Exchange Traded Funds (ETFs)
Introduction |
How to trade |
Commentaries |
FAQ
Introduction
Exchange Traded
Fund (ETF) is an investment fund traded on Stock Exchanges (eg SGX).
Most ETFs generally aim to track indices. In other words, when
investing in ETFs, you are effectively investing in the price
movements of the component stocks in the underlying indices. Thus,
ETFs give you the opportunity to buy or sell the entire portfolio of
the component stocks as a single security. Furthermore,
ETFs can be sold short and bought on margin.
Exchange-traded funds offer the following
advantages:
-
Efficiency:
In a single transaction on ETF, investors can obtain a cost
efficient exposure to a diversified portfolio of securities. In
addition, ETFs have no sales charge and its annual management
fees are lower than the traditional funds!
-
Transparency:
Investors are able to monitor the live prices for ETFs during
the trading hours. Investors are also able to monitor and access
the performance of the underlying stocks in an ETF.
-
Flexibility:
The ability to perform live trading on ETFs gives the investors
the flexibility to implement their own investment strategies and
react rapidly to the volatile market.
|
|
Exchange
Traded Fund
|
Stock
|
Mutual
Fund
|
|
Diversification
|
a
|
x
|
a
|
|
Price
Transparency
|
a
|
a
|
x
|
|
Traded
Through Broker
|
a
|
a
|
x
|
|
Cash
Settlement
|
T+3
|
T+3
|
Upfront
|
|
Brokerage
Fee
|
a
|
a
|
x
|
|
Sales
Charges
|
x
|
x
|
3
- 5%
|
|
Annual
Management Fees
|
Less
than 1%
|
None
|
1
- 2%
|
To read the ETF Recommendation Report, please click
here.
For
more information on ETFs, please click
here.
To
register for our Investor Education seminars on ETFs, please click here.
|
