This article considers what advantages and disadvantages ETFs offer the individual investor, and what other factors the individual investor should consider prior to making an ETF investment.
Advantages of exchange traded funds
ETFs offer the private investor a number of advantages. These include:
Market access:
As above, ETFs give investors unprecedented exposure to international stock markets, as they span nearly every available indexed equity class.
Cost:
ETFs are a cheap, efficient and direct means for investors to get exposure to equity markets. An ETF investment typically has low transaction costs (avoiding front-end charges, early redemption penalties or exit charges, and high service charges) and can be tax efficient.
Flexibility:
ETFs offer great flexibility for the individual investor, who is now no longer faced simply with the binary choice between direct stock ownership and diversification via mutual funds. The individual investor can trade in ETFs regularly, and can use ETFs in a variety of different ways. Continue reading ‘ETF Investment – What Are the Advantages and Disadvantages?’ »