Exchange-traded funds (ETFs) are a type of investment fund designed to simulate, copy, or evaluate a reference index of a certain asset type. Assets used for reference can be anything from stocks, bonds,… to gold, oil and gas,… and more.
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What are Exchange-traded funds (ETFs)?
Exchange-traded funds, also abbreviated as ETFs, are passive investment funds designed to simulate, copy, or evaluate a reference index of a certain asset type. Accordingly, there is no limit to the type of asset used for reference, so it can be anything.
The main types of assets often used for reference are usually stocks, bonds,… or a type of asset with high value such as gold, oil and gas, real estate, etc. To participate and own a portion of ETFs, you need to own something called an ETF certificate, which can be considered a certificate of ownership from the fund.
The special feature of Exchange-traded funds is that they can be traded freely and comfortably like a stock on the stock exchange. This opens up opportunities for investors to more easily diversify their investments and access other securities products.
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What are the benefits of participating in ETFs?
First let’s talk about the benefits of participating in Exchange-traded funds, which especially those new to investing should know:
- Diversify your investment portfolio: Investing in ETFs means you are investing in many different businesses, helping to optimize investment costs and possible profits.
- Easy to control: By investing in many different categories when participating in ETFs, you can reduce the more significant risks of investing in just one category.
- Flexibility and transparency: ETF certificates can be traded as easily as a regular stock, and transaction information is also transparently published, allowing participants to more easily buy certificates.
- Attracting foreign investment capital: Exchange-traded funds are the best investment opportunity for organizations and foreign investors who want to invest in a foreign country, thereby attracting more investment capital from foreign countries. outside/
- Low cost: If you are a newbie and don’t have much capital, ETFs are the best opportunity for you to invest instead of having to spend more money on other strong stocks.
What risks are there when participating in ETFs?
However, along with the above benefits, some risks come from investing in ETFs that you should clearly understand:
- Mismatch to the referenced asset: ETFs reference and evaluate the parameters of any asset but will never match exactly, significantly affecting the buying and selling price.
- Poor liquidity: Some ETFs have very high bid and ask price differences, leading to an increase in transaction costs, and reducing liquidity.
- Poor profitability: Because it is a safe investment fund, ETFs’ profitability will be much lower when investing in a certain stock asset on its own.
- Risk of being scammed: If you are unlucky enough to invest in less reputable fund issuers, the risk of losing everything is very high.
Should you invest in ETFs?
From the information we have found so far, the question that arises here is whether you should invest in ETFs or not. The answer we can give you is yes.
If you eliminate the risks of biological detection, this is the first source that can bring a lot of benefits, especially when you are:
- Those who are new, lack the experience and capital to invest in stocks.
- People who don’t have too much time to learn and research the market.
- Long-term consultants, with confidence in the development of future capabilities.
The world’s leading ETF funds
We would like to introduce to you information about some of the most prominent and leading ETF funds in the world at present:
Grayscale Bitcoin Trust
Grayscale Bitcoin Trust is a fund launched in 2013 that has since grown to be more than 10 times larger than the largest newly launched spot Bitcoin ETFs.
This is considered the largest fund investing 100% of assets directly in Bitcoin and is one of the top choices for investors who do not want to manage their wallets.
iShares Bitcoin Trust (IBIT)
iShares Bitcoin Trust (IBIT) is a Bitcoin ETF managed by BlackRock, one of the world’s largest asset managers with 10 trillion USD in assets.
Therefore, iShares Bitcoin Trust possesses a lot of experience in operating complex ETF funds as well as being reputable and trusted by many people.
Evolve ETFs
Evolve ETFs is a very large company that brings innovative ETF funds to investors, helping open up opportunities for investors to diversify their investments and easily access securities products.
The special thing is that they own up to 54 different types of ETFs in many fields, from finance to crypto ETFs and more.
Purpose Ether ETF
Purpose Ether ETF is a mainstream stock exchange-traded fund that confidently calls itself the world’s first physically settled Ether ETF.
Accordingly, they have created a more transparent and accessible path for traditional investors who want to access Ethereum through their Ether ETFs.
Conclusion
Finally, together we have fully learned the most important and easy-to-understand content about Exchange-traded funds (ETFs). Hope you enjoy this content and see you again in future content from AZcoin.
I am Tony Vu, living in California, USA. I am currently the co-founder of AZCoin company, with many years of experience in the cryptocurrency market, I hope to bring you useful information and knowledge about virtual currency investment.
Email: [email protected]
