Exchange-traded funds (ETFs)

Our stockbroking platform gives you access to a range of ETFs so you can easily diversify your investments.

Apply now to to access ETFs on our trading platform

What are ETFs?

An exchange-traded fund (ETF) is an investment fund that holds a collection of assets like shares, commodities and bonds. ETFs can be traded on stock exchanges such as the Australian Securities Exchange (ASX), and they can be shorted and traded on margin.

ETFs give you diversified exposure to an index that is comprised of assets such as bonds, commodities or securities (stocks). As one of the fastest growing investment products in the world, ETFs offer investors a simple and cost-effective way to build diversification into their investment portfolios. Just like shares, all ETFs listed on the Australian Securities Exchange provide investors with the flexibility to buy and sell units at any time during the ASX trading hours.

The CMC Markets Stockbroking platform provides access to the full range of ETF providers in Australia listed on the ASX and there are many different types of ETFs available. The most common types track an index that is a portfolio of stocks or bonds. There are also variants known as exchange-traded commodities (ETCs) that track the physical price of a commodity such as gold or other precious metals. There are now also a range of ETFs that are focused on achieving a specific outcome such as high-dividend returns.

What you need to know before you invest in ETFs

Advantages of ETFs

  • Easy diversification – get exposure to an entire market, country or region with one trade
  • ETFs are a cost-effective investment product – it only takes one transaction to trade a fully diversified index. The cost of investing in ETFs generally attracts lower fees (lower management expense ratio) than investing in actively managed equity funds, and even some equity index funds. Low minimum initial investment of $500
  • Leverage and shorting – just like shares, ETFs can be bought or sold. They can also be traded through gearing facilities such as a margin loan or CFDs
  • Unlike managed funds, ETFs do not have minimum holding periods or early-withdrawal fees
  • ETFs hold the underlying securities in a trust separately with a custodian
  • ETFs, particularly index funds, aim to disclose their holdings regularly so you can see exactly what you hold in your portfolio

Risks of ETFS

  • Currency risk – investing  in ETFs with an international focus exposes your capital to currency risk as well as local equity returns
  • Liquidity – liquidity  varies between ETFs and it influences the buy/sell spread (or cost) you’ll encounter when trading
  • Tracking error – the return on the portfolio may deviate from the return on the index or benchmark tracked. These errors are more significant when the ETF employs a strategy other than full replication of the underlying index

More on ETFs

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Awards that stand for value and service

CMC Markets officially offers the best value in Australia* when it comes to share trading. You get the lowest brokerage available, alongside powerful trading tools, great service and a rewarding frequent trader program.

CMC Markets
  • Best Value Australia, CANSTAR Online Share Trading award 2011, 2012, 2013, 2014, 2015 and 2016*
  • Outstanding Value Australia Casual Investor, CANSTAR Online Share Trading 2011, 2012, 2013, 2014, 2015 and 2016*
  • 2016 ABA100 Winner for Business Innovation in The Australian Business Awards for our Pro platform
  • The highest satisfaction rating for value for money, active trader platform, brokerage and charting, Investment Trends 2016**
  • Cheapest Online Broker, Money magazine Best of the Best award 2011, 2012, 2013, 2014, 2015 and 2016
  • Cheapest Online Broker, Smart Investor Blue Ribbon Award 2011, 2012 and 2013

*CANSTAR Online Share Trading Best Value Australia 2011-2016. CANSTAR Online Share Trading Outstanding Value Australia, Casual Investor 2011-2016. CANSTAR Online Share Trading Outstanding Value Australia, Active Investor 2013
** By own client satisfaction. Investment Trends 2016 First Half Online Broking Report, based on a survey of over 15,000 investors/traders.

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