Investing and constructing your own portfolio can appear a daunting task at first. But it turns out there’s an easy way to do so… ETFs!
What are ETFs?
Exchange Traded Funds (ETFs) are basically pre-made portfolios (a basket of investments if you will) that can be bought as a single investment.
If you purchase one ETF (often available on normal share markets) you are really buying a tiny amount of every company (or asset) included in that ETF portfolio.
How do ETFs work?
As all the underlying assets included in an ETF portfolio change in value… the value of the ETF will roughly move in line with the weighted average of the shares themselves.
If your ETF consists of NAB, Telstra and BHP and these companies increase in value, so will the value of the ETF.
Who puts ETFs together?
These ETFs are put together by people known as ETF managers and they assemble each ETF a little bit differently.
Some may choose to create an ASX200 ETF – where the 200 biggest companies listed on the Australian Securities Exchange are tracked.
While some might be sector/region specific, for example, the 20 biggest technology companies in Asia.
There is a wide range of ETFs out there, covering numerous investing options and styles.