Some do, but most don’t. Many ETFs invest very simply, following an index and are what the market deems as “passive”. They don’t try to beat the market. Our (Exchange Traded Managed Funds) ETMFs are actively managed ETFs (or active ETFs). They are solutions based and actively managed by professional investment managers who invest on behalf of people like you day in day out, running some of the top managed funds Australia. Their professional management is the reason why we provide quality investment solutions at a low cost price. Many of our active ETFs try to actively manage your risk. We recommend you read the PDS to see the fund’s investment objective and to find out if it is suitable for you.
An Exchange Traded Fund (ETF), Exchange Traded Managed Fund (ETMF or active ETF) is an open ended investment fund that is quoted on the stock exchange. In Australia, active ETFs are quoted on the Australian Securities Exchange (ASX) or Chi-X (CXA) under the AQUA rules and are traded much like a share. Active ETFs can provide you with a good way to gain exposure to a wide variety of investments. They can also be used as the building blocks for a well-diversified portfolio.
On one level, both unlisted managed funds and ETFs do the same thing – Provide you a diversified portfolio of securities.
The obvious difference between the two structures is that an ETF is traded on an exchange. Unlike managed funds, where you can buy and sell once per day (if it has daily unit pricing), an ETF allows you to buy and sell throughout the day at any time.
The largest market for ETFs is the US, however they can be also found on exchanges in Canada, UK and on exchanges throughout Europe. In Australia, ETFs are not new, however have been increasing in popularity with many investors looking to gain control of their investing, provide additional liquidity to their portfolio and find a low cost solution to their investment needs. The first ETFs were quoted on the ASX in 2001 and investors have been trading them for over 17 years.
ETFs and active ETFs are popular due to the following reasons
Yes they can be. But as with many things, you pay for quality. ETFs invest very simply: by tracking an Index. Our funds are actively managed by professional investment managers who invest on behalf of people like you day in day out. Their professional management is the reason why eInvest provides quality investment solutions at a lower cost.
ETFs and active ETFs are often cited as cheaper for the following reasons:
ETFs and actively managed ETFs are popular due to the following reasons
ETFs and active ETFs trade just like shares, on an exchange. This means that you use a broker or financial adviser to buy and trade. Otherwise you can do it yourself via your online trading account, such as Commsec. To find a broker, you can visit the ASX (www.asx.com.au) website and Chi-x (www.chi-x.com.au) website for more information.
Not necessarily. Some ETFs and active ETFs offer a portfolio of stocks, some offer a portfolio of fixed income securities. Some still provide a portfolio of a number of different asset classes. By researching each fund, you will find the fund that is right for you. It is always recommended that you read the PDS for the fund you are interested in.
No. As with many investments, particularly shares you buy on the stock exchange, an ETFs performance is not guaranteed or insured against any loss that may occur. Make sure you do you research first and read the PDS before investing. You may even wish to seek investment advice.
What you might mean is “do ETFs and active ETFs pay out all dividends as a distribution each year”? The answer is ‘Yes’. All applicable income after fees must be paid out to investors on an annual basis.
There are many positive benefits of buying an active ETF on an exchange rather than buying an unlisted managed fund. You can indeed do this yourself via you online brokerage account. These include:
The stock market is a place where where the issuing and trading of stocks of publicly held companies, bonds and other sorts of securities takes place. The stock market is one of the most vital components of a free-market economy, as it provides companies with access to capital in exchange for giving investors a slice of ownership. (Investopedia)
Chi-X Australia (CXA) is a regulated stock exchange committed to transforming, improving and growing Australia’s securities and derivatives markets. Chi-X has experienced strong and sustained growth and has achieved significant milestones including gaining over 20% market share, $1billion traded in value in equity trading and up to 50% of the Australian ETF market (trading and reporting). The Chi-X investment products platform offers a range of unique products exclusively traded on Chi-X, including funds (ETFs & Quoted Managed Funds), Transferable Custody Receipts (TraCRs) and Chi-X Warrants. For more information visit: www.chi-x.com.au.
The Fixed Income Exchange Traded Funds are listed on the Chi-x exchange (CXA:ECOR, CXA:ECAS, CXA:EMAX). For an investor there is no difference when purchasing shares (see how to invest)
Nothing. Stock and share are used interchangeably when talking about trading on the secondary market on the ASX. Equity is another term that may be used.
Put simply, lots of things makes stock prices go up and down. These may include company specific information or market information such as interest rates, changes in government policy or economic results. It could even be exogenous events such as earthquakes and floods that are out of anyone’s control. As there is lots of information effecting the prices of stocks, it can be best to use professional investors with expertise who are researching stocks and markets and what effects them each and every day, to help you in your journey in the stock market.
Put simply, because there are so many bits and pieces of information for the market to digest and then price accordingly, it is difficult even for the professionals to predict where the market is going next. The stockmarket can be fickle at times, so it is always best to invest with a long term view.
Risk can be define as the probability or threat of damage, injury, liability, loss, or any other negative occurrence that is caused by an action. For investing, risk is defined as the likelihood that the actual return on an investment will be lower than what you expect the return should be.
Each investment will have different risks associated with it. You can read about the general and specific risks associated with your investment in the fund’s PDS.
According to ASIC, a managed fund is a legal arrangement where your money is pooled together with other investors. An investment manager then buys and sells shares or other assets on your behalf.
You are usually paid income or ‘distributions’ periodically. The value of your investment will rise or fall with the value of the underlying assets.
The investment manager may also be called a ‘fund manager’.
Many people think that you need to be “squillionaires” to invest in the stockmarket, however this is not the case. Many shares cost less than $1 and it just takes one investment, no matter how big or small to start your wealth creation journey. The compounding effect of reinvesting your dividends may also help your investment balance over time.
Yes, you do need a stockbroker to buy and sell ETFs and active ETFs. There are many different types of stockbrokers so it is best to find one that fits your values and personal circumstances. Brokers can be full service or they can be even online, where you do the trading yourself. To find a broker, click here.
Yes, there are fees associated with buying and selling ETFs and actively managed ETFs. These fees are called brokerage. Buying and selling these funds can cost less than $20 per trade but can also cost as much as hundreds of dollars. It all depends on how much you are buying/selling and the type of relationship you have with your broker. For example, does your relationship include research and service, or just execution only.
Yes, generally you do. However we don’t know your personal taxation circumstances. It is best to discuss your tax outcomes with your accountant or financial adviser.
You do need a stockbroker to buy and sell units in our funds. It is best to read the PDS for the risk and return details for our actively managed ETFs.
You do need a stockbroker to buy and sell shares in our funds. There are many different types of stockbrokers so it is best to find one that fits your values and personal circumstances. Brokers can be full service or they can be even online, where you do the trading yourself. On the eInvest website there is some information you can use to find a broker that might be right for you. To find a broker, click here.
There are fees associated with buying and selling shares. These fees are called brokerage. Buying and selling shares can cost less than $20 per trade but can also cost as much as hundreds of dollars. It all depends on how much you are buying/selling and the type of relationship you have with your broker, for example does it include research and service, or just execution only.
Other fees associated with our funds include investment management and administration fees. Each of our fund’s fees will be different from another. It is best to read the PDS relevant to the fund that you are looking to purchase for more information on fees and costs.
Yes of course. Our funds can be used in superannuation or personal investment accounts. We recommend you to read the PDSs for more information on whether our funds are right for you.
Yes, many of our funds do pay regular distributions to investors. The number of distributions a year and their frequency will differ from fund to fund. Indeed there may be times too where our funds don’t pay distributions due to market circumstances. We recommend you to read the PDSs for more information on distributions and when they are paid to investors.
If a fund pays a distribution, all investors who are unitholders at the time of the distribution date are entitled to a distribution.
Yes, many of our funds do pay regular franking credits to investors as part of the distribution. The number of franking credits paid to investors will differ from fund to fund. We recommend you to read the PDS for more information on distributions and franking credits and when they are paid to investors.
Yes. We offer a distribution re-investment plan (DRP) for all our funds. Participation in the DRP is subject to the terms and conditions of the DRP policy document.
You can choose to:
Full or partial reinvestment will be available. If no DRP election is made, the distributions will automatically be paid into the nominated Australian bank, building society or credit union account. Holders can elect to participate in the DRP by submitting a form available here or from the Unit Registrar Link Market Services. Link Market Services can be contacted on 1300 554 474 or via email [email protected]
You will receive a tax pack on an annual basis, after 30 June. This tax pack will be provided to you by our Unit Registrar, Link Market Services.
To change your contact details or make any general inquiries on your account such as your statement, account balance, DRP or tax pack, you can contact our Unit Registrar, Link Market Services, on 1300 554 474 or via email [email protected]
Please call eInvest if you have any questions on the investment portfolio, investment managers and business. We are very happy to hear from you. You can reach us on 1300 088 660 (within Australia) or +61 3 8623 4202 (outside Australia) or via email [email protected]