Exchange traded funds (ETFs) have been utilised by institutional investors for several years and are now seeing increasing take up from individual traders. But why should you add them to your portfolio?
Diversifying your investments is a crucial way of mitigating against risk, as it enables you to hedge against negative movements in a single market or sector. ETFs offer access to multiple markets with a single trade, and can be used to trade several different asset classes including equities, bonds, and commodities.
2. Transparency and ease of use
ETFs are bought and sold on exchanges, just like shares. This makes them easier to buy and sell than other types of fund, as well as giving you instant visibility of how your fund is performing and what assets you have exposure to. With ETFs, institutional and individual investors have access to the same level of real-time insight.
3. Lower costs
The costs associated with investing in the number of assets you can get exposure to with a single ETF would be prohibitive. With ETFs, you can build your portfolio with fewer individual trades, and avoid the
higher fees associated with actively managed funds.
With 1000s of funds to choose between, the range of strategies you can employ using ETFs is staggering. Whether you are pursuing long-term goals like saving for retirement or growing your wealth, mitigating against volatility, or hunting for new investment opportunities, you are likely to find an ETF to suit you.