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Investing in ETFs and other ETPs

Learn more about the features, risks and benefits of investing in Exchange Traded Funds (ETFs) and other Exchange Traded Products (ETPs). 

 

What are ETFs and ETPs? 

ETPs are products traded on an exchange that invest in, or give exposure to, a variety of securities. ETFs and other ETPs trade, clear and settle in a similar way to shares on the ASX. All ETPs are open-ended, which means that the number of units on issue can increase or decrease in response to demand and supply. This helps them trade at or near their net asset value (NAV). 

Investing in ETFs and ETPs

Benefits and risks
While investing in exchange traded funds (ETFs) may help you achieve your investment goals, it’s also important to consider how they fit in to your overall portfolio. As with any investment, ETFs involve risk. Generally, the higher the expected return of an investment, the higher the risk and the greater the variability of returns.
Asset classes
ETPs include a wide variety of product types, offering exposure to different assets and investment styles
Buying and Selling
Trading ETFs and other ETPs is similar to trading shares – but there are also some important differences.
20 years of ETFs on ASX
Find out more about the history and outlook for ETFs, which has as grown exponentially as a category and continues to evolve and innovate.
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Find out more about the history and outlook for ETFs, which has as grown exponentially as a category and continues to evolve and innovate.

Types of ETPs

ETPs include a wide variety of product types, each with its own potential benefits and risks.

There are four types of ETPs:

Exchange Traded Funds

Exchange Traded Funds (ETFs) typically seek to track the performance of an index, a currency or a commodity, such as gold.

Most ETFs aim to track the return (before fees and expenses) of the relevant index by investing directly in securities that comprise the index in proportion to the weightings of securities in the index, this is known as “full replication”. Some ETFs may use a sampling strategy, holding a sub-set or a representative sample of the securities included in the index.

SINGLE ASSET Exchange Traded Products

Single asset Exchange Traded Products (ETPs) track the performance of a specific security.

Exchange Traded Managed Funds

Exchange Traded Managed Funds (ETMFs) generally follow an active investment strategy that seeks to outperform an index or benchmark.

Structured products (SP)

Investors in structured products typically don’t receive an interest in a portfolio of assets held by the SP, instead relying on rights against the issuer of the SP under the terms of issue. These are often called synthetic products and have different risks to other ETPs that investors should be aware of before investing. 

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