What are Exchange Traded Funds?
An exchange-traded fund sounds complicated, but in reality it’s a simple product. Its sole purpose is to track a specific market index, like the JSE All Share. In the past, the only way to track the JSE All Share would have been to buy one share in every company making up the All Share index – expensive, time-consuming and risky.
With an exchange-traded fund, you benefit from combining the best features of a unit trust and an individual stock:
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Share |
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Exchange-traded fund |
• Your money is pooled (like a unit trust) so that it goes further.
• You are buying a portfolio of securities, which lowers the risk.
• You choose the index, sector or commodity you want to track, or a range of ETFs over several markets.
ETFs are ideal building blocks in creating the investment portfolio that suits your own needs and investment goals.