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INVSTR TOPIC: EXCHANGE TRADED FUNDS AND INDICES

by | Apr 6, 2016

 

invstr’s Lea asks what ETFs and indices actually are, what the hype is all about and why they are a popular investment.

Video Transcript

LEA JAKOBIAK (Reporter, invstr):When you’re looking to invest your money an obvious option would be to invest in stocks or bonds for example. Well another option is to invest in ETFs (exchange-traded funds) and they aren’t as complicated as they sound.

MARK FAULKNER (Game Manager, invstr): Okay, so i’m an investor and I want to invest in tech stocks but I don’t have a lot of money and I want to diversify the number of stocks that I can invest into. So, I can’t afford all of the Apple or all of the the Amazon banana. So instead what I have is an ETF which is a blend of each of these stocks and probably quite a few others that will track an index. This allows me to invest efficiently and to diversify my portfolio safely in an easy way. Cheers!

LEA JAKOBIAK (Reporter, invstr):  That’s not bad. But hang on, what exactly is an index? Well in simple terms it’s a list of stocks that lists the relative value of its members.They cannot be invested in directly and the most common ones are the FTSE, the CAC, the DAX, and the Dow Jones.

MARK PRIEST (Head of Index & Equity, ETX Capital): The tax advantage to trading ETFs is it also gives you access to certain markets that as a retail investor you wouldn’t normally be able to trade such as gold for example.

MIKE HOLLINGS (Investment Strategist, Shard Capital): Basically it’s a low-cost easy way to invest in something that you’re interested in. So you can buy an ETF on the FTSE 100, you could buy an ETF on gold, you could buy an ETF on currencies. If I think oil stocks were oversold? Well I can go buy Royal Dutch. I can go buy BP again or I can go buy an ETF and they give  me exposure to the oil sector.

LEA JAKOBIAK (Reporter, invstr): But like with all investments beware of the downsides for ETFs.

MARK PRIEST (Head of Index & Equity, ETX Capital): I guess the risk is some of them are geared very highly. So for example their is called the two times ETFs whereby if gold moves one percent the stock will move two percent so therefore it has a very high gearing into it so it increases your exposure to the underlying market. And the risk of adverse move in the market are the same as any other tradable equity or fund or whatever it is that you trade.

 

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ALL RIGHTS RESERVED © INVSTR LTD. 2018

Risk Disclosure:
Invstr is a technology platform, not a registered broker-dealer or investment adviser. Invstr does not offer its own recommendations of any security or provide its own research to any user regarding any security transaction or order.
Please note, investing involves risk and investments may lose value. Past performance does not guarantee future results.
Brokerage services are provided by the following:
US-traded securities, including fractional trading, are provided to Invstr users by DriveWealth LLC, a regulated member of FINRA/SIPC. DriveWealth may not establish investment accounts to residents of certain jurisdictions. For more information, including disclaimers, risk and transaction fees click here.
India account traded securities are provided by SIC Stocks & Services PVT Ltd. SIC does not make any personal recommendations to buy, sell or otherwise deal in investments. Investors make their own investment decisions. The services and securities provided by SIC may not be suitable for all customers and, if you have any doubts, you should seek advice from an independent financial adviser. For more information and disclaimers, click here.

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ALL RIGHTS RESERVED © INVSTR LTD. 2018

Risk Disclosure:
Invstr is a technology platform, not a registered broker-dealer or investment adviser. Invstr does not offer its own recommendations of any security or provide its own research to any user regarding any security transaction or order.
Please note, investing involves risk and investments may lose value. Past performance does not guarantee future results.
Brokerage services are provided by the following:
US-traded securities, including fractional trading, are provided to Invstr users by DriveWealth LLC, a regulated member of FINRA/SIPC. DriveWealth may not establish investment accounts to residents of certain jurisdictions. For more information, including disclaimers, risk and transaction fees click here.
India account traded securities are provided by SIC Stocks & Services PVT Ltd. SIC does not make any personal recommendations to buy, sell or otherwise deal in investments. Investors make their own investment decisions. The services and securities provided by SIC may not be suitable for all customers and, if you have any doubts, you should seek advice from an independent financial adviser. For more information and disclaimers, click here.

 

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