ACCA Mentor

What is an ETF?
if you want to invest in equity/fixed income securities and find it difficult to select sectors, identify securities, conduct research, track dividends/coupons and capital gains, then the ETF does it all for you.

Characteristics of ETFs:

ETFs are a kind of hybrid investment Fund (Open end & closed end Funds) combining the returns offered by any investable index for various asset classes (stocks, fixed income, real estate, commodities etc.) with the diversity offered by a mutual fund.

ETFs are offered by Asset Management Companies (AMCs) & approved by SECP in Pakistan.

ETF is a portfolio of Securities based on underlying index and its securities’ total value is further divided into equal units.

ETFs aim to track an underlying specified Index. ETF providers strive to minimize the tracking error, which is the difference between ETF performance & index.

ETFs are listed at an Exchange & trading is similar to normal stocks being traded at any stock exchange.

ETF providers & exchanges display real time price of the ETF throughout the day called Instant NAV (INAV) with a few seconds interval, while Authorized Participant as Market Maker provides bid & offer quotes on exchange.

For individual as well as institutional investors, it’s difficult to select sectors, identify securities, conduct research, track dividends and capital gains, then the ETF does it all for you.

Flexibility, Diversification, lower cost and transparency are the salient features of ETFs.
ETF is an attractive avenue of investment, especially for the small investors as some securities may have a high price.

ETF can be traded on the Exchange through a brokerage account.

Ever thought why?