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Some of the most purchased ETFs in the UK have also been among the top performing, with funds such as Vanguard’s S&P 500 and the Nasdaq-100 ETF delivering returns well ahead of sector averages.
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Precious metals were in high demand, with the iShares Physical Gold and iShares Physical Silver ETCs topping the list as investors moved to hedge portfolios against inflation and market uncertainty.
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Defence-focused ETFs entered the top 10 for the first time, reflecting a growing shift towards sectors aligned with rising global security spending.
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Broad, low-cost global trackers such as iShares MSCI World continued to attract inflows, reinforcing their role as a cornerstone in diversified portfolios.
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Investor appetite for innovation remained strong, with the Nasdaq-100 ETF highlighting continued confidence in the growth potential of leading US technology firms.
Exchange Traded Funds (ETFs) have become one of the most widely used investment vehicles for UK investors. Their low costs, simple structures, and ability to provide exposure to global markets make them an attractive option for those who prefer a straightforward way to build portfolios. As a result, ETFs have surged in popularity across the UK’s major investment platforms.
But while popularity signals confidence, it is not always a guide to performance. Many investors gravitate toward the funds they see most frequently promoted, or those that have delivered strong recent results, without considering whether they are the right fit for their long-term objectives.
This review examines the ten most popular ETFs with UK investors in 2025. We look at how each has performed over 6 months, 1 year, 3 years, and 5 years relative to their sector averages, and we provide independent commentary on the factors behind these results.
Why Popularity Can Be Misleading
As explored in our article 5 Mistakes That Can Harm Portfolio Growth, one of the most common investor errors is choosing funds based on popularity or past performance alone. When markets are rising, the strongest performers quickly attract inflows, and platforms often highlight these funds, reinforcing the cycle.
However, popularity can disguise risks. A fund may outperform for a time but struggle in the next cycle. Concentrated exposure, market timing, or thematic bets - such as funds targeting a single industry like technology or defence - can deliver exceptional short-term results but create long-term inefficiencies. Without professional oversight, portfolios can become skewed toward popular themes or regions and miss out on genuine diversification.
The 10 Most Popular ETFs
The 10 funds featured in the table below have consistently been among the top purchased ETF's on Interactive Investor.
As highlighted in the performance tables, the 10 funds show contrasting results. While several rank among the strongest in their sectors, others have struggled to keep pace and delivered returns below their five-year sector averages.
Vanguard S&P 500 UCITS ETF Inc USD
This ETF replicates the S&P 500 Index, offering exposure to 500 of the largest US companies across sectors. It is one of the most widely held ETFs globally.
Over the past year, it returned 14.47%, compared with a sector average of 8.45%. Over three years, it gained 45.13% versus 32.94%, and over five years it achieved 93.71% compared with 71.07%.
Performance has been driven by US technology and consumer giants such as Apple, Microsoft, and Amazon. While results have been strong, the ETF’s reliance on the US economy and its concentration in a handful of mega-cap companies leave it sensitive to sector and regional downturns.
Vanguard S&P 500 ETF
Similar in design, this ETF also tracks the S&P 500, providing broad exposure to the US equity market.
It delivered a 1-year return of 14.74% against a sector average of 8.45%. Over three years, it returned 46.20% compared compared to 32.94%, and over five years it achieved 96.11% versus 71.07%.
As with the UCITS version, performance has benefited from the dominance of US growth and technology stocks. While its cost-efficiency and consistency make it attractive, investors should recognise its dependence on a single market.
iShares Physical Gold ETC GBP
The iShares Physical Gold ETC provides exposure to gold by physically holding the metal in secure vaults, allowing investors to track the spot price of gold without owning it directly.
Over the past year, it returned 31.63% compared with a sector average of 16.73%. Over three years, it gained 67.59% versus 16.73%, and over five years it achieved 70.18% compared with 63.18%.
Gold’s role as a defensive asset has underpinned returns, particularly during periods of inflation and uncertainty. However, while it diversifies portfolios, gold does not consistently match equity-like long-term growth.
VanEck Crypto & Blockchain Innovators ETF
This ETF targets companies linked to cryptocurrencies and blockchain technology, including miners, exchanges, and innovators in digital assets.
Over one year, it delivered 56.57% versus a sector average of 32.55%. Over three years, it achieved 156.22% compared with 100%. Its performance places it among the strongest of the most popular ETFs.
Returns have been fuelled by the recovery of cryptocurrency markets and broader institutional adoption of blockchain. But with extreme volatility, performance can reverse rapidly, making it one of the highest-risk options among the top 10.
Vanguard FTSE All World UCITS ETF USD
This ETF replicates the FTSE All World Index, offering exposure to large- and mid-cap stocks across both developed and emerging markets.
It returned 14.57% over the past year versus 10.62% for the sector average. Over three years, it gained 39.55% compared with 29.20%, and over five years it achieved 73.40% against 57.70%.
Performance has been supported by its heavy weighting toward US equities, complemented by allocations to Europe, Japan, and emerging markets. It is one of the most diversified ETFs available, though its results remain closely tied to the US market.
Vanguard FTSE All World UCITS ETF GBP
This GBP-denominated version of the Vanguard FTSE All World ETF delivers identical exposure to the USD class, but removes the need for UK investors to manage currency conversion.
Its performance has matched the USD version: 14.57% over 1 year versus 10.62% for the sector average, 39.55% over three years compared with 29.20%, and 73.40% over five years against 57.70%.
As a globally diversified ETF, it provides simple and broad exposure, but the dominance of US holdings still drives results.
Invesco EQQQ Nasdaq 100 UCITS ETF
This ETF tracks the Nasdaq 100 Index, giving concentrated exposure to US technology and growth companies.
Over one year, it returned 18.76%, ahead of the sector average of 10.62%. Over three years, it delivered 65.78% compared with 32.55%, and over five years it achieved 97.39% versus 71.07%.
Performance has been boosted by exceptional growth in firms such as NVIDIA, Apple, and Microsoft. While results have been impressive, the ETF is highly sensitive to sector rotations away from technology.
iShares Core MSCI World UCITS ETF
This ETF tracks the MSCI World Index, providing low-cost exposure to developed market equities across North America, Europe, and Asia-Pacific.
It returned 14.03% over one year versus 10.62% for the sector average. Over three years, it gained 42.15% compared with 29.20%, and over five years it achieved 80.98% against 57.70%.
As one of the most popular global equity ETFs, its diversification is appealing, but with two-thirds of its weighting in US equities, it is less balanced than it may appear.
VanEck Defense UCITS ETF
This thematic ETF invests in global defence and aerospace companies, giving investors focused exposure to a sector that has benefitted from rising global defence budgets.
Over one year, it returned 69.91% compared with a sector average of 12.57%. Over three years, it achieved 21.89%, with limited five-year data due to its shorter track record.
Recent performance reflects strong demand for defence stocks, but the narrow focus creates concentration risk. It may perform strongly during geopolitical instability but is more volatile than broad-based ETFs.
iShares Physical Silver ETC GBP
This ETC tracks the spot price of silver by holding the metal physically in vaults. It offers investors direct access to silver markets.
Over one year, it returned 25.91% versus a sector average of 10.93%. Over three years, it gained 73.88% against 16.73%, but over five years it delivered only 36.59% compared with 63.18% for the sector.
Silver has benefited from demand as both a precious metal and an industrial input, but its volatility has capped long-term growth. It can diversify portfolios but lacks consistency over time.
Why Popular ETFs Alone Don’t Make a Strong Portfolio
While the 10 ETFs featured in this article are among the most bought in the UK, it does not mean they are suitable for every investor. The long-term success of a portfolio is shaped by far more than popularity or past performance. Looking at the results of popular ETFs highlights a simple truth: good funds do not automatically make a good portfolio. Many investors assume that selecting individual funds with strong track records or combining a range of well-known ETFs is enough to build an effective strategy. In reality, what matters most is how those funds work together, how risk is spread, and how the portfolio is managed and adjusted over time.
Our analysis of thousands of investor portfolios has revealed recurring structural flaws — duplication of holdings, weak diversification, unbalanced risk exposure, and persistent use of underperforming funds. These issues are rarely deliberate, but over time they can erode returns and compromise investment objectives.
Identifying where a portfolio falls short is the first step. Putting the right structure in place and maintaining discipline through regular oversight is what drives meaningful improvement. This is where professional advice can provide a clear advantage.
The Mistakes That Quietly Harm Portfolio Growth
While popular ETFs can form part of an effective investment strategy, our analysis shows that many portfolios built around them contain underlying flaws that quietly erode returns. These issues are not always obvious to investors, yet they can have a significant impact on long-term outcomes.
Duplication of Funds
Many self-managed portfolios include ETFs or funds that look different on the surface but hold near-identical stocks. For instance, a global ETF and a US ETF may both be heavily weighted towards the same large US technology companies. In some portfolios, as much as 60–70% of holdings overlap, which reduces true diversification and leaves investors effectively paying twice for the same exposure.
Overreliance on Past Performance
Funds that have delivered the strongest recent results are often the most popular. But the conditions that drove performance over the last decade — such as low interest rates and growth-led markets — may not repeat in the future. Investors who chase recent winners risk concentrating portfolios in narrow areas, making them vulnerable when market leadership inevitably shifts.
Portfolio Drift
Over time, ETFs that perform strongly can grow to represent a disproportionate share of a portfolio. Without rebalancing, this drift alters the original risk profile and increases exposure to particular markets or sectors. Left unaddressed, it can compromise the long-term objectives the portfolio was built to achieve.
Misunderstood Diversification
It is common for investors to assume that holding more funds means being more diversified. Yet a portfolio of 10 or 12 ETFs may still rely heavily on the same global large-cap companies. True diversification requires exposure to uncorrelated strategies and asset classes, not simply a longer list of holdings.
These structural flaws are rarely visible on the surface, but without clear oversight of how funds interact, portfolios can become imbalanced, inefficient, and less likely to deliver on investor goals.
How MKC Invest Adds Value
Following Yodelar’s merger with MKC Wealth, our clients benefit from portfolios that are managed on a discretionary basis by MKC Invest, a specialist discretionary fund management firm within the MKC group. This structure provides an important advantage: timely portfolio changes can be made without the delays that often occur in more passive or advisory-led models.
This agility helps to reduce inefficiencies and ensures portfolios remain aligned with their intended strategy, even as markets evolve. Where duplication or underperformance is identified, funds can be replaced quickly. Where allocations drift out of balance, portfolios can be restructured in real time to restore efficiency.
MKC’s investment process blends independent research, active oversight, and globally diversified asset allocation. Portfolios are built with discipline, but also with flexibility to adapt as conditions change. Importantly, they are tailored to each client. Time horizon, financial objectives, and risk tolerance are all factored into how the portfolio is structured and managed. This ensures that portfolios remain both efficient and suitable over time.
Conclusion
The ten most popular ETFs in the UK show why investor behaviour needs careful oversight. While many have delivered strong results, others highlight the risks of relying too heavily on past performance or popularity. Without structure and ongoing review, portfolios built around popular ETFs can fall into the traps of duplication, drift, and concentration.
Building a portfolio that works efficiently requires more than just good fund selection. It requires discipline, oversight, and a process designed to keep holdings balanced, diversified, and aligned to long-term goals.
If you’re unsure whether your portfolio is working as efficiently as it could be - or whether there may be opportunities to reduce risk and improve performance - you can request a no-obligation call with a qualified financial adviser at MKC Wealth. During the call, we’ll review your current holdings, identify potential inefficiencies, and outline how structured oversight can improve your long-term outcomes.
Download the Full ETF Report to see how the most popular ETFs compare across performance, sector rankings, and Yodelar ratings, and gain a clearer picture of how your choices measure up.
