The Motley Fool

Why I’m hoping that 2022 will be strong for this FTSE 100 exchange traded fund

Scene depicting the City of London, home of the FTSE 100
Image source: Getty Images.

I’m largely optimistic about the FTSE 100 going into 2022. The UK has one of the largest economies in the world and one of the highest Covid vaccination rates. In October, the IMF projected that UK economic growth would be 5% in 2022, which is among the highest in the developed world. This sets the backdrop for what could be a good year for the FTSE 100.

The flagship UK market index has underperformed many others in the developed world. However, with a low price-to-earnings (P/E) ratio and good dividend yield, 2022 might be time for the Footsie to surge.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

Within the FTSE 100 there’s exposure to some world-class companies across several sectors. I think in particular pharmaceuticals and energy are likely to see a boost next year. For example, GlaxoSmithKline has had a good year in 2021. It is up around 15% year-to-date and 13% year-on-year. 

BP has had a strong year too, seeing a rise in its stock of over 36% and 27% year-on-year. I can see oil prices rising in 2022, which could lead to a further uptick in BP’s shares.


I like these shares, but I’m aware that individual stock picks always come with risk. For my portfolio, I prefer to diversify to try to reduce that risk and invest in the FTSE 100 via an exchange traded fund (ETF). An ETF is a fund that tracks an index or sector, is usually low-cost and can be bought and sold like a share through most online brokers.

Most, if not all, of the major investment companies offer a FTSE 100 ETF and I’m spoilt for choice. I look at making my choice based on three factors: fund size, expense ratio and whether I want dividends or not.

The fund I’m interested in is iShares FTSE 100 (LSE:ISF). By size, it’s the biggest,at over £10bn and it’s the cheapest too, with an ongoing charge of 0.07%.

Although there’s a choice of whether to have an accumulation option (where my dividends are reinvested) or a dividend-paying option with this ETF, I prefer the income stream of the latter. Currently, the yield is 3.71%.

It’s also worth mentioning that this fund is consistently one of the most popular ETFs by trading volume in the UK. 

The risks

There will continue to be lots of risks in financial markets in 2022. A new Covid variant could easily cause a downturn as we briefly saw with the Omicron variant. A rise in interest rates could be a further catalyst for a crash.

Also, by investing in iShares FTSE 100, I’ll only get the market performance of the index, rather than the chance to outperform the market by picking individual stocks.

However, I hope that if I include this exchange traded fund in my holdings as part of a balanced portfolio, I can get good rewards next year. 

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

Niki Jerath owns shares in iShares FTSE 100. The Motley Fool UK has recommended GlaxoSmithKline. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.