The Barclays Global Investors (BGI) in 1992 introduced the Exchange-Traded Funds (ETFs) from its index funds which paved the way for the latter to come into the scene. BGI’s massive and very aggressive worldwide expansion saw the huge potential of the ETF, which BlackRock eventually purchased.
ETFs are projected to continue to rise on the market share’s conventionally managed fund structures for their innovative and efficient ways of managing funds.
In Australia, ETFs have already tripped their market in the last four years. It is now worth $25 billion. One of the main reasons behind their growth is enabling its investors to have exposure to a vast array of typically low-cost assets.
Australian ETFs usually mimic the benchmarks of their investments while their deviations are relatively small and temporary. Thus, their investment continues to grow, but it does not mean that the ETFs Australia have is not risky at all.
What is an ETF, Anyway?
ETF is a financial instrument listed to provide investors with exposure to a range of assets in the simplest and most often low-cost nature.
Over the years, ETFs have earned popularity, particularly among retail investors, because of their simple trading mechanics. Even though many ETFs have attempted to track the performance of the world’s most reputable indices, many investors are also taking advantage of the ETFs specific tracking sectors, commodities, and currencies.
One of the bestselling points of ETFs came from the fact that its investors have sold and bought on an exchange similar to any ordinary stocks or shares. It gives them and the traders a flexible strategy to go in and out of their positions easily.
Aside from that, most ETFs also benefits its investors and traders with very low management fees; thus, it is very popular.
What Are the Types of ETFs You Can Invest in Australia?
Due to its popularity, the variety of ETFs’ products available for retail and investment have exponentially increased over the years.
It gave way to the introduction of different types of ETFs, which are all available for investment. These are
- Inverse ETFs
- Property ETFs
- Commodity ETFs
- Bond ETFs
- Broad Exposure ETFs
- Actively Managed ETFs
- Sector ETFs
- Currency ETFs
How to Trade ETFs in Australia?
The ETFs Australia have very similar to the rest of the world’s ways. From dealers, investors, and traders, everyone has an equal chance to purchase and own their ETFs themselves.
While there are derivatives trading, the investors can easily choose between the short and long positions, which gives them the benefit of their underlying assets’ price movements, but not physically owning the assets.
Anyone can start investing in ETFs. Here is a step-by-step guide to learn.
- Make an IG trading account and log into it once it is done
- Search for any ETF and choose the best deal available for its price
- Enter the desired number of shares that needs to be purchased
- Confirm the purchased shares
- Choose the position size
Is ETF a good investment?
Ultimately, ETFs have good records in Australia, and the numbers have shown already. Investors have so many reasons why they decided to invest in shares with this trading platform. In short, there are many benefits to ETFs.
First of all, it helps individual investors create more diverse portfolios, which help them gain more exposure to the international market, sectors, and asset classes. Second, it can be purchased and sold similar to other shares with very low management fees and can be sold in a very short manner.
However, despite its promises and benefits, investors have to keep in mind that investing with ETFs also comes with risks.
As with any other investments, people who wish to invest with ETF must study, familiarize, and strategize before they plunge into its world. With everything in its proper place, ETF investors will surely be sailing smoothly in no time.