ETFs, the new investment trend
We bring you a new financial concept: ETFs or exchange-traded funds. A complex product that has become a widely used investment tool for both individuals and professionals. We explain to you the key concepts.
The acronym ETF stands for exchange-traded fund. It is, therefore, a product that works like an investment fund, through which you can invest in different companies, sectors, and even in several countries, fact that offers the holder more diversification and flexibility to access markets.
On the other hand, the fact of being listed on the stock exchange means that ETF units are bought and sold through the stock exchange, following the same mechanism as shares. This can provide more liquidity to holders, since, unlike traditional mutual funds, buying and selling transactions can be carried out at any time of the day, within market hours.
The following training expands on the explanation to show us in more detail how this product works:
Investment trends 2021: ETF and ETF ESG
The Fundspeople report shows that ETFs have positioned in recent years as one of the investment vehicles most appreciated by investors, who especially highlight their liquidity, diversification capacity and costs, which are usually lower than in other conventional investment funds. In fact, the consultancy TrackInsight confirmed in a study that 57% of mutual fund holders have switched to ETF products for their equity investments.
Within this growing trend, sustainable investment comes into play. These are the so-called ESG ETFs, which are governed by environmental, social and corporate governance criteria. They attracted 45.5 billion euros in 2020, accounting for 51% of total fund inflows and thus outperforming traditional ETFs, doubling the figures of 2019.
Although on a global scale the impact of sustainable ETFs remains low, the investment trend continues to grow, and it is not ruled out that, as has happened with “green” government bonds, the increase in demand will lead to an increase in the supply of ESG ETFs in the coming years.
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