I’ve been speaking to quite a few tickr investors on the phone in the past 2 weeks and there was a lot of people who wanted a better understanding of what an Exchange Traded Fund (ETF) is, and why we use them at tickr for your investment portfolio.
So I thought I’d explain…
A low cost, diversified way to start long term investing.
ETFs (Exchange Traded Funds) are a type of fund - but instead of employing a Fund Manager to pick stocks you can buy a basket of stocks that fit with a set of rules, known as an index.
ETFs come in a number of different shapes and sizes. They can be baskets of stocks, bonds, or other assets. They can track indices based on country i.e. USA stocks, company size i.e. FTSE 100, or a particular theme i.e. Global Clean Energy
Our example is the Global Clean Energy ETF we provide at tickr. This ETF tracks the performance of the 30 largest publicly listed companies in the global market. Both in Developed and Emerging markets.
By providing our investors with this ETF (Available in the Climate Change and Combo Portfolios) - our investors are invested in approximately 30 companies all making a positive impact in the Global Clean Energy Market , under one investment.
Why does this make fees lower?
By providing access to this fund in our tickr app - it means a first-time investor doesn’t need to pay an expensive Fund Manager or Research Team. The ETF is much more affordable than spending all the time, money and effort of investing in each company individually. By building your investment portfolio through the use of ETFs, a tickr investor now has a diversified investment portfolio (through industry, sector and country) for a comparatively cheaper cost.
ETFs also trade on a stock exchange - just like a stock. This means they can be bought and sold just like a stock. Assuming a typical ETF might represent 50-100 individual stocks by buying 5 ETFs you could have exposure to 250 - 500 individual companies, that will be automatically bought and sold according to the index rules. As an investor you would only have 5 holdings in your portfolio and 5 transactions.