HOW TO CHOOSE AN ETF

Finweek English Edition - - Cover Story Exchange-traded Funds -

Choos­ing an ETF de­pends very much on what you want in­vest­ment ex­po­sure to. ETFs range from the broad­est in­dex track­ers, lo­cally and in­ter­na­tion­ally, to spe­cific in­dices. For in­vestors want­ing to buy into com­modi­ties, there are ETFs cov­er­ing every­thing from gold to palladium, plat­inum, cop­per, sil­ver, oil and wheat. There are ETF op­tions for in­vest­ment in money mar­kets, bonds and prop­erty. As with eq­ui­ties, an in­vest­ment de­ci­sion re­quires some un­der­stand­ing of the risks and his­tor­i­cal re­turns of each of th­ese in­vest­ments.

The best op­tion for in­vestors with lit­tle un­der­stand­ing of th­ese risks is a broader in­dex like the Top40 in SA or any of the big global in­dices like the S&P 500 or MSCI in­dices. Many in­vestors opt for broad track­ers and there is grow­ing in­ter­est in off­shore ETFs, which track in­dices in the US, Europe and Asia.

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