Professional Documents
Culture Documents
Bonds
Currencies
Available in U.S. since 1992 and in Europe since 1999 Not yet available in the Philippines but theres a plan to
introduce this
Advantages of ETFs
Exchange-traded ETFs can be bought and sold throughout the trading day No investment minimum ETFs can be bought in quantities as small as one share Lower expense structure Most ETFs are index funds thus having naturally lower management expenses Shareholding servicing costs are lower because they are exchange-traded
Advantages - ETFs
Broader set of investments ETFs allow investors to have access to commodities and currencies which traditional mutual funds are generally not permitted to own Tax efficiency ETFs are more tax-efficient than many mutual funds (generate fewer taxable capital gain)
Disadvantages - ETFs
Trading commissions Investors in ETFs must normally pay brokerage commissions whenever they buy or sell shares Fewer choice of actively managed funds Most ETFs are passive index funds; actively managed ETFs are just beginning to be developed
authorized participant
basket, a portfolio of securities that exactly matches the portfolio of securities held by the ETF. Step 2. The AP delivers the creation basket to the ETF. In exchange, it receives a creation unit, which is a large batch of shares of the ETF.
Step 1
ETF
Step 2
Authorized Participant
Exchange
Investors
sets of shares and sells them in the public market or the AP may decide to hold on to some or all of these shares.
Step 1
Trading
ETF
Step 2
Authorized Participant
Exchange
Step 3
Investors
Actively managed
To put ETFs on equal footing with mutual funds
institutional investors.
HEDGE FUNDS
provide returns to their investors by investing in a diverse range of markets, investment instruments, and strategies. Exempt from many of the regulations governing mutual funds. Hedge funds can:
Invest in a wide variety of assets
Require investors to remain in the fund for months or years at a
time Use large amount of borrowed money or leverage to enhance investment returns Engage extensively in short sales Charge performance fees based on gains on top of management fees on assets
2. Absolute returns
3. Lower volatility 4. Low correlation 5. Unique strategies and assets 6. Star management talent 7. Manager co-investment