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Exchange Traded Funds (ETFs) - VanEck Vectors
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Exchange Traded Funds (ETFs) are one of the fastest growing investment products in the world.
ETFs are managed funds which have been quoted on a listed securities exchange to give investors a simple and cost-effective way to achieve diversification in their investment portfolios with a single trade.
Buying a single ETF security can give you exposure to an entire index of listed securities.
ETFs combine the features of unlisted managed funds and listed shares:
Characteristics shared with managed funds:
- Pool of money from a group of investors
- Funds are invested and managed by a portfolio manager in accordance with a specific strategy
- Simple way of obtaining diversification
- Dividend income and franking credits pass through to investors
Characteristics of listed shares:
- Easy and flexible access
- ETF units can be bought and sold on the ASX throughout the trading day like shares
- Transparent intra-day pricing allowing investors to track performance throughout each trading day
- Traded via a broker or financial adviser under a HIN without any additional paperwork
Additional features of index-tracking ETFs:
- Liquid – trading liquidity provided through an appointed market maker
- Transparent – list of holdings published prior to the open of trading each day
- Removes portfolio manager risk by tracking an index instead of ‘stock-picking’
- Lower fees than actively managed funds
- Less turnover than actively managed funds results in better tax efficiencies
- Historically index funds outperform active managers 75% of the time
VanEck Vectors ETFs are designed to track the performance of particular purpose-built indexes.
How ETFs compare to managed funds
This table summarises the benefits of ETFs over unlisted managed funds.
Benefit ETFs Unlisted Managed Funds Real time market valuations Yes No Daily transparency of holdings Yes No Intraday ASX trading flexibility Yes No Cost efficient Yes No Tax efficient Yes No Low documentation Yes No Minimum investment Generally $500 Anywhere from $1000 to $500,000 minimum Find out more about VanEck Vectors ETFs.