Exchange-traded funds (ETFs) can be powerful tools for creating long-term wealth. With more than 2,000 listed in the UK alone, investors can gain exposure to a wide menu of growth and dividend shares. This vast choice can support a range of investing styles, and allows individuals to effectively diversify to spread risk and capture many different investing opportunities.
We can, of course, choose individual stocks to buy instead. However, buying a fund can significantly reduce much of the hassle that comes with choosing specific stocks to buy. It can also be far more cost effective, typically protecting investors from higher trading fees along with Stamp Duty.
My own strategy involves holding both individual companies and ETFs in my portfolio. And I’m thinking about buying some more funds for it in 2026. Here are two that have caught my attention and I see as worth considering.
A pick for growth shares…
Technology shares are likely to remain among the best growth performers over the next decade. Themes like artificial intelligence (AI), quantum computing, robotics and self-driving vehicles could make investors a lot of cash, in my view.
The Invesco S&P World Information Technology ESG ETF (LSE:WTEG) looks extremely attractive in this respect. It holds shares in 75 different global stocks, including market leaders like Nvidia, Apple and Microsoft.
Unlike many sector ETFs, though, it focuses on companies with high environmental, social and governance (ESG) scores. This lets it harness the mammoth growth potential of tech stocks in a way that safeguards investors from companies that may face regulatory, reputational or litigation problems.
The fund’s focus on a cyclical sector may leave it vulnerable to underperformance during any economic downturn. But I’m optimistic it will deliver titanic returns as the digital revolution rolls on. Over the last year, the fund’s delivered an average annual return of 16.8%.
…and one for dividend stocks
Real estate investment trusts (REITs) can be great ways to target a second income. For this reason, holding a collection of them in an ETF can be a good strategy. One such fund I’m considering right now is the iShares UK Property UCITS ETF (LSE:IUKP), which has shares in 32 different REITs.
Under sector rules, like its fellow popular dividend picks, it must pay at least 90% of annual rental profits by way of dividends.
This is in exchange for tax benefits, like exemption from corporation tax on qualifying rental income. As such, REITs can generally provide better dividend visibility than most other stocks. Total protection isn’t guaranteed, however — after all, earnings (and by extension dividends) remain vulnerable to shocks like a sharp drop in occupancy levels.
Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.
This particular REIT’s major holdings include FTSE 100-listed Segro, and FTSE 250 trusts Tritax Big Box and Primary Health Properties. This ETF’s delivered an excellent 10% return over the past 12 months, which I expect to improve looking ahead as interest rates drop, boosting REITs’ asset values and reducing their borrowing costs.
