ETF investor education

What are ETFs?

ETFs are a type of managed investment fund that are traded on a stock exchange. This means they are bought and sold in exactly the same way as shares, allowing investors to enter or exit a position any time the market is open.

ETFs often track major local and overseas indices such as the ASX200 or S&P500, or sub-sectors such as listed property or smaller companies. Some track more specific indices, for example the MSCI Australia ex-Tobacco ex-Controversial Weapons Index. There are also ETFs that track bond (fixed interest) indices, currencies, and commodities such as oil and gold.

Most ETFs are ‘index funds’, which simply means that they seek to match the performance of a particular index. They usually do this by investing in the same shares in the same proportions that make up the specified index. ETFs can also be based on a custom-designed index, known as smart beta ETF. These indices consist of stocks that have been selected for their potential to out-perform a specific market rather than to simply replicate a market like a traditional ETF. As with other managed funds, the dividends earned and franking credits received are passed through to investors in the form of distributions.

How to trade ETFs

Trading is as simple as contacting your financial advisor or stock broker. Alternatively you can trade directly via your online brokerage account.

Investing in ETFs is as easy as 1, 2, 3

1. Place your order using the ETF ticker code through your financial advisor or online broking account.

2. You will receive confirmation of your purchase and can monitor performance on our site or via your broking account.

3. You have complete control over your holding and can buy and sell units anytime during ASX trading hours, at the market price.

UBS IQ Exchange Traded Funds offer the following benefits for investors:

Benefits

Diversification

Easy access to a diversified portfolio of securities in a single transaction

Low Cost

ETFs are generally cheaper than traditional managed funds.
 

International Exposure

Gain exposure to securities listed on global exchanges of the world's major economies.

Ease of access & Liquidity

Trade units in the ETF as simply as trading any other ASX listed share.

Flexibility

ETFs trade and settle like any ASX listed security and can be bought and sold during ASX trading hours

International Exposure

Gain exposure to securities listed on global exchanges of the world's major economies.

Comparing ETFs to other investment vehicles

 

ETFs

Mananged Funds

Shares

Pricing

Intra-day / continuous

End of day, weekly or monthly

Intra-day / continuous

Liquidity

High

Varies depending on structure.
Closed-ended structures may have limited liquidity

High

Accessibility

High

Entry via a fund manager or intermediary

High

Expenses / Fees

Low MER
Standard Brokerage

Buy/Sell spread
Higher MER.
Performance fee and commissions possible

No MER
Standard brokerage

Diversification

High - index exposure

High

Low

Transparency

Index constituents
generally available daily

On request, rarely daily
Often will not disclose portfolio

N/A

UBS Asset Management has a long-term track record of providing index-based investment solutions to clients. The first UBS ETF was launched in Europe in 2001. Since then UBS has launched over 250 ETFs globally, with funds under management in excess of AUD 59 billion as of 30 September 2017. The UBS Australian ETF platform was established in 2012. Since then UBS has launched 9 ETFs in Australia.

UBS ETFs are managed by an experienced asset manager, UBS Asset Management, with a long-term commitment to passive management (managing passive assets for 30 years).

UBS ETFs boast a variety of advantages through a wide range of ETF products:

An experienced ETF manager

UBS ETFs are managed by an experienced asset manager, UBS Asset Management, with a long-term commitment to passive management.

Diversification with a single trade

A single ETF trade provides easy access to a diversified portfolio of securities in a single transaction.

Easy to access

ETFs can be as simple to buy and sell as an individual share on the ASX.

Flexibility

Like shares, UBS ETFs provide investors with the flexibility to trade at any time during market hours.

Transparency

ETFs provide investors with transparency of the underlying portfolio shares and market prices.

‘Intelligent‘ research based portfolios designed to deliver growth and income

UBS offer an ETF specifically designed for investors seeking to boost returns in their portfolio and another designed for investors seeking to boost income: UBS IQ Morningstar Australia Quality ETF (ASX code: ETF) and UBS IQ Morningstar Australia Dividend Yield ETF (ASX code: DIV).

Divest tobacco and controversial weapons from your portfolio

UBS offer a range of ETFs that exclude companies with significant business activities involving tobacco as well as excluding companies with significant business activities engaged in the production of controversial weapons.