ETFs are open-ended funds, meaning they issue new units, or cancel units, as investors move into and out of the fund, allowing them to maintain on-market prices that correlate closely with the value of the underlying portfolio. Prices therefore are determined by the value of the assets the ETF holds rather than by other factors such as investor sentiment.

ETFs are one of the most rapidly growing investment product categories around the globe. First launched on the Toronto Stock Exchange in 1989. At the end of March 2001, ETFs had grown to represent assets of some USD 100 billion across more than 200 products traded on exchanges in North America, Europe, Asia, Africa and now Australia.

ETFs can be classified as either classical or hybrid.

Classical ETFs are based on any one of a number of indices, and hold the components of the index in order to replicate its performance. They also incorporate a ‘in-specie’ unit creation and redemption mechanism to assist institutional investors in buying and selling the fund.

Hybrid ETFs can either be based on an index or be ‘actively managed’ by the fund manager selecting the securities that he or she favours. Hybrid ETFs provide access to a much broader range of investment management styles, strategies, asset classes and operational practices than classical ETFs, which typically will seek to track a share market index or other pre-determined portfolio of shares.


ASX World Link provides access to a range of international ETFs, including funds  from Singapore and  the US

Most ETFs are designed to be cost-effective vehicles, applying comparatively low charges to investors.

ETFs may be appropriate for investors seeking:

• Diversification in a single investment
• Exposure to additional asset classes
• Surety of pricing relating to the value of the assets held in the fund
• A cost and tax effective investment
• Investment in the components of an index or an actively managed portfolio