ETFs: The Basics
What are ETPs? How do they compare to mutual funds? How do I find the right ETP?
Exchange-traded funds are a new type of mutual fund that is changing the way investors invest. Offering access to virtually every corner of the market, ETFs allow investors big and small to build institutional-calibre portfolios with greater transparency than ever before and often at lower costs.
In many areas of the market, there are both ETFs and mutual funds tracking the exact same index. Choosing one over the other comes down to prioritizing what matters to you. Let’s review the fundamental difference between the two structures.
With more than 900 ETPs listed on the London Stock Exchange and close to 5,000 available globally, choosing the right one can be tough. But as we’ll demonstrate below, it is also critical, because two ETPs that claim to promise the same exposure can actually deliver very different returns.
What is a financial index? And why do indices matter? These are two critical questions for any ETF investor.