As exchange traded funds (ETFs) become a household investment name, more investors are starting to utilize these nifty investment tools, especially for asset classes that are not easily accessible.
BlackRock‘s research recently found that investors are diversifying into emerging markets and commodities with passive investment strategies found in ETFs, writes Simoney Girard for Financial Times Adviser.
Deborah Fuhr, managing director and global head of ETF research and implementation strategy, stated that “strategies being implemented include managing asset allocation, taking tactical positions and increasing diversification. The introduction of ETFs covering emerging markets, commodities and property has allowed investors to access some of the best-performing asset classes of the past few years.”
Currently, ETFs that try to reflect indexes in the emerging markets provide exposure to 22 underlying countries. Expense ratios range from 0.05% to 1.5%. [Jack Bogle’s Take On International ETFs.]
According to John Lang, director for London-based Tower Hill Associates, “it does not take a genius to realize that if you use a variety of ETFs as building blocks, then you end up with a well-diversified, low-cost portfolio.” However, investors should note that “in the case of exchange-traded commodities, these tend to track commodity futures contracts rather than the asset itself, so you have to be aware that the contracts may not move in the same way.”
For more information on exchange traded funds, visit our ETF 101 category.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.