Investment Education
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ETF
Definition
ETF or Exchange Traded Fund is a Collective Investment Contract whose participation units are listed and traded on the Exchange.
Differences between ETFs and Open Ended Mutual Funds:
- ETFs are traded on the Exchange during exchange hours, whereas Open Ended Mutual Funds are traded through MI or selling agents.
- There is no minimum investment for ETFs, unlike Open Ended Mutual Funds which depend on each type of Mutual Fund.
- Special ETF prices for LQ45 ETF Mutual Funds follow the trend of increasing or decreasing LQ45 index and there is a premium / discount on bid / offer to adjust to market demand, while the price for Open Ended Mutual Funds is determined by NAV (Net Asset Value).
- ETF price announcements are displayed continuously during trading hours on the Stock Exchange, while Open Ended Mutual Funds are announced once by the Investment Manager based on NAV calculations.
- Almost all ETFs have market makers (liquidity providers), while Open Ended Mutual Funds do not.
- Some ETFs have options and/or futures on the underlying in the form of an index or the ETF itself, while Open Ended Mutual Funds do not.