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Trading Our Products - ETFs
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Exchange-Traded Funds
ETFs vs. mutual funds
ETFs Mutual funds (unit trusts) No sales charge Charge a sales charge of 3-5% Charge lower management fees of less than 1% Management fees of 1-2% Offers intra-day pricing End of day pricing
Shares vs. mutual fundsETFs Shares Allows exposure to a basket of securities Allow exposure to one company Small management No management fee Normal brokerage and standard charges -
Underlying assets, performance and liquidity
ETFs come with various underlying assets, like equities, commodities, bonds and currencies.
ETFs’ performances are based on the underlying assets and benchmark, and the function of the fund manager is to track as closely to the underlying assets and benchmark as possible, thereby reducing the tracking error.
Liquidity is provided by the market-maker assigned by the issuers and in addition, the market participants add on to that amount of liquidity.
Citing an example in Hong Kong, 2823HK has an average daily traded volume of 60 - 100 million shares per day, with certain intra-day change in price of a few percent depending on the underlying.
Therefore, ETF is an investment tool that day / trend traders can use for their short-term trading needs with the liquidity and volatility it presents.