Source: Erik Schriemer, investment expert at MeDirect
You have probably heard of them: ETFs, Exchange-traded funds, also known in the Netherlands as “trackers”. ETFs are extremely popular. That’s mainly because ETFs are accessible and have low fees. With just one purchase, you can invest in a wide range of financial instruments, such as stocks, bonds, commodities and currencies, making investing easier and less risky.
There is a lot of discussion about what is ‘better’ now: active management through an investment fund; or passive management through an ETF. The discussion is mainly about the fund manager: can he beat an index, or the market, or not. Both products have advantages and disadvantages. Mutual funds offer a more personalized investment approach and a fund manager can also ‘get out’ in the event of a very bad stock market. An ETF with a negative stock market will follow the index and thus fall just as fast as the index. On the other hand, a fund manager has – after all, he is a human being – emotions and can therefore be sensitive to rumors. If you want to read more about emotion in investing, read this article about behavioral finance in investing.
As we mentioned above, ETFs also offer diversification. By investing in an ETF you can invest in many different financial products at once. This reduces the risk that a single stock or bond affects your portfolio. In addition, ETFs provide access to markets and investment products that can be difficult or expensive for individual investors to access directly.
There are many types of ETFs available, each with a different investment strategy. Popular variants include stock ETFs that track a stock market index (such as the AEX index) or sector, fixed-income bond ETFs, commodity ETFs that track the price of commodities such as gold or oil, and currency ETFs that track the exchange rate of a specific currency.
Investing in ETFs is very easy at MeDirect:
- Wide universe of ETFs: MeDirect offers a wide choice of ETFs.
- User-friendly platform: Our user-friendly platform makes investing simple and fun. You get access to important information and useful tools. With our filtering options we make it very easy to find the right ETF that suits your investment goal.
- Low costs: Buying and selling ETFs is free at MeDirect. You only pay a small annual fee of 0.30% on your invested amount. Check the costs here.
- Free investment training: At MeDirect we want to make investing easier. That is why all our customers receive an online training program at Markets are Everywhere. Terms and conditions apply, click here for more information.
- Expert support: If you have a question, don’t hesitate to ask!
Disclaimer
The information contained in this document is for general information purposes only and is not intended to provide legal or other professional advice nor does it commit MeDirect Bank (Malta) plc to any obligation whatsoever.
The information available in this document is not intended to be a suggestion, recommendation or solicitation to buy, hold or sell, any securities and is not guaranteed as to accuracy or completeness. If you invest in any product, you may lose some or all the money you invest. The value of your investment may go down as well as up. A commission or sales fee may be charged at the time of the initial purchase for an investment. Any income you get from any investment may go down as well as up. Products may be affected by changes in currency exchange rate movements thereby affecting your investment return therefrom. The performance figures quoted refer to the past and past performance is not a guarantee of future performance or a reliable guide to future performance.
Any decision to invest in a mutual fund and ETFs (Exchange traded funds) should always be based upon the details contained in the Prospectus and Key Information Document (KID), which may be obtained from MeDirect Bank (Malta) plc.
MeDirect Bank is a trading name of MeDirect Bank (Malta) plc, registered under company number C34125, MeDirect is licensed to conduct banking activities in accordance with the Maltese Banking Act (Cap. 371) and investment services under the Maltese Investment Services Act (Cap. 370).