If you have heard the puff given exchange traded-funds (ETFs), then the time is definitely right for private investors to be given an array of choice to make such great investment decisions.
Investors in most part of the world have embraced this cheap and flexible way of investing, however that can't be said of private investors on these shores, who are deprived of such an opportunity to satisfy their investment savviest trend.
Currently, most Ghanaian investors are missing the variety at stake with ETFs, because they must have missed the opportunity to build a fully balanced and diversified portfolio using only ETFs. ETFs as practiced by other markets are cheap and the most effective way to track a market and provides a core holding to a sector with other satellite holdings being used to add value to a portfolio.
Let me note that ETFs are not much different from tracker funds; however they are shares where the underlying assets mirror a portfolio of a specific index or sector, such as the FTSE100 or the S&P500. A key significance of the ETFs is that an investor can get exposure to asset classes that are in the domain of institutions or very wealthy investors. You can buy funds that track all sorts of assets and sectors, such as gold, agriculture, infrastructure etc.
Structurally, ETFs are a mixture of unit trusts and investment trusts. They offer a cheap way of gaining exposure to international stock markets and are ideal for investors who want to trade regularly. But because they are open-ended, investors do not have the problem of shares trading at discounts or premiums.
- What are ETFs?
- Types of ETFs
- Benefits of Investing in ETFs
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