Exchange Traded Funds^ (ETFs) are portfolios of stocks, bonds or in some cases other investments that trade on a stock exchange just like a share. ETFs aim to replicate the performance of a particular index (such as the S&P/ASX 50), and are therefore made up of the same shares as the relevant index.
There are a number of different types of ETFs created by various issuers. ETFs listed on the ASX offer investors exposure to domestic and international markets, as well as commodity markets.
Exchange Traded Commodities^ (ETCs) track the physical price of a commodity such as gold to provide direct exposure to the underlying asset.
CommSec makes it easy for you to start investing in Exchange Traded Funds (ETFs) and Exchange Traded Commodities (ETCs) with the same low brokerage rates that apply to Australian shares.
How do ETFs & ETCs work?
An issuer or fund manager constructs a portfolio of shares, often to mirror the performance of an index, such as the S&P/ASX50 index. That portfolio is then listed on the stock exchange as one entity so that it can be traded just like ordinary shares.
ETFs have an open-ended structure, which allows units to be bought and sold as investors enter or exit the fund. This means ETFs are traded at a unit price close to the net asset value of the underlying portfolio. An ETF's price is valued throughout the trading day like a share, and it can be bought or sold with the same T+3 settlement times as shares.
ETCs track commodities, not commodity companies, allowing you to gain exposure to the physical price of the underlying commodity without having to trade in futures or take physical delivery of the commodity.
ETFs and ETCs are listed on the ASX and many global stock exchanges, and you can trade both through CommSec.
Various issuers have created different types of ETFs which are listed on the ASX to offer investors with exposure to the domestic and international markets, as well as the commodity market.
View a list of current ETF & ETC providers listed on the ASX.
^This website notes some features of ETFs and ETCs however, please consider the product disclosure statement, or equivalent disclosure document, available from the product issuer before making any decision about the relevant ETF and ETC.
The information on this site has been prepared without taking account of the objectives, needs, financial and taxation situation of any particular individual. For this reason, any individual should, before acting on the information on this site, consider the appropriateness of the information, having regards to their own objectives, needs, financial and taxation situation, and, if necessary, seek appropriate independent financial and taxation advice.