Exchange-Traded Fund (ETF) 101

If there is any easy financial product where you can invest in and trade like stocks, then it is Exchange-Traded Funds. Investing in ETFs has been growing in popularity in Singapore in recent years. If you have any questions related to Exchange-Traded Funds, then this guide is for you. We have answered the basic questions people generally have related to ETF investing.

What are Exchange-Traded Funds (ETFs)?

ETFs have listed funds that are traded on popular investments such as stocks, bonds, or commodities. Think of an ETF as a mutual fund that trades like a stock. Just like a mutual fund, an ETF represents a collection of stocks that reflect an index. An ETF’s price changes throughout the day, fluctuating with supply and demand.

How Do ETF Investments Work?

To summarize the process, you invest by buying shares of the ETF, essentially owning a tiny portion of the total fund. When you buy these shares at a certain price, and the price goes up, you can sell the shares and make a small profit. ETFs, come with a ticker symbol and intraday price data that can be studied once the markets open. The number of shares outstanding in an ETF changes on a daily basis as new shares are created and others are redeemed.