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Exchange Traded Funds 101 (and why these low-cost investments are so popular)

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An exchange traded fund (ETF) is a fund that holds assets such as stocks, commodities or bonds.

ETFs track an index (i.e. it’s a “passive” investment and not managed by human fund managers).

ETFs are attractive due to their low costs.

Listen to the audio (scroll down) for a discussion on ETFs by Nerina Visser, ETFSA Strategist and Advisor.

Research proves that ETFs are three to five times cheaper than actively managed funds.

Nerina Visser, ETFSA

Most ETFs are unit trusts. There are six that aren’t; they’re invested in commodities.

Nerina Visser, ETFSA

There are 70 ETFs available to South African investors.

Nerina Visser, ETFSA

ETFs provide opportunities to invest in assets that would otherwise be difficult to hold. For example, oil. You can easily own gold, but you can’t keep a barrel of oil under your bed!

Nerina Visser, ETFSA

ETFs that track market cap weighted indices can lead to over-investment in huge companies such as, for example, Naspers. However, market-cap weightings aren't the only way ETFs are constructed.

Nerina Visser, ETFSA

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This article first appeared on 702 : Exchange Traded Funds 101 (and why these low-cost investments are so popular)


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