Exchange Traded Fund (ETF)
ETF is portfolio investment products that are admitted to listing or trading on a regulated exchange. An ETF provides investors with exposure to a diversified basket of shares or other financial products. ETFs aim to replicate the performance of a specific index; this index can be a blue chip, a regional, or a sector index. ETF is similar with mutual funds, but we can trade ETF in Stock Exchange.
The differences between ETF and mutual funds :
| Stock Mutual Fund | ETF | |
|---|---|---|
| Trading | Investment Manager | Stock Exchange |
| Minimum Purchase | 1 unit | Primary Market: Creation unit ( = 1000 lot = 100.000 units) Secondary Market: 1 Lot (100 units) |
| Price | The end of the day | Real time |
| Underlying | Stock | Reference index |
| Dealer Participant | No | Yes |
The Benefits of ETF
The benefits of ETF compare to another alternative investment are :
ETF’s Trading Mechanism
ETF’s Regulation
The surveillance of ETF is held by three parties, that is OJK, BEI and KSEI. ETF’s trading in Indonesia is regulated by :
Listed ETF :
As 11 February 2019, 25 ETF listed on IDX. Click here for more information about ETF.