Exchange Traded Funds (ETFs) are passive funds that track a stock market index – such as the ATX – as closely as possible. For this reason, they are also referred to as exchange traded index funds. They are listed on the stock exchange and can be traded at any time. Therefore, ETFs offer the opportunity to participate in the price performance of various securities with a single investment. This opens up a wide range of investment opportunities for investors acrossmultiple asset classes or in various markets from different countries and regions. In contrast, there are active investment funds. Here, fund managers analyze the market and the securities and deliberately select their holdings accordingly.
ETFs as a smart investment option for retail investors
Thanks to the diversification provided by a fund’s broad portfolio, combined with the trading advantages of a stock, retail investors enjoy compelling benefits when investing.
- Cost-effective & flexible
ETFs are less expensive than traditional mutual funds, which are typically sold with an upfront sales charge and ongoing costs such as management fees. When buying an ETF on the stock exchange, investors only pay the spread between the bid and ask prices and the usual trading fees, just as they would when buying a stock. ETFs can also be traded at any time during stock exchange trading hours. - Transparency
Most Exchange Traded Funds (ETFs) are index funds whose objective is to replicate the price and return performance of the underlying index. A glance at the index is all it takes to stay up-to-date on the index’s composition as well as the value of the ETF at any time. - Investor protection
The securities held in ETFs are considered special assets. This means that the money managed by the fund is legally separated from the assets of the fund company. For investors, this means their money is protected.
Investing is a marathon, not a sprint
Those who start investing their savings early on will be rewarded in the long run. The earlier you start investing, the more you can benefit from the power of compound interest. In addition to the duration of the investment, broad diversification across a wide range of asset classes is also crucial for investment success. However, you should only invest in products that you understand. Education is the best investor protection and a prerequisite for being able to take advantage of various investment opportunities.
