ETFs, or exchange-traded funds, are becoming an increasingly popular investment choice. BlackRock's Joe Parkin takes a look at three reasons why you should consider adding them to your portfolio.
ETFs are easy to access and simple to use
ETFs, like shares, are traded on an exchange. As a result they’re easy to trade, and it’s easy to track their performance – you can do both at any time the exchange is open. And because ETFs often track whole indices, sectors or groups of commodities, you can achieve diversification through a single trade.
ETFs are cost-effective
Over the long term, the fees charged by a fund manager can have a big impact on the overall performance of your portfolio.
ETFs aren’t actively managed and so avoid these types of costs, helping you to keep more of what you earn. iShares ETFs can be less than a quarter of the cost of a traditional mutual fund in Europe.
ETFs are flexible
With the massive range of ETFs available, they offer an investment option for every strategy, risk appetite and wallet depth. You can use them to gain access to a wide variety of:
- Asset classes – you can trade ETFs based on equities, commodities, currencies and more
- Sectors – whether you want to invest in energy, healthcare, telecoms or something else entirely, you can with an ETF
- Geographies – there are ETFs to track benchmarks from across the globe, and denominated in a range of currencies