-term investors turned to the passive index investing philosophy.

 

Some of the top index funds in the UK are:

 

  • Vanguard FTSE Global All-Cap
  • iShares FTSE 100 UCITS ETF
  • FTSE SmallCap Index
  • Vanguard Real Estate ETF
  • Schwab Emerging Markets Equity ETF

 

Forex

Finally, Forex has been a perfect refuge for new traders who are fed up with markets being closed when they finish work. Generally, trading within stock market times doesn’t go hand-in-hand with working a full-time job. With Forex markets being incredibly liquid and open 24 hours a day, traders can exercise their strategy at any time.

 

Whilst currency is inherently more volatile than many other financial instruments, there’s no doubt that the pandemic, in conjunction with Brexit and other political events, has caused a certain instability within some currencies. With the recent interest rate rises, commodity price fluctuations, and high inflation, Forex markets are red hot right now with trading opportunities.

 

Cryptocurrency

Cryptocurrency is yet to be approved as an official financial instrument, but there’s no harm in talking about it as if it is one. Crypto has really taken off in the past few years, and it’s one of the highest trending investments of 2021. Bitcoin reached a new all-time high, Cardano exploded into the limelight and soared in price, and the first Bitcoin ETF was launched.

 

The sheer amount of crypto news only increases year upon year, asking more questions than it answers. With El Salvador making Bitcoin legal tender at the same time that China clamps down on mining has thrown investors mixed emotions, but one thing is for sure: 2022 will be an even more dramatic year for cryptocurrency. Pressure to regulate cryptocurrency in the US will continue to grow, whilst more and more legacy systems are incorporating blockchain into their solutions.

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