Exchange-traded products (ETPs) is the family name for the group of products comprising exchange-traded funds (ETFs), managed funds (MF) and structured products (SPs). There are over 100 ETPs accessible through ASX.
Exchange-traded products are financial products traded on an exchange that invest in or give exposure to securities (shares) or other assets such as commodities. Most ETPs generally seek to track the performance of a specified index or benchmark (such as the S&P/ASX 200 index) or a currency such as the USD or a commodity such as gold. Single asset products that track the performance of a specific security, bond or debenture are also available.
ETPs are open-ended, which means that the number of units on issue is not fixed but can increase or decrease in response to demand and supply from investors. This assists in ensuring that the ETPs trade at or near their net asset value (NAV). ETPs trade, clear and settle in the same way as shares on the ASX.
ETPs can offer exposures across a range of asset classes including;
- Australian ETPs
- International ETPs
- Commodity ETPs
- Fixed income ETPs
- Currency ETPs
- Cash ETPs.
Things to consider before investing
As with other products, it is important to read the product disclosure statement for ETPs to gain an understanding about an ETP’s structure, investment objectives, principal investment strategies, risks, and costs. You should do this before you make a decision to invest or not. You can find the product disclosure statement on the website of the ETP issuer.
You should also consider seeking the advice of an investment advisor who holds an Australian financial services (AFS) licence or is a representative of an AFS licensee. Be sure to work with someone who understands your investment objectives and tolerance for risk. Your investment advisor should understand these products, be able to explain whether or how they fit with your objectives, and be willing to monitor your investment alongside you. The ASX find a broker service may assist you in locating an investment advisor in your area.