What are ETFs?
ETFs are managed funds that trade on the ASX just like ordinary shares. Most of them track a benchmark or theme, allowing investors to gain exposure to the overall index, a particular asset class or broader theme through one share transaction.
There are over 200 ASX listed ETFs to choose from. ETFs can contain a selection of small caps, Aussie tech companies, international companies, commodities and currencies. ETFs can also provide exposure to themes including ESG, robotics, property, emerging markets, or they may simply track a broader index.
It is not just about equity markets. There are also fixed income ETFs that can offer exposure to a range of bonds from corporates to plain vanilla government bonds. While cash isn’t generating much income right now, there are cash ETFs for when capital preservation is paramount for some investors.
Why are ETFs popular now?
ETF adoption is growing because they offer investors the ability to buy hundreds of stocks and other securities through a single fund, making them popular tools for diversifying investment portfolios. They also allow Australian investors to gain exposure to global markets and thematics.
Low fees are also behind the growing popularity of ETFs. Fees and costs are lower than traditional actively managed investments because investors do not pay fees directly to the ETF manager. Rather fees are reflected in the daily price of the ETF.
ETFs are popular across the investor spectrum, from Millenials through to the retired and SMSF investors. Critically, some funds can be matched to your risk profile and stage of life.
Is there a crypto ETF on the ASX?
Cryptocurrency enthusiasts will have to wait a while for a local crypto ETF. However, the Australian Securities and Investments Commission (ASIC) gathers evidence to determine whether it will sanction a cryptocurrency ETF.
ETF providers are constantly innovating and creating new exchange traded products so investors can access markets, asset classes and themes right around the globe.
ETF news on ausbiz
As ETFs (exchange traded funds) grow in popularity with investors, the ausbiz team is joined by ETF experts to discuss the latest trends in ETPs (exchange traded products.)
ausbiz examines what ETFs are available, how to use ETFs in a portfolio, who is investing and where the smart money flows. Importantly, we also explore what ETFs may be available in the future.
Don’t play catch-up. Sign-up to ausbiz or download the app for ETF news and investing ideas brought to you by the experts, anytime and anywhere. On-demand and free.
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