An ETF or Exchange Traded Fund is like a unit trust but listed on the stock exchange such as the NZX or the ASX. The great thing is these investment tools are a cheap way to invest into diversified assets without the expensive fees attached to many unit trusts (let alone the performance fees some investment outfits slip in as well).
ETFs can invest into anything from commodity indexes or share market assets to listed property assets. The ETF assets are directly linked to the underlying assets and don’t have the problem that some listed investment companies have. In some cases listed investment companies can either trade at a premium or discount to their underlying assets. With the structure of ETFs this can’t happen as the under lying asset value and dividends, flow directly to the investor.
I see these funds as a good way to get exposure to assets, that historically, would have required people to use unit trusts (run by big New Zealand institutions) to access . Now investors can access global investments and have the transparency of knowing where their money is invested, and the peace of mind that they can access their cash when they need it. All of this is backed up by independent research.
Give me a call to learn more.
John Barber
WealthDesign – a life well planned