Indirect Investing
ETFs & Investment Companies
Indirect investing through funds allows the private investor to gain access to different asset classes as well as obtaining quick and efficient diversification.
Investors can buy either listed funds or non-listed funds. Non-listed describes the range of funds that are not listed on recognised stock exchanges and include such products as unit trusts (in the UK), mutual funds (in the US) and unit-linked funds (in Ireland). In contrast, and as the name suggests, listed funds are investment products listed and traded on the stock exchanges and, as a result, they are bought and sold through a stockbroker in the same way as shares.
There are two distinct types of listed funds;
- Traditional & Intelligent exchange traded funds (ETFs) – passive index tracking funds
- Closed-ended Investment Companies – actively managed funds
Advantages of Listed Funds
Listed funds offer several advantages over the non-listed variety including minimal entry costs, lower annual management fees, daily pricing, improved transparency and liquidity and less administration. Managing your own savings and/or pension through listed funds could not be easier, particularly with The InvestR Centre’s ongoing advice through the weekly on-line investment commentary.
Traditional exchange traded funds (ETFs) track a traditional market-weighted index where as an Intelligent or Fundamental ETF is more discriminating and tracks an index based on some fundamental factors like dividends, profits, cashflows and sales. Intelligent ETFs have taditional added 2-3% per annum to the returns avaiable from the alternative traditional ETF and The InvestR Centre believes that there are strong grounds for expecting continued out-performance in the future. Investment Companies offer private investors the ability to buy into a range of different asset classes through the stock markets including equity funds, property funds, government and corporate bond funds and commodity funds among other asset classes. A peculiarity of investment companies is that they often trade at discounts to the value of the underlying portfolio of investments. A sizeable discount can offer the medium term investor an opportunity for above average returns.
The InvestR Centre’s Services in this area
Our 1-day investment seminar covers both the traditional and inteligent exchange traded funds in detail. In addition, ongoing information and advice on ETFs and investment companies is provided to members through the web site. In our weekly investment bulletin to members, we regularly profile different ETFs and investment companies. As The InvestR Centre is an authorised adviser, regulated by the Irish Financial Regulator, Irish-based members of the website can also chose to opt for a one-on-one meeting with one of our investment advisors.
In addition, exchange traded funds and investment companies are described in more detail in our series of investment note and e-books (PDF documents) which are available to members through the web site. Non-members can purchase any of our ebooks with a credit card by clicking on the link or from the Home page.
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