11.7 Lessons learnt
- ETFs or Exchange Traded Funds are traded on the stock exchange in the same way as individual shares therefore they are also called Exchange Traded.
- Every day when the stock exchange is open you can buy and sell ETFs with a listing.
- ETFs follow in general an underlying index, a basket of shares, or other financial instruments.
- ETFs provide you with a cost-effective investment instrument allowing you to diversify your risk with only one purchase in many different underlying shares.
- On the stock exchange, you can buy physically replicated ETFs in which the ETF “sponsor” or also builder directly buys the underlying shares as collateral for the assets under administration in the ETF. On the other hand, there are synthetic ETFs in which the underlying index or assets are replicated by futures or cash products.
- There are many different sorts of ETFs allowing you to invest in almost any region, sector, or financial instrument of your choice.
- The ETF market has grown tremendously over the past 20 years.