An ETF is a security traded on a stock exchange. In its simplest form, an ETF attempts to track the performance of one or more indices.
Investing in a single unit of a particular ETF provides investors with diverse exposure to various issuers. For example, purchasing one unit of an ETF tracking the S&P 500, provides investors with shares in all the companies that comprise the portfolio of that particular ETF. Different ETFs provide exposure to different companies, industry sectors, markets and/or regions that serve your needs.
Why invest in ETFs?
Global market reach
Access all the major stock exchanges on your computer or in the HSBC UAE app.
Lower management costs
The management fees and per unit costs of obtaining ETFs tend to be lower compared to other investment instruments providing similar diversification exposures to international markets.
Diversify your investment risk
Diversification is important because different assets respond differently to different market conditions. Having different types of investments may lower the overall risk of a portfolio, as they tend to be less volatile.
Things to know
ETFs are bought and sold in the same way equities are traded, and are treated to the same standards on the respective exchange in which the security is listed. ETFs are traded during the business days and operating hours of the exchange.
How diversification works
Investing in a single unit of a particular ETF provides investors with diverse exposure to various issuers. For example, purchasing one unit of an ETF tracking the S&P 500, in its simplest form, provides investors with shares in all the companies that comprise the portfolio of that particular ETF. Different ETFs provide exposure to different companies, industry sectors, markets and/or regions that serve your needs.
Risks to consider with ETFs
You should understand that past performance of investment products is not an indicator or evidence of the future performance and the value of investments can go down as well as up and you may not get back the amount originally invested.
Investment products may be subject to periodic or general “illiquidity” and you may not be able to sell at the required number of shares at the publicly-displayed price on the relevant exchange (and you may have to accept a discount) or you may not be able to sell them at all.
There may be exchange rate risks associated with investing in ETFs denominated in a different currency than your home currency.
We are not providing any guidance or advice with regard to the ETFs you choose to transact and the related transaction, and we are not making a personal recommendation for you. You are responsible for the choice of ETFs you wish to transact as well as the outcome of any Transaction effected through the Platform, and understand that you are acting on an “execution only” basis.
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Information quoted is from publicly available sources or proprietary data and subject to change without notice. This information is neither an offer to sell, purchase or subscribe for any investment nor a solicitation of such an offer. HSBC accepts no liability for any loss or damage arising out of the use of all or part of this material. This information is general and does not take into account a person's individual circumstances, objectives or needs.
The price of an ETF can and does fluctuate, and any individual ETF may experience upward or downward movements, and may even become valueless. There is an inherent risk that losses may be incurred rather than profit made as a result of buying and selling ETFs.
If you choose to invest in an ETF, the decision to place the investment should be based on your own judgment without relying on any material provided or advice given by the Bank or its representative. You should consider these matters and consult your financial adviser prior to making any investment decisions.
The information is solely for personal and non-commercial use and for reference only. Opinions and estimates expressed are subject to change without notice and HSBC expressly disclaims any and all liability for representation or warranties, expressed or implied, contained herein or for omissions. As this document is circulated to all clients, the specific investment objectives, personal situation and particular needs of any specific person have not been taken into consideration. HSBC does not but may from time to time have an interest in the securities and may hold long or short positions for its own account or those of its clients.