[Korea goyounghun financial newspaper reporter] Financial Supervisory Service announced significant investments made during eight kinds of exchange traded funds (ETF) and asked for caution to investors.
ETF is tracking the returns of a specific index or price as a hybrid (hybrid) form a mix of stocks and funds, index funds, and real-time transactions are available in the same way as listed shares. The average total remuneration of the listed ETF is an affordable than the full complement equity funds average 1.21% 0.37% as of the end of January.
FSS emphasized that six days, the ETF should carefully invest any time if you get bought and sold like stocks, but limited period of time, not a guarantee of principal products, unlike bank deposits. Look at the net asset value of the ETF as an underlying asset configuration details because they are determined according to the net asset value (NAV) of the portfolio follows the index (PDF) you can make sure that the investment planned ETF to invest in any sport.
Be sure to know the history in order to configure asset value of the ETF because they understand properly. Detailed information about the PDF, NAV and liquidity provider (LP) of the ETF can be found on the Korea Stock Exchange website.
ETF is also different fees and maintenance respectively. Trading in the stock market, so as to pay brokerage commissions when buying, selling, and also because the cost of funds, including management fees, sales fees, salary will be deducted from the trust fund assets. If the current publicly traded investment cost of the ETF is the cheapest ¥ 0.05 percent, the most expensive is the case sheds 0.99% to about 20-fold difference.
If the "tracking error" and "disparity" big ETF should be cautious in investment. ETF should therefore follow the underlying asset price trend tracking error means that the ETF Net Asset Value can not follow an exponential basis. Does not transfer usually occurs when the index constituents on the basis of the total portfolio, and the largest ETF ETF tracking error may be excluded from the investment.
Disparity is a phenomenon that occurs temporarily due to market price and net asset value ETF and the underlying index to trade time difference means the difference between an ETF that such transactions. However, if an unusually large disparity in the ETF should continue to pay attention to the long investment.
Also, it leveraged and inverse ETF is not suitable for long-term investment. If the index is based on the leverage ETF climb 1% because aims to integrate up to twice the rate of change of the day based index price is going up leverage ETF values of 2%, 2% anti-based declines lowering the index 1%.
But the period of return on ETF may not be based on double the period of exponential returns. If the base index rose 25 points to start the day falling 25 points, and the next day at 1000 points based index returns is not a change rate of return can be leveraged ETF is -0.14%.
The inverse leveraged and inverse ETF ETF The situation is similar. If the underlying index to make a leveraged inverse ETF Leveraged ETF with similar properties it is also designed to rise by twice the inverse ETF is designed to rise or decline by a decline.
ETF is divided into real and synthetic ETF ETF, depending on how you follow the basic index. But for synthetic ETF can easily follow the basic index is difficult to replicate the real raw material, that is a risk factor that exposure to credit risk of the swap counterparty's bankruptcy or a bankruptcy caution.
In addition to the ETF or index, such as commodity futures traded on foreign agricultural products ∙ underlying asset may have lost me as you will be exposed to currency risk. For profits generated during the holding period must not forget also that the dividend tax deducted 15.4%. However, no tax for selling if you invest directly in stocks in domestic equity ETF.
Financial Daily Economic News FNTIMES - unauthorized reproduction for commercial purposes in accordance with the Copyright Act, No copying, distribution,
Copyright ⓒ Korea's financial newspaper & FNTIMES.com
