Diversification with a single trade

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Exchange Traded Funds (ETFs) are cost effective investment vehicles which can be used to create a diversified portfolio or to complement existing investments. Exchanged Traded Commodities (ETCs) provide low cost, liquid exposure to commodities such as gold.

ETFs and ETCs are as straight forward to buy and sell as individual shares. A single trade on the ASX can give you exposure to a portfolio of domestic, international or fixed income securities.

Key Features:

  • Cost effective – more cost effective than buying the equivalent portfolio of shares and typically have lower fees than managed funds.
  • Diversification – a single trade provides instant exposure to a diversified portfolio of securities.
  • Access – gain exposure to international markets, as well as fixed income and other sectors.
  • Simplicity – invest in global and local markets all through a single trade on the ASX.
  • Control – build your own portfolio across sector, country and / or asset class.
  • Flexibility – the listed nature of an ETF provides investors with the liquidity and flexibility to react to changing market conditions.
  • Competitive brokerage – trade from just $19.95 or 0.11% (whichever is greater)

Since the launch of the first ETF in 1993, the ETF industry has grown to over US$2.6 trillion in assets worldwide with over 5,000 exchange traded products (ETPs).

The first ETF was launched in Australia in 2001 and the industry has experienced rapid growth.

Key risks include:

  • ETFs and ETCs are inextricably linked to the trend of the underlying asset and should that asset trend down then the value of the ETF or ETC will also move down.
  • In certain circumstances market conditions (for example, lack of liquidity) may make it difficult to buy or sell ETFs.
  • ETFs that use synthetic investments or derivatives could expose the ETF investor to additional risks and or losses.
  • ETFs which seek to achieve the same return as a particular overseas market index or benchmark, and are traded and settled on ASX in Australian dollars, may be exposed to additional currency risks. Additionally, there may be political risks in the home country of the overseas market or benchmark which may also affect the value of the ETF’s assets.
  • For more information about ETPs, refer to asic.gov.au.

Each ETF and ETC is different, this information only covers some general features and is not a summary. Consider the Product Disclosure Statement, or equivalent disclosure document, available from the product issuer before making a decision.

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