ETFs - something worth looking out for

Ever heard of ETF? It stands for Exchange Traded Fund (I won't be defining what it is here. Instead, you can read about it here).

I thought ETFs are extremely interesting because you trade them like a stock, but they aren't as exposed to risk because they are diversified. In comparison to unit trusts, ETFs are much easier to maintain and monitor, and the charges are extremely low.

While I would think that ETFs are best suited for DIY investors who will never employ the help of financial advisors, I also think that it is good to put a reasonable amount of your investments in it. Unless you completely don't want to monitor the markets, ETFs are cost-effective, and effective.

However, in our local market, the ETF market is not as established as the States. You won't get much variety for now, and chances are if you want to diversify on broader sectors and countries, you still need a larger portfolio of unit trusts. But do stay tuned, because it is very likely that when the investors market here are more receptive to ETFs, there will be more variety of this product. Unit trusts may not completely become the thing of the past, but it sure will see a great downsizing. I know I would do that to my own portfolio when the time comes.

For more about ETFs, I thought this article is a very good read.

For the current available ETFs in our Singapore market, you can take a look here.