Investing in ETF's
Discussion
Greetings all.
After recently taking stock (no pun intended) of my investments and pensions, specifically the 'what and where' there are invested, ETF's have come onto my radar.
Interested to know if others here invest in ETF's whether it be alongside funds or as opposed to using funds and why you use ETF's..is it the relatively low ongoing costs, being able to buy/sell daily rather than having to wait until EOD/next day as usually the case for funds.
AFAIK, there is (currently) no FSCS protection for ETF's either( Funds are covered upto 85k?) so curious if that puts off anyone especially if you have a sizeable investment in a ETF(s)?
Finally, I appreciate this is a sub Finance forum of a car forum and not a investments- specific forum but it's good to get a broad set of perspectives
After recently taking stock (no pun intended) of my investments and pensions, specifically the 'what and where' there are invested, ETF's have come onto my radar.
Interested to know if others here invest in ETF's whether it be alongside funds or as opposed to using funds and why you use ETF's..is it the relatively low ongoing costs, being able to buy/sell daily rather than having to wait until EOD/next day as usually the case for funds.
AFAIK, there is (currently) no FSCS protection for ETF's either( Funds are covered upto 85k?) so curious if that puts off anyone especially if you have a sizeable investment in a ETF(s)?
Finally, I appreciate this is a sub Finance forum of a car forum and not a investments- specific forum but it's good to get a broad set of perspectives
ETFs are funds, do it isn't really a case of ETFs or funds. ETFs tend to be trackers, so if you're interested in trackers and you already have an account with a stock broker, then ETFs can be an efficient way of getting exposure to a stock index, basket of commodities, or whatever. Good way to get diversification. Good way to get exposure to asset classes other than bonds and shares in your domestic currency.
Not sure on FSCS protection. The protection they offer with respect to funds is largely about compensation for s
t advice and misselling or going bust while holding your cash, I think? If the ETF itself is a regulated business, which I'd guess they are, then between them and your broker I'd guess the protection is similar to that of any other regulated fund. I may have been overlooking some real value, but I can't say that I've really considered the FSCS protection as particularly important except for deposit accounts. Note my repeated use of the word "guess" ;-)
Not sure on FSCS protection. The protection they offer with respect to funds is largely about compensation for s
t advice and misselling or going bust while holding your cash, I think? If the ETF itself is a regulated business, which I'd guess they are, then between them and your broker I'd guess the protection is similar to that of any other regulated fund. I may have been overlooking some real value, but I can't say that I've really considered the FSCS protection as particularly important except for deposit accounts. Note my repeated use of the word "guess" ;-)ATG said:
ETFs are funds, do it isn't really a case of ETFs or funds. ETFs tend to be trackers, so if you're interested in trackers and you already have an account with a stock broker, then ETFs can be an efficient way of getting exposure to a stock index, basket of commodities, or whatever. Good way to get diversification. Good way to get exposure to asset classes other than bonds and shares in your domestic currency.
Not sure on FSCS protection. The protection they offer with respect to funds is largely about compensation for st advice and misselling or going bust while holding your cash, I think? If the ETF itself is a regulated business, which I'd guess they are, then between them and your broker I'd guess the protection is similar to that of any other regulated fund. I may have been overlooking some real value, but I can't say that I've really considered the FSCS protection as particularly important except for deposit accounts. Note my repeated use of the word "guess" ;-)
Thanks, I was more curious as to why people use ETF's, is it primarily for cheaper charges over a standard index fund? Let's say for example we take a Global Equities index fund that's fairly well diversified and there is an 'ETF' equivalent....generally it's cheaper to use an ETF as they have lower ongoing costs but is there any other benefit? I guess (I am using that word too now Not sure on FSCS protection. The protection they offer with respect to funds is largely about compensation for s
t advice and misselling or going bust while holding your cash, I think? If the ETF itself is a regulated business, which I'd guess they are, then between them and your broker I'd guess the protection is similar to that of any other regulated fund. I may have been overlooking some real value, but I can't say that I've really considered the FSCS protection as particularly important except for deposit accounts. Note my repeated use of the word "guess" ;-) ) you could have an ETF that fills a gap in your portfolio e.g: let's say you are 100% equities but with no EM exposure and there is a super cheap ETF that could give you your 10% EM exposure or whatever it is...that seems a fairly sensible way to use an ETF but I'm sure there are others. I could be wrong but ETF's seem more popular in the US than over here(UK).
ETFs trade on the market similar to shares and Investment Trusts which is probably one reason some people favour them over funds.
Funds have closing time for placing a buy or sell order so you don't know the price at the time you buy or sell them.
If you're sticking to the big name houses (Blackrock, Vanguard etc.) and to "vanilla" ETFs (not VIX volatility 2x baskets or god knows what else) I don't think there's much to be concerned about.
Of course for balance you can find plenty of views out there that when financial armageddon comes it'll be riding on a wave of ETF automation.
I've thought about them for trackers and gold but personally I stick to Investment Trusts.
Funds have closing time for placing a buy or sell order so you don't know the price at the time you buy or sell them.
If you're sticking to the big name houses (Blackrock, Vanguard etc.) and to "vanilla" ETFs (not VIX volatility 2x baskets or god knows what else) I don't think there's much to be concerned about.
Of course for balance you can find plenty of views out there that when financial armageddon comes it'll be riding on a wave of ETF automation.
I've thought about them for trackers and gold but personally I stick to Investment Trusts.
bhstewie said:
hstewie said: ETFs trade on the market similar to shares and Investment Trusts which is probably one reason some people favour them over funds.
Funds have closing time for placing a buy or sell order so you don't know the price at the time you buy or sell them.
If you're sticking to the big name houses (Blackrock, Vanguard etc.) and to "vanilla" ETFs (not VIX volatility 2x baskets or god knows what else) I don't think there's much to be concerned about.
Of course for balance you can find plenty of views out there that when financial armageddon comes it'll be riding on a wave of ETF automation.
I've thought about them for trackers and gold but personally I stick to Investment Trusts.
I am thinking of taking the plunge soon with an ETF, I agree that generally with the big/established names probably not worth stressing about it. I use Vanguard already in the S&SISA so for that reason I likely won't use another Vanguard fund (provider/platform diversification...) but plenty of others out there with HSBC, Fidelity, L&G..and others etcFunds have closing time for placing a buy or sell order so you don't know the price at the time you buy or sell them.
If you're sticking to the big name houses (Blackrock, Vanguard etc.) and to "vanilla" ETFs (not VIX volatility 2x baskets or god knows what else) I don't think there's much to be concerned about.
Of course for balance you can find plenty of views out there that when financial armageddon comes it'll be riding on a wave of ETF automation.
I've thought about them for trackers and gold but personally I stick to Investment Trusts.
I'm not too clued on about Investment Trusts either but aware SMT have been v popular with investors.
VR99 said:
I am thinking of taking the plunge soon with an ETF, I agree that generally with the big/established names probably not worth stressing about it. I use Vanguard already in the S&SISA so for that reason I likely won't use another Vanguard fund (provider/platform diversification...) but plenty of others out there with HSBC, Fidelity, L&G..and others etc
I'm not too clued on about Investment Trusts either but aware SMT have been v popular with investors.
If you want cheap index investing it's funds or ETFs all the way.I'm not too clued on about Investment Trusts either but aware SMT have been v popular with investors.
Investment Trusts are basically companies which in turn invest in other companies.
More for if you want to invest actively.
Perhaps look for a physical ETF over a synthetic one but not sure how much of a problem that actually is unless we end up in financial armageddon.
https://www.investopedia.com/articles/investing/06...
bhstewie said:
hstewie said: If you want cheap index investing it's funds or ETFs all the way.
Investment Trusts are basically companies which in turn invest in other companies.
More for if you want to invest actively.
Perhaps look for a physical ETF over a synthetic one but not sure how much of a problem that actually is unless we end up in financial armageddon.
https://www.investopedia.com/articles/investing/06...
Cheers,.will have a readInvestment Trusts are basically companies which in turn invest in other companies.
More for if you want to invest actively.
Perhaps look for a physical ETF over a synthetic one but not sure how much of a problem that actually is unless we end up in financial armageddon.
https://www.investopedia.com/articles/investing/06...
bhstewie said:
hstewie said: One of the things I quite like about Vanguard is if you already have an account with them as a platform provider you can deal ETFs for free at their "batched up" buy/sell points.
You do have to pay to buy/sell in real-time.
Thanks, v useful to know and I wasn't aware. I have a Vanguard S&S already, whether adding one of their ETF's makes sense from a portfolio perspective I will need to determine but will certainly consider. You do have to pay to buy/sell in real-time.
VR99 said:
Thanks, v useful to know and I wasn't aware. I have a Vanguard S&S already, whether adding one of their ETF's makes sense from a portfolio perspective I will need to determine but will certainly consider.
You're welcome.https://www.vanguardinvestor.co.uk/content/documen...
Section 2.
Keep in mind with ETFs there can be a spread whilst with funds the buy/sell is usually the same price.
There's an article here about the differences between,
open-ended (conventional unit trusts or mutual funds)
closed-ended (investment trusts), and
ETFs.
https://www.financialexpress.com/money/mutual-fund...
AFAIK there's no "right answer", they're just different.
The Woodford debacle involved an open-ended fund, where the whole thing spiralled out of control and regulators had to step in to protect unit holders - essentially by freezing the fund until things had been stabilised. There was a period when people couldn't get their cash out but the value of their investment was protected.
In contrast, if you're invested in a closed-ended fund you will always be able to sell your investment but the catch is that if things have gone badly you may get very little money for it.
open-ended (conventional unit trusts or mutual funds)
closed-ended (investment trusts), and
ETFs.
https://www.financialexpress.com/money/mutual-fund...
AFAIK there's no "right answer", they're just different.
The Woodford debacle involved an open-ended fund, where the whole thing spiralled out of control and regulators had to step in to protect unit holders - essentially by freezing the fund until things had been stabilised. There was a period when people couldn't get their cash out but the value of their investment was protected.
In contrast, if you're invested in a closed-ended fund you will always be able to sell your investment but the catch is that if things have gone badly you may get very little money for it.
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