Exchange Traded Fund (ETF) - How?

Edsanwong on 23/01/2015 - 12:19

Hi all,

Some ozbargainers mentioned about Exchange Traded Fund (ETF) as an investment option. I am interested to invest my money, buying ETF, but where do I start?

Do I need to open Commsec account and buy? I had experience in share trading, but very basic one.

Or do I need to go to the company's website like Vanguard and open an account?

How to sell it and how to monitor the price?

Many thanks,

Financial

Comments

    • Edsanwong on 23/01/2015 - 14:10

      Thanks, I will do that.

  • mskeggs on 23/01/2015 - 15:11

    This article has a general intro:
    http://www.smh.com.au/money/investing/investors-flocking-to-…

    The funds themselves trade on the ASX, so you buy and sell them just like any share. You probably want a low cost stock broking account to do so. I use Bell Direct and Westpac Online because they happened to make sense when I opened them. Other popular brokers are Commsec, Etrade. Here is a list:
    http://www.infochoice.com.au/investment/investment-broker/on…

    You then look up the ETF stock code (e.g. an oil ETF has code ooo) check its price and place a buy order just like any other share. The ETF operator will have information on what it consists of e.g. which shares or commodities it contains, any hedging or leverage.

    • Edsanwong on 23/01/2015 - 15:43

      Thanks. I still have an etrade account. Probably will use that. NAB sometimes has free first 6 trading, what do you think about this?

      So, to buy and to sell I use the stock brocking services (or online stock brocking), but to research what is the ETF code ZZZ consist of, I go to the operator website like Vanguard etc?

      Thanks,

      • mskeggs on 26/01/2015 - 15:22

        Correct. I wouldn't bother setting up a new account if you already have one.

  • Baysew on 23/01/2015 - 18:15

    While you are on the ASX site, go here ASX EFT

    This has charts, Management Expense Ratios, Benchmarks and links to issuers.

    Free brokerage is always a bonus, but maybe look at other features the broker may offer. I use Bell Direct.

    • Edsanwong on 29/01/2015 - 12:01

      Thanks. What is the advantage of Bell Direct compare to other online broker?

  • sickllama on 28/01/2015 - 22:08

    An important thing to look at when comparing etfs is the expense ratio.

    Also outside of the ASX200, total world and us market indices, they can be quite illiquid. Your best bet is to not buy within the first or last hour of trade and always set a limit, rather than a at market order.

    • Edsanwong on 29/01/2015 - 12:03

      Thanks. I will do more research on this.

      The reason I am thinking about ETF, because I dont feel saving maximiser giving me a good return. And I thought Shares vs ETF, ETF is better because the risk is lower? Please correct me if I am wrong.

      Thanks,

      • sickllama on 29/01/2015 - 13:43

        The risk is only lower because of diversification. If you theoretically bought the same basket of shares that the etf has, your risk would be the same.

        There is risk associated with etfs. Look at the ASX200, I think the ticker code is ajo, over 2007/2008. A asx200 etf would have had a similar return.

        • sickllama on 29/01/2015 - 13:51

          Think of etfs as a way to invest in shares, rather than a different investment class.

          Also research investment horizons and work out what yours is and if shares the right decision for you. You also have the option of investing a portion of your savings in shares/etfs and keeping a portion in your savings account

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