Here’s why ETFs have emerged as an attractive investment option in the time of heightened market uncertainties
For instance expat investors, no matter where they are, have it tough when it comes to building wealth. Not only do they have to juggle through the complexities of managing their investment, but they may also be preyed upon by fly-by-night financial advisers.
Or worse, they may even be tempted to squander that money away on sweepstakes, raffles, prize draws, in the distant hope of netting a fortune.
Well, while everyone may not be so lucky to win a multi-million jackpot overnight, there are thankfully certainly many smart and low-risk ways to put your hard-earned money in as an investor who is longing for a peace of mind.
In today’s world full of policy uncertainties, one of the big themes at the moment is that investors are looking for safer capital-guaranteed investment products.
Many wealth managers, for instance, are certainly seeing expat investors being very cautious. Many of them are also not comfortable with committing active investments.
This begs the big question: where exactly should expats invest that would grow their money?
One of favorite picks of wealth managers has been Index-tracking exchange traded funds (ETFs) that are becoming popular among expat investors worldwide, including in this part of the world.
But why ETFs?
Simply speaking, from an investor’s risks and rewards perspective, ETFs have emerged as an attractive investment option especially in the time of current heightened market uncertainties.
ETF, just like stocks, are traded on a secondary market. However, unlike stocks ETFs track the underlying index and an ETF’s main aim is to achieve the same return as the underlying index such as the S&P 500.
ETFs come in many forms. They can be denominated in various currencies, can be geographically diversified or can be focused sector focused such as oil and gas, agriculture, basic resources or alternative energy.
When investors buy ETFs tracking large indexes, they tend to get access to a wide range asset classes, sector, region, and investment theme. No wonder, ETFs, have seen consistent growth over the years since their launch in 1990s.
One of the fundamental principles of ETFs is that they tend to diversify your investments, thereby providing low-risk alternatives by reducing exposure to volatility.
Take for instance the ETFs offered by the world’s largest asset manager, BlackRock through its iShares platform. iShares Core ETFs are broad stock and bond index funds that are designed to be long term portfolio holdings. These ETFs are a low cost and tax-efficient way for both savers and investors to build a strong foundation for a portfolio.
The bottom line is that ETFs offer a convenient exposure to a wide range of investment products. However, all investment classes are subject to market risks, and ETFs are no exception.
Interested in ETFs?
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Takaud is a Bahrain-based leading provider of savings plans that are simple, flexible and competitively priced, making saving and investing easier for both locals and expatriates