Contrary to popular belief, the ETF (exchange trade fund), called a tracker in French, is not difficult to understand. It is easier to understand than a fund in euros. It is a listed fund. It allows you to acquire and sell several financial products (shares, bonds, etc.) making up a stock market index in a single transaction. How does it work ? Can we invest at any time? What are its characteristics ? Find the answers here!
The ETF has the same characteristics as a classic fund. For example, it is subject to the control of the Autorité des Marchés Financiers and the European supervisory body. But unlike traditional investments, it follows a stock market index. In addition, its operation requires few management costs. On this point, do not hesitate to see the opinion of a specialist on ETFs.
The ETF replicates a stock market index, such as the MSCI World index or the CAC 40 index. Moreover, it has several options for doing so:
As it is a fund listed on the stock exchange, you have the possibility of holding an ETF easily, at least if you have an ordinary securities account.
However, also invest in the ETF, if you are eligible for the PEA (Stock Savings Plan or even life insurance.
Of course, you will have access to the financial market (to place buy or sell orders) directly through a broker.
As for the dividends, they depend on the ETF you have chosen. Some make the profits you’ve earned available to you directly in a wallet. Others offer to reinvest the funds. You choose !
In any case, if you are considering investing in an ETF, consider the following points:
Investing in ETF is beneficial as it is easy to access. You can place buy or sell orders as soon as the market is open. That’s not all, it also has other advantages:
Of course, the ETF has some disadvantages. Take the example of its volatility. Indeed, its value can vary from one moment to another, because of the fluctuation of the exchange and the market. Impossible to choose your actions yourself. Unlike some UCITS, you must accept the products in your basket.