What are the main advantages for an investor in choosing an ETF over a Mutual Fund?
In Asia where tax is not a big issue, ETFs still enjoy many advantages over traditional mutual funds. Amongst them are the usual considerations relating to costs, convenience, transparency and liquidity. In a region where investing through mutual funds still costs 1-3% in front-end commission, the trading costs for ETFs appear insignificant. In 2008, transparency and liquidity were the two reasons many investors decided to venture into ETFs. This was because many investors felt uncomfortable not knowing what assets were held by their mutual funds during fast-changing markets and quite a few funds put up creation/redemption restrictions when investors needed the liquidity the most. As a result, many Asian markets witnessed a rise both in Assets Under Management (AUM) and turnover for ETFs in 2008. During this economic downturn, a lot of people have been looking for transparency in their investments. Have you seen a growth in your ETF take up rate because of this? Absolutely. On a global
