Choice of different bars of chocolate

One transaction

Pay for the packaging

Can be bought off the shelf in a shop

An Exchange Traded Fund is;

A basket of stocks…

… that provides diversification

… in one transaction

… with a small charge for the wrapper

… which can be purchased on the stock

market

S&P 500

FTSE 100

ISEQ

An ETF simply “tracks” these indexes

The ETF “provider” (like Nestle in the ETF

world) buys the stocks that are in the index

This makes up the fund

So, you, as the buyer have bought the

“S&P”, or the “FTSE” etc…

Buy several stocks in one transaction –

you don’t need that much money

Small charge for “putting the fund

together”

Can be easily bought through the stock

market

You had just started a new job or had some money that people gave you for

your 21st.

You don’t have enough to buy a strategy, but you do want to invest…

By buying something like the S&P500, you can gain a lot of diversification with

one transaction.

With a few hundred euro, you can intelligently invest

The mother with the child benefit who does receive a regular income, she

doesn’t have enough to buy a strategy.By building up that income over a couple

of months and then buying an ETF and repeating that process over the youth of

her child, she will have built up a significant, diversified and low cost

portfolio.

A man asks you where to invest his pension. He has a significant amount of money, but doesn’t want to have to manage a strategy or simply doesn’t want to pick direct stocks…

By buying ETFs in several markets across the world, he will have built up a significant, diversified and low cost portfolio that doesn’t require management or direct stock picking

The lady who wants to invest in the Chinese

market, but doesn’t know enough about

individual companies to invest in them.

By buying an ETF in the Chinese market,

she is getting diversified exposure i.e.

“taking a position” in several stocks.

However, she doesn’t have to bear huge

transaction costs.

An investor wants to invest in the Irish

market as he feels it’s undervalued.

However, he hasn’t enough to buy a

number of companies, but does have

enough to buy one or two.

By buying the Irish ETF, he can gain low

cost, diversified exposure to the market

that he wants with small funds.

What does the ETF track?

What sort of diversification is involved?

What is the expense ratio?

What is the dividend yield?