DIY Investor Magazine
/
December 2015
34
INTRODUCING ETFS
EASY
– ETFs can be bought and sold like any other
share via an online broker.
LIQUID
– trade with multiple market makers during
normal market hours with liquidity according to the
underlying assets.
CHEAP
– low Total Expense Ratio (TER); also attract
dealing commission and bid/offer spread. No Stamp
Duty.
SIMPLE
– aim to match an index, which makes them
straightforward.
SCOPE
– with 800 listed on the London Stock
Exchange alone ETFs offer exposure to most countries,
regions, sectors, and asset classes.
Exchange Traded Commodities (ETCs) and Exchange
Traded Notes (ETN) offer additional access to
commodities and currencies.
DIVERSE
– an ETF is as diverse as the index it follows,
which may contain thousands of components.
Income generating – many pay dividends to enable you
to build a portfolio for income.
Trade close to NAV – the price of most ETFs closely
reflects the value of the assets they hold (net asset
value).
TRANSPARENT
– when you invest you know you
should achieve very close to the return of the index the
product replicates.
EASY TO RESEARCH
– justETF’s Screener Tools allows
you to compare products that track a particular index.
Most brokers will allow you to compare the cost, risk,
and return characteristics of different ETFs.
ISA and SIPP eligible – most products available via your
online broker can be held within wrappers to shield
them from income and capital gains tax.
ETFS AT A GLANCE
