Exchange Traded Funds have in recent years become very popular, they offer a cost effective way to access markets or specialist sectors for those more sophisticated clients or advisers who understand and know what they want in their portfolio. Unlike a Unit Trust or Managed Fund the emphasis is on the investor to pick and choose the market, sector or type of stock they wish to be linked with. The returns normally mirror that market place, for example an ETF invested in the S&P 500 should return almost identical results as the S&P itself, less the cost of the ETF, which generally tends to be around a quarter of a percent a year.
For most clients there is and always shall be a place for the Managed Fund, especially in some specialist sectors or some emerging markets where the market itself is too small to justify an ETF, or so volatile a hands on approach is preferred. However, it would be our view that ETFs are an essential part of the modern portfolio and while we feel this is equally true of Managed Funds we can no longer see the justification for paying higher costs to a manager if a client simply wants to hold the FTSE 100 or the DOW 30 when the lower cost ETF would produce the same result.
While keeping in mind the importance of a balance and mix of assets including some very good Managed Funds mentioned elsewhere on our site we do think it is worth looking at some of the ETF web sites available. The list below represents some of the companies we actively use in our clients The Offshore Investment Platform through which we can buy almost any ETF availably globally.
Please feel free to contact us for more detail or advice.
INDEXUNIVERSE Leading independent ETFs review site
PROSHARES Great for leveraged ETFs mainly USD.
ETF SECURITIES Great for Special metals and sectors available in GBP and Euro
VAN ECK GLOBAL One of the olderest providers of ETFs
ISHARES From the UK was Barclays Bank but now sold, still one of the largest providers
WISDOM TREE US Based
GLOBAL X Good for Specialist sectors
COMSTAGE German based but some good Commodity ETFs
EG SHARES EGShares provides exchange traded funds (ETFs) designed to deliver emerging market exposure.