As most of them has explained... What ETF stands (a lot of my clients asked this and are clueless as to what they really mean how it works). So i will explain in this manner to them and i hope it will help you as well.
In Layman terms, ETFs tracks the index of a particular market that you are interested in comprising of the similar made up of the index. i.e.
- STI Index,
- FTSE ST Mid Cap Index
- etc
There are mandy index out there and also in different segment for example Marinetime industy has
So you get that picture what Index are?
Now ETF as echoed by Yang Teng is a fund that track these indices for example STI ETF tracks STI index, ST REITs ETF Tracks the Reits index etc. Investor buys ETFs because they have a certain confidence/view in the Index they want to track in to reap the performance of it but at the same time do not have that huge captial to copy the exact allocations of it is made up i.e
STI comprises of 30 stocks, DBS, UOB, GENTING etc. Can you imagine buying each of this stock at one LOT (1000 shares) each that's a huge capital to invest in for any retail investor out there.
As such there is ETFs that allow investors to contribute a small amount of investment into a pool that tracks the indices they want to invest in.
Do note that no ETFs are able to track 100% to the index because there is some techincal tracking errors and other factors as well, but in general they do track closely to index.
As most of them has explained... What ETF stands (a lot of my clients asked this and are clueless as to what they really mean how it works). So i will explain in this manner to them and i hope it will help you as well.
In Layman terms, ETFs tracks the index of a particular market that you are interested in comprising of the similar made up of the index. i.e.
There are mandy index out there and also in different segment for example Marinetime industy has
So you get that picture what Index are?
Now ETF as echoed by Yang Teng is a fund that track these indices for example STI ETF tracks STI index, ST REITs ETF Tracks the Reits index etc. Investor buys ETFs because they have a certain confidence/view in the Index they want to track in to reap the performance of it but at the same time do not have that huge captial to copy the exact allocations of it is made up i.e
STI comprises of 30 stocks, DBS, UOB, GENTING etc. Can you imagine buying each of this stock at one LOT (1000 shares) each that's a huge capital to invest in for any retail investor out there.
As such there is ETFs that allow investors to contribute a small amount of investment into a pool that tracks the indices they want to invest in.
Do note that no ETFs are able to track 100% to the index because there is some techincal tracking errors and other factors as well, but in general they do track closely to index.