The past decade has seen huge growth in the popularity of exchange traded funds (ETFs) which track a market index. Investors can now access an unprecedented range of markets, sectors and asset classes. However, while investors can appreciate the simplicity of ETFs, it must be noted that these funds aim only to deliver returns in line with market performance.
Source: BlackRock ETP Landscape Industry Highlights, Bloomberg, Q1 2012
“So what do I do with my money?”
As with all other investments, it’s important to do your research before you invest in an index fund, and understand that pricing should only be one consideration in your choice of fund. Although on the surface different funds that track the same index might appear to do the same thing, there are key differentiators between index providers and funds which means they can produce different results. Look to larger providers, who have more assets so are in a better position to negotiate trades, and also tend to have more dedicated indexing resources and well-established systems and management teams.
IMPORTANT INFORMATION
Investments involve risks, including the loss of principal. Investors are advised to consider their own investment objectives and circumstances in determining the suitability of an investment in any of the Index Funds described in this marketing material (the “Index Funds”). An investment in the Index Funds may not be suitable for everyone. If you are in any doubt, you should consult your stockbroker, bank manager, solicitor, accountant or other financial adviser for independent financial advice. Investors should refer to the Index Funds prospectuses for further details, including the product features and risk factors. Investors should not only base on this marketing material alone to make investment decisions.