A Personal Finance Blog for Malaysian: New Investment Vehicle - ETF

Thursday, September 16, 2010

New Investment Vehicle - ETF

To balance one's portfolio, ETF can be a good option for a few reasons.

What is ETF?
An Exchange Traded Fund (“ETF”) is an open-ended investment fund with no expiry date, listed and traded on a stock exchange. Investors can buy or sell ETFs through their remisiers or trade via online during trading hours. An ETF is designed to track or follow an index’s performance.

What are the advantages of ETFs?

ETFs combine the benefits of stocks, unit trusts and index funds because they share common characteristics:

Easy access to diversification – own a basket of securities e.g. an entire market, country or region with a single trade
Flexibility – buy and sell during trading hours just like a stock
Low cost – cost of investing (lower management fee and no upfront fee) is generally lower because it follows the performance of the index
Transparency – you know what you are buying as the underlying securities are disclosed. Prices are available real-time throughout the trading day.
Liquidity – The investor can redeem units easily and obtain cash by the 3rd market day after trade date (T+3).
Affordability – For a small sum of money, you can invest in your desired securities investment.

Want to know more? Click here.

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