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Passive investments such as Exchange Traded Funds (ETFs) offer you convenient exposure to different markets or assets at lower costs. In addition, ETFs are able to complement and diversify your investment portfolio.
ETFs are open-ended investment vehicles (like unit trusts) tracking performance of market indices or a single asset class, or other portfolios of assets that are listed and traded on stock exchanges such as shares, bonds and commodities.
Our product offering includes diversified ETFs that provide exposure to a basket of shares, bonds or money market instruments. Single asset based ETFs are also available. For example, our popular gold ETF offers you exposure to the spot price of gold at lower investment costs.
Prudent investment has never been this easy, or affordable. You can start investing from as little as R500 per month or with a lump sum of R10,000.
ETFs have been a trusted feature of the South African investment landscape since 2000, with Absa as a dominant force in the market through the different funds that cover asset classes including commodities, stocks, fixed income and money market instruments.
The lower transaction costs of ETFs reflect the more passive nature of the investment vehicle compared to actively managed funds, such as some unit trusts.
ETFs are easy to buy and sell as we take on the responsibility of executing the trade, irrespective of whether there are willing buyers or sellers in the market.
Since ETFs are physically backed, they do not carry credit risk of the issuer.
One of the big advantages offered by ETFs is that you are able to gain broad market exposure through a single investment transaction.
We are committed to disclosing the exact components that make up an ETF so that you have a clear view of the shares or assets that constitute a particular fund.
Most ETFs are structured as Collective Investment Scheme (CIS) portfolios and are fully regulated by the FSB and CISCA. In addition, as JSE listed instruments, they are regulated by the JSE’s ETFs rules.
While ETFs are generally regarded as lower-risk investments, particularly over the medium- to long-term, you need to be aware that the value of your chosen index tracker is subject to the performance of the underlying shares in the index.
This means that your capital is not protected. The performance of an ETF - can go up or down – this is the risk you need to be aware of. You can exit your investment at any time should you feel that your exposure to a fund is not aligned to your risk appetite.
It goes without saying that your exposure to the stock market - even through an instrument such as an ETF - carries a potential profit but also the possibility of negative market moves. Particular risks in an ETF include general market risks, interest rate risks, liquidity risks in which prices are subject to greater or lesser volatility, or tracking errors.
We have made it quick and simple to start your investment journey using ETFs.
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