Investam-HK : What you should know more about Exchange-Traded Fund

Posted February 15, 2020 by investamhk

Exchange-Traded-Fund is a type of investment wherein your invested fund can be buy collections of securities like stocks, commodities and/bonds.

What Is an ETF?

ETF is an abbreviation that means Exchange-Traded-Fund. It’s a security fund that involves collections of securities that tracks underlying index like investment stocks. You may categorically compare ETF with Mutual Fund (MF) because they are similar in a way; however ETFs can be trade through stock market while Mutual Fund is not..

ETF’s can be bought through major investments programme like stocks, commodities and/or bonds. It has an associated price which makes it a marketable security that allows investor to trade (buy/sell) it easily. Some well-known example is SPDR S&P 500 ETF (SPY) that tracks the S&P 500 index.

Exchange-Traded-Fund is a type of investment wherein your invested fund can be buy collections of securities like stocks, commodities and/bonds. It is similar with Mutual Fund that holds different holdings, the only difference is, ETF is traded like a regular stock market while MF can only be trade once in a day.

Key Takeaways

A stock like investment fund, exchange-traded-fund (ETF) is a basket of securities which you can trade on exchanges. Like in a stock market… ETF’s price fluctuates every time it is bought and sold all throughout the trading day.

It contains all types of investments such as stocks, bonds and/or commodities, while others is offered locally, some is offered internationally.

Why ETF is a good catch compare to other investment plan? It offers low expense ratios and fewer broker commissions than individual buying of stock.
Not like Mutual Fund that can only be trade once per day after the market close, ETF’s price per share varies all throughout the trading day.

Since ETF includes multiple assets in one holding, it is one of the best choices of clients for diversification. Rather than trading just one stock in a market, you can go on an ETF which holds multiple underlying assets.

A single ETF fund can own not just hundreds but thousands of stocks across various industries, but it call also be secluded in particular industry or sector base on clients preference. Some funds only focus on local offers while others offers worldwide standpoint. Like for example, Banking-focused ETF’s contains various banks stocks across the industry.

Types of ETFs

There are loads of ETFs a client can invest into that can be used to gain more income and diversify assets for longer or shorter term... Since ETF has a wide range of income generation investment machinate, let us talk the types of ETFs extensively. Stated below are the most talked about types of Exchange-Trade-Funds.

• Bond ETFs might include government bonds, corporate bonds, and state and local bonds—called municipal bonds.
• Industry ETFs track a particular industry such as technology, banking, or the oil and gas sector.
• Commodity ETFs invest in commodities including crude oil or gold.
• Currency ETFs invest in foreign currencies such as the Euro or Canadian dollar.
• Inverse ETFs attempt to earn gains from stock declines by shorting stocks. Shorting is selling a stock, expecting a decline in value, and repurchasing it at a lower price. Note that investors must be aware that many inverse ETFs are Exchange Traded Notes (ETNs) and not true ETFs. For starter, an ETN is a bond but trades like a stock that is backed by an issuer like a bank. Not everyone knows and fit to invest with ETN so be sure to check with your broker to determine if an ETN is a right fit for your portfolio.
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Country Hong Kong SAR
Categories Finance
Tags Investment , asset management
Last Updated February 15, 2020