ETFs - The only investment vehicle you need?

Welcome to Financial Fluency - your weekly guide to mastering financial English, learning how money works, and making confident financial choices.

In this issue:

• A Look at the Markets: Performance August 2025

• ETFs - The only investment vehicle you need?

• Quote of the Day: Warren Buffett

• We value your feedback

• Word of the Day: Alternative Assets

• Interactive Quiz

• Whenever you are ready, here is how I can help you

A Look at the Markets: Performance August 2025

Vanguard FTSE All-Word ETF (Accumulating)

A gain of 1.59% for the Vanguard FTSA All-World ETF (Acc) for August (in Euro).

iShares Core S&P 500 UCITS ETF (Accumulating)

The iShares Core S&P 500 ETF (Acc) also ended August slightly up with a gain of around 1.4%.

Vanguard EUR Corporate Bond ETF (Accumulating)

The Vanguard EUR Corporate Bond ETF (Acc) ended August almost break even.

Bitcoin Monthly Performance $BTC.X ( ▼ 0.56% ) 

August was a slightly negative month for Bitcoin after 4 positive months. Statistically, September is more likely to be negative for Bitcoin than positive but this is not a prediction.

ETFs - The only investment vehicle you need?

How ETFs changed my approach to investing for long-term security

I first started investing in ETFs around 10 years ago.

I wish that I had discovered them earlier or they had been around when I started my working life. When I discovered them, I was amazed. The more I learned about them, I realised that, if I could only invest in one thing, it would be ETFs.

Let's examine the main types of ETFs available for retail investors.

Understanding the Choices

There are so many choices of ETF that it may seem overwhelming.

However, most investors only need to make three choices.

1. What You're Buying - Equity ETFs, Bond ETFs, etc.

2. Where You're Buying - Geographic focus

3. How the Assets are Chosen - Index vs Active

Let's examine these in more detail.

What You're Buying

All investors need to make the same basic choices.

Forgetting about the name 'ETF' for a moment, investors might ask themselves if they want to invest in equities (stocks and shares), bonds, or alternative assets (investments that are not equities, bonds or cash). There are ETFs that specifically cover equities, bonds and many, but not all, alternative assets such as commodities (e.g. gold, silver etc), property, and cryptocurrencies. ETFs can even cover specific sectors such as technology or pharmaceuticals.

For most long-term investors, equity ETFs form the foundation of their portfolios.

Where You're Buying

This is another question every investor makes.

Do you want to invest in your own country (domestic)? Should you expand to investments in your own or a different region (like Europe or the USA)? Alternatively would you like to include the whole world or just the developed world.

You can even exclude regions like the world except the USA or except the UK.

How the Assets are Chosen

Finally, there's the question of how the fund is managed.

Remember that ETFs are a basket of assets - for example an equity ETF will contain hundreds or thousands of stocks. The question is do you want the assets to be passively selected from an index (for example, the S&P 500) or do you want the assets to be actively selected by a fund manager (such as Cathie Wood).

The two main types of selection are active (fund manager) or passive (indexes).

Putting This Into Practice

Over the next three newsletters, you'll see exactly how I build my ETF portfolio using these three choices:

• Week 1: What I'm buying and why

• Week 2: Where I'm investing geographically

• Week 3: Active vs passive - my decision process

This real-world example will help you think about your own investment choices.

As always, none of this is financial advice. Everyone should invest according to their personal circumstances, risk tolerance and financial goals.

Quote of the Day: Warren Buffett

This quote perfectly captures why ETFs have revolutionised investing for ordinary people. They deliver exactly what Buffett recommends - low-cost, diversified index investing - in a simple, accessible format that anyone can use.

We Value Your Feedback!

Your opinion helps us improve and lets you suggest topics or ask Business English questions for future issues.

Word of the Day: Alternative Assets

Alternative Assets - noun - investments that are not traditional stocks, bonds, or cash; includes commodities, real estate, private equity, hedge funds, cryptocurrencies, and other non-conventional investments.

Context and Usage: Alternative assets are called "alternative" because they're different from the traditional investment mix of stocks and bonds. They often behave differently during market cycles, potentially providing diversification benefits. However, they can be more complex, less liquid, and carry different risk profiles than traditional investments.

Note: While alternative assets can provide portfolio diversification, they often require more research and understanding. Most financial advisors recommend that alternative assets should only represent a small portion of most investors' portfolios.

Common Collocations:

Alternative asset classes - different categories of non-traditional investments
The pension fund allocated 15% of its portfolio to alternative asset classes including real estate and commodities.

Alternative asset allocation - the portion of a portfolio invested in non-traditional assets
Their alternative asset allocation helped protect the portfolio during the stock market downturn.

Alternative asset exposure - investment access to non-traditional markets
ETFs now provide retail investors with alternative asset exposure that was previously only available to institutions.

Alternative asset strategy - investment approach focusing on non-traditional assets
The fund's alternative asset strategy included gold, real estate, and cryptocurrency investments.

Business Example: The investment committee decided to increase alternative asset holdings to reduce correlation with traditional equity markets.

Investment Context: Alternative assets can include physical commodities like gold and oil, real estate investment trusts (REITs), cryptocurrencies, and even collectibles. Through ETFs, retail investors can now access many alternative assets that were previously only available to wealthy individuals or institutions.

Interactive Quiz

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Disclaimer:

This newsletter is for informational and educational purposes only and should not be construed as financial advice. The information contained herein is generic and does not take into account your individual financial circumstances. You should always consult with a qualified financial professional before making any investment or financial decisions.

Additionally, the authors and/or publishers of this newsletter may hold investments in securities or other financial instruments mentioned herein. These are included for illustrative purposes only and should not be taken as a recommendation to buy or sell such securities or financial instruments.