In turbulent times, we have seen investors have turn to ETFs (exchange traded funds).

During recent market volatility, European ETF trading volumes have surged to up to USD $120bn/week. This is not only a record, but it’s almost three times more than the 2019 weekly average*. So, why are investors turning to ETFs in volatile markets? We believe it's the very same reasons why investors around the world continue to choose ETFs and index funds to build stronger portfolios in calmer markets.

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.

Why ETFs?

  • ETFs provide efficient access to different markets
    ETFs provide access to many different markets across the globe, ranging from the indices like the FTSE 100 to specific countries to an asset class like government bonds – and even commodities like gold.
  • ETFs can provide the flexibility to trade when it’s needed most
    As ETFs are traded on exchanges, like company shares, it makes them simple to buy or sell when markets are open. This has been especially helpful to investors navigating recent volatile markets as it helps them trade when they need to most.
  • ETF transparency can help demystify investing
    Generally, ETFs are transparent because they show what the underlying investments in the ETF are. This is not always the case with all investments, for example in a mutual fund, where the portfolio manager has the discretion to choose not to reveal the investments in the fund.
  • ETFs can help diversify investment portfolios and even lower risk
    By incorporating ETFs within an investment strategy, investors can benefit from instant diversification. ETFs offer greater diversification than simply buying individual company shares because every ETF invests in many different companies. In fact, some ETFs invest in over 1,000 companies which really helps investors diversify their investment portfolio.

* BlackRock, as at 16 March 2020.