3 ETFs This Investor Is Buying Right Now 2021 is proving to be another volatile year -- where are professionals investing their money, and where are the returns?
By Samuel Leach Edited by Russell Sicklick
Opinions expressed by Entrepreneur contributors are their own.
Exchange Traded Funds ("ETFs') emerged in the 1980s and '90s and are a popular investment option for beginners and experienced operators alike. According to one source, over $4 Trillion (USD) in assets are under management in US-listed ETFs. So, what are they and why are they so attractive?
ETFs are a form of security that tracks a specific index by holding stocks proportionate to the index. ETF ownership is divided among shareholders, with individual shares in various ETFs available over a vast number of exchanges.
ETFs have several advantages over other investment options including Equities, Commodities and other funds available on the market. Being aware of these advantages will enable investors to use ETFs skillfully and appropriately within a broader investment portfolio.
Cost-effective diversification
Benjamin Graham, the famous American Economist, stated that "Diversification is an established tenet of conservative investment." Warren Buffet would invite the concentration of wealth in a specialist area at the expense of diversification, but in uncertain times and markets, there is nothing that protects investments better.
Rathbone Global Opportunities ETF offered 125.35% Cumulative Performance over the past five years and solid in-year performance over the same period (20.47% in July 2020 to 2021) for only 330.12p per unit. James Thomson, fund manager, is a successful player on the global scale with the potential to outperform his peers long-term. This investment is within the grasp of even the most modest investor and gives robust diversification — on a global scale.
Related: Everyday Money: What is Investment Diversification?
Passive is the new proactive
Every investor imagines beating the market on every position that they take. Put simply, that is not going to happen. Fund managers will not thank me for saying this, but by some measures and taking into account fees and associated costs, passive investments like ETFs can outperform all but the very best managed funds.
As of July 2, 2021, for only 1,422.19p, an investor can invest in the FSSA Greater China Growth Class B ETF. With an average of 21.9% discrete calendar year performance since 2016 and 157.23% Cumulative Performance over five years, investors can secure amazing Returns on Investment in one of the greatest economies in the world. Can your fund manager or own investment selection offer that? Martin Lau has a pedigree for investing in China and works within a team with an ethos as stewards of client's capital.
ETFs give investors the flexibility to take advantage of passive investments or carefully select actively managed funds led by specialist fund managers within their sectors. It is the investor's choice!
Related: Exchange-Traded vs. Index Funds
Tax-efficient wrappings
Fundamentally, ETFs offer immense flexibility, in terms of global scope, sector selection, active and passive management, and cost efficiency for a broad range of investors of various means.
The diversification that they can offer can bolster any portfolio, especially as the global economy seeks to overcome and recover from the challenges posed by the unprecedented Covid-19 pandemic.
While these macro considerations are important, the micro-level detail has the most direct significance to the individual investor. ETFs also meet the investor's needs on this level as well. ETFs can be invested in through one of the many ISA models to tax-efficiently invest up to £20,000 per annum. ASI Asia Pacific Equity has raised £1,083 million since its launch in April 1987, which has benefited from 104.22% Cumulative Performance over the past five years. That's a lot of retail investors' ISAs!
ETFs are a healthy option with which to augment your investment portfolio in a broad range of circumstances, none more so than in these uncertain economic circumstances. Their strengths come from their adaptability and their mitigating effect through diversification while securing growth in and of themselves.
Related: Why New Investors Should Start With Some Allocation To ETFs As ...
This information does not constitute advice or a personal recommendation and you should seek advice concerning suitability from your investment adviser. As with any investment your capital is at risk. Past performance is not an indicator of future results.
