ETF

At 5 Financial we stay ahead by always looking for newer and better ways of doing things.

A good example is some years ago we identified that Exchange Traded Funds (ETFs) could provide us with a method to invest our clients’ money in a more cost effective way than other alternatives available at the time. In fact, we have been using them extensively since as way of managing your portfolios.

Let’s take a quick look at what ETFs are how they can be of real benefit to investors.

Diversification

A single ETF trade provides you with instant exposure to a diversified portfolio of securities. This can be as broad as a few hundred shares or as narrow as 20 holdings. This diversification can help reduce reliance on just a few shares in portfolios.

Cost Efficiency

The ETFs we use are a cost-effective way to gain exposure to a diversified portfolio of securities. They are generally less expensive than investing in actively managed funds and even some index funds. They can also be less costly than purchasing a large number of individual shares as there are less trading costs.

Flexibility

Like shares, ETFs provide us with the flexibility to trade at any time during market hours. Priced throughout the trading day, ETFs can be bought or sold like a share.

Transparency

With holdings published as often as daily, ETFs are highly transparent, you always know exactly what you own. ETFs are also transparent around costs through upfront fees disclosure, so you know exactly what you are paying for.

Liquidity

ETFs can be as simple to buy and sell as individual shares. The listed nature of ETFs provides us with the liquidity to react to changing market conditions quickly and simply.

Tax efficiency

ETFs prove tax efficient as a result of low levels of portfolio turnover. Also, trading in and out of ETFs does not increase portfolio turnover within the ETF, which can help keep them tax efficient.

Like to know more about ETFs? Book a free, no-obligation consultation with one of our experienced financial advisers who can explain how they work, and give you an idea of whether they offer benefits to you in your particular circumstances. Contact us today to schedule a time that’s convenient to you.

 

2018-01-22T08:14:36+00:00 July 26th, 2013|