Exchange Traded Funds on Nasdaq Europe
A Flexible and Cost-Effective Way to Invest
ETFs provide diversification, flexible and transparent trading, and many opportunities to reach different markets.
What are ETFs?
Combine the benefit of a fund with the flexibility of a stock with Exchange Traded Funds
ETFs (Exchange Traded Funds) are flexible and cost-efficient investment products, providing easy access to a variety of markets and assets. An ETF can track the performance of underlying assets, such as an index with equities or bonds. They can be bought and sold on an exchange, just like any share.
Why invest in ETFs
Trading Flexibility
ETFs can be traded during stock market hours, just like shares. Traditional mutual funds are usually only traded once a day.
Cost-efficient Investment
ETFs tend to have lower fees than traditional mutual funds.
ETFs: What you need to know
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ETF stands for Exchange Traded Fund. An ETF tracks the performance of an underlying assets, such as an index, a basket of stocks, bonds or commodities. They can be bought and sold on an exchange and represent a collection of securities, so they give investors the possibility to track the performance of a wide range of securities.
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As an ETF tracks the performance of an underlying assets, buying an ETF gives investors a simple and cost-effective tool for getting exposure to the underlying securities. Instead of buying stocks in all companies included in an index, investors can gain access to those stocks with a lower risk. Investors can invest in many industries, companies or markets with the purchase of just one instrument.
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ETFs suit active investors who have a firm understanding about trading in financial instruments and want to benefit from changes in the market as easily and quickly as when buying or selling stocks.
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It is always wise to formulate your personal strategy to be able to maximize the profit and spread the risks in a way that suits you. Your strategy should include both market and risk assessment, as well as the potential return you desire. Important aspects to take into account in all types of investments are:
- Purpose of the investment
- Investment horizon
- Risk profile
- Market perception
- Interest and time
If you have little time and are relatively risk-averse, it can be good to choose a few broad index funds as a base, which helps to diversify the risk. You may then consider increasing the risk and return potential with a smaller share of your capital by supplementing with more "exotic" ETFs, with exposure to commodities or a developing country. If instead you are less risk-averse, have more time to follow your investments and be more active in the market, you may consider increasing the share of funds with more exotic exposures or trade ETFs with leverage.
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The main difference is that an ETF is traded throughout the day on the exchange while a mutual fund is typically traded once per day at the Net Asset Value (NAV) price. In especially volatile markets with rapid price movements, ETFs offer clear advantages from this perspective as the investor does not need to wait until the end of the day for their order to be eligible for execution.
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Investing in ETFs is done by placing your order with your broker — similar to the way stocks are bought and sold. An ETF can be bought and sold on the marketplace during the whole trading day.
