- ETF is a group of securities that track a core index and offer several benefits like product diversification risk management and low cost.
- Vanguard Australian shares index ETF provides investors with an effective way to capture long-term market performance.
- Vanguard Active Emerging Market Equity Fund invests essentially in equity securities of firms from emerging markets around the world.
- Vanguard Active Global Credit Bond Fund offers a moderate and sustainable level of current income.
An exchange-traded fund (ETF) is similar to mutual funds; however, they are listed on exchanges and trade throughout the day, just like an ordinary stock. It is amongst the fastest-growing categories of investment products in the world, made very popular by the Vanguard group. ETFs are a combination of securities that track a core index.
Also read: Is A200 ETF the gateway to ASX stocks?
ETFs offers several benefits like product diversification, risk management and deliver all this at a very low cost. It allows investors to invest in a broader market. If an investor is interested in a sector but not sure about a particular stock, investing in shares attached to an index or a basket of stocks reduces stock-specific risk and offers diversified exposure.
Investors can use ETFs to quickly enter and exit the market as it has ample liquidity. When compared to mutual funds, exchange-traded funds are considered to be tax-friendly instrument.
Let's flick through some of the ETFs that are on offer on the ASX:
Vanguard Active Emerging Market Equity Fund
This ETF is managed by Wellington. It invests mainly in equity securities of companies from emerging markets around the world and strives to provide long-term capital growth. Wellington applies the expertise of their global industry analysts (GIA) in emerging markets in addition to global perspectives.
Each GIA follows a unique investment process, philosophy, and analytical framework effective for the industry they are covering. These investments are for international diversification, long-term capital growth, and offers higher tolerance from the risks associated with share market volatility.
Vanguard Active Global Credit Bond Fund
This ETFs investment strategy entails investing in the AUD Hedged Class of the Vanguard Global Credit Bond Fund, domiciled in Ireland. The objective is to offer a moderate and sustainable level of current income.
The fund has exposure to investment grade global credit fixed income bonds with a credit rating equivalent of Baa3 and above by reputed rating agencies like Moody and others. These bonds are predominantly made up of corporate and non-corporate obligations.
The Vanguard active global fixed income team focuses on the global market environment and adopts a strategic and disciplined framework for analysing fixed income securities.
This ETF is best suited for investors who are seeking an actively managed diversified portfolio that remains relatively unaffected by currency fluctuations.