Whilst Exchange Traded Funds (ETFs) are still considered the new kid on the block their popularity and importance can no longer be over-looked by investors who are finding it harder than ever to achieve the returns they desire.
Exchange Traded Funds
At JPM we believe that there is real value to be gained from ETFs but are they right for everyone? It’s worth taking a moment to understand what they are and how they can form part of your investment strategy.
ETFs were first introduced to the UK in 2000 and just like mutual tracker funds they mimic the performance of a particular market, commodity or index with their value determined by how much the index rises or falls. Their popularity has increased substantially in the past 5 years and there are now over 500 of them listed on the London Stock Exchange including many specialist funds.
Probably the most publicised advantage of ETFs is their low running cost and, on average, they will levy a much lower annual charge of anything between 0.1% and 0.5%, compared with 1.5% on an average mutual fund. Keep in mind though that every trade will incur a commission to buy and sell ETF shares which may quickly start to accumulate dependant on the number and size of trades you make.
As Mutual funds are normally only priced once a day you have the constant frustra