Exchange Traded Funds

What are Exchange Traded Funds (ETF's) and what would I be investing in exactly? Are they appropriate investments?

The Australian Stock Exchange describes ETFs as funds that invest in a portfolio of securities, which may include Australian shares, international shares, fixed income securities, listed property trusts, or a combination of asset classes.

ETFs issue new units, or cancel units, as you move in and out of the fund, allowing you to maintain on-market prices that correlate closely with the value of the underlying portfolio.

As to whether ETFs may be appropriate for you, they could be if you are seeking:
• Diversification in a single investment
• Exposure to additional asset classes
• Surety of pricing relating to the value of the assets held in the fund
• A cost and tax effective investment
• Investment in the components of an index or an actively managed portfolio.

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