Learning about shares: Exchange traded funds great for the beginner

Sunday 4 April 2004

Barbara Kendall asks: There seem to be lots of investments other than shares that I can buy on the sharemarket. I'd like to learn about them. What's an exchange traded fund?

By The Landlord

Dan Dividend responds: You're right - shares are just the tip of the iceberg.

Exchange traded funds (ETFs) are a good place to start, as these little-known investment products are great for people new to the sharemarket. Worldwide interest in ETFs is growing and a lot of people, myself included, are excited about them!

I'll cover what ETFs are and how they work then hand over to our guest NZX broker, Cam Watson from ABN Amro Craigs in Tauranga, to explain some of the benefits for investors.

Pop quiz. Do you like the idea of gaining diversification through investing in a range of companies? Does researching companies and picking stocks seem too hard? Would you like your portfolio to replicate a market index (a tool that tracks the performance of a group of companies, such as the NZSX 10) so you get returns very similar to those of the index?

If you answered yes to any of the above, ETFs could be for you.

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