Are ETFs different investment tools?

Team Veye | 26-May-2023 investment tools

As the stock market surges to new record highs, an increasingly popular way to invest continues to achieve new milestones of their own. 

According to a report, many retail investors in the products are not comfortable with their knowledge level of ETFs. Some ETF providers have noted the need for even more ETF education and have ramped up their own efforts to help investors makedecisions.

While getting acquainted with exchange-traded funds (ETFs), you will probably wonder as to what makes them different and sometimes better than other investment tools out there. ETFs are similar to mutual funds, in that they’re generally baskets of stocks. But that’s where the similarities end.

Exchange-traded funds (ETFs) are investment funds traded on the stock exchange. Most of the ETFs have been created in order to replicate the performance of market indices. 

The value of assets managed by global exchange-traded funds has already crossed $5 trillion. Even the Australian ETF market has reached a new milestone, hitting $50 billion in assets under management after a surge of $10 billion in the first half of this year amid predictions that it could hit $100 billion by 2022.

There are a few advantages to ETFs, which are the cornerstone of the successful strategy known as passive investing. The advantages of ETFs over mutual funds are, among other things, lower costs, the possibility of tracking the performance of the whole market rather than investing in single stocks, and potentially better investment results.

Exchange-traded funds (ETFs) pay out the full dividend that comes with the stocks held within the funds. To do this, most ETFs pay out dividends quarterly by holding all of the dividends paid by underlying stocks during the quarter and pays them to shareholders on a pro-rata basis

There is a wide range of ETFs Australian investors are using for income. There are also fixed-income ETFs that invest in government, semi-government and corporate bonds.

They are proving popular with retail investors, especially those with self-managed super funds because they can add instant diversification at low cost to portfolios.

Disclaimer

Veye Pty Ltd(ABN 58 623 120 865), holds (AFSL No. 523157 ). All information provided by Veye Pty Ltd through its website, reports, and newsletters is general financial product advice only and should not be considered a personal recommendation to buy or sell any asset or security. Before acting on the advice, you should consider whether it’s appropriate to you, in light of your objectives, financial situation, or needs. You should look at the Product Disclosure Statement or other offer document associated with the security or product before making a decision on acquiring the security or product. You can refer to our Terms & Conditions and Financial Services Guide for more information. Any recommendation contained herein may not be suitable for all investors as it does not take into account your personal financial needs or investment objectives. Although Veye takes the utmost care to ensure accuracy of the content and that the information is gathered and processed from reliable resources, we strongly recommend that you seek professional advice from your financial advisor or stockbroker before making any investment decision based on any of our recommendations. All the information we share represents our views on the date of publishing as stocks are subject to real time changes and therefore may change without notice. Please remember that investments can go up and down and past performance is not necessarily indicative of future returns. We request our readers not to interpret our reports as direct recommendations. To the extent permitted by law, Veye Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss, or data corruption) (as mentioned on the website www.veye.com.au), and confirms that the employees and/or associates of Veye Pty Ltd do not hold positions in any of the financial products covered on the website on the date of publishing this report. Veye Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services.

veye logo

Grab Your Free Report On 5 ASX Dividend Stocks To Buy In 2024

(+61)

SALE IS LIVE

Limited Time Deal:   Over 72% OFF

DIVIDEND
INVESTER REPORT

Dividend-Investor-Report

Each week we cover companies offering a good combination of growth & dividends, maintaining a balance between stable 'cash flow' and risker 'raising stars'. Our guidance helps you choose companies with regular dividends and opportunities for lower-risk capital growth.

  • The best High Yield Dividend Stocks picked by our team of analysts every week.
  • Detailed in-depth Analysis with our expert Recommendations Buy, Hold or Sell.
  • Free Daily Analysis Report to keep up with the latest on what's hot and what's not.
  • Gain instant access to a wide range of Dividend Share Reports, exclusive to members only.
Frequency: Every Tuesday