ETF

ETFs are exchange-traded funds. Most ETFs track a market index such as the SMI and attempt to replicate it as closely as possible.

Unlike expensive active investment funds, passive ETFs explicitly do not attempt to beat the market index – something that most active funds fail to do in the long term anyway.

ETFs are characterized by several advantages:

• Low management costs (TER)
• High liquidity and tradability on the stock exchange, therefore no issue surcharges and redemption commissions. Spreads tend to be low.
• Diversification across a large number of individual securities (e.g. equities, bonds, commodities, etc.).
• They track the underlying index as closely as possible and enable cost-efficient passive investment.

What is an ETF? And what should you look out for when choosing one? Find out more in our video podcast.