ETF trading

Trading ETFs enables investors to obtain instant diversification, by gaining exposure to a range of instruments across a sector, or within the S&P 500 or Russell 3000 index for example, with a single transaction.

ETFs can be classified into three major fund types, typically based on specific investment characteristics. These are passive, smart beta and actively managed (including semi-transparent ETFs). The difference between each type of fund is the investment strategy underpinning it. For instance, index investing uses a strategy that requires little involvement, as these funds are set up to mimic the performance of a broad market index, such as the FTSE 100 or S&P 500. These are passively-managed funds. An actively-managed fund, on the other hand, will have its holdings readjusted and reallocated on a frequent basis by portfolio managers in an attempt to outperform the benchmark index.