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Exchange Traded Funds

About ETFInvesting in ETFs

What is an ETF?

Exchange Traded Funds (ETFs) are one of the fastest growing investment products in the world.

ETFs are bought and sold on stock exchanges like regular shares. ETFs typically contain a portfolio of securities designed to track specific indices, such as the biggest 10 or 20 listed companies on the New Zealand (NZX) and Australian (ASX) stock exchanges.

How do ETFs work?

The majority of ETFs track published market indices representing a broad diversification of securities for an investor. These ETFs buy shares in each of the companies in proportion to the index. The aim of the ETF is to mirror the performance of this group of companies in the index. Therefore the value of the ETF units should move in line with the index tracked. For example, a 2% rise in the S&P/NZX 50 Portfolio index should result in a approximately 2% rise (before fees and taxes) in the Smartshares New Zealand Top 50 Fund (FNZ).

Benefits

DIVERSIFICATION

With one simple NZ$ purchase an investment in an ETF provides you with a range of securities, such as listed companies or corporate bonds, spreading your risk more broadly.

LOWER COSTS

The funds keep costs down because in most cases we do not need to make active investment decisions, which may require spending on research and analytical expertise.

FLEXIBILITY

ETF units trade like individual shares. You may be able to make additional contributions through a regular savings plan which is a simple and affordable way to accumulate units.

TRANSPARENCY

Information about an ETF is public. The funds' prices are published in the newspaper and online so you can follow the progress of your investment at any time.

Risks of ETFs

Purchasing ETFs does not guarantee a profit or assure against losses

Price of units can go up and down and units can trade at a discount or a premium, which means the purchase price of a unit can differ from the value of the underlying fund assets

Smartshares Limited (which is part of the NZX Group), is the manager and issuer of the Smartshares Exchange Traded Funds, which are the only ETFs that are quoted on the NZX Main Board. Download the Product Disclosure Statement.

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