ETFs – want an excellent introduction? 

The Central Bank of Ireland  have issued an excellent paper on ETFs.  see more here

Every year more funds flow into ETFs, and it is a favourite of conferences and meetings, although less popular with IFAs, partly due to obscure names leading to investor alarm.  However the super low prices should make every IFA sit up straight, and indices like the MSCI World Index Hedged to Sterling accumulation provide coverage of the entire listed equity universe at under half a per cent in a fund that produces no income, (so no tax return required for trusts).  It is compellingly simple and the pre-eminent challenge to all active managers in portfolios that are held almost ad-infinitum, without any meaningful event on the horizon.

ETFs are constituted as investment funds (and thereby subject to the full spectrum of investment fund regulation) they are also exchange-traded financial instruments, like equities or bonds, and as such are subject to stock exchange rules and regulations applicable to publicly traded assets.

The enthusiasm for hybrid ETFs has waned and physical ETFs now predominate.  The paper is keen to point out that the risks in ETFs is NOT higher than with conventional funds, but different.  I recommend this as an excellent read.

discussion-paper-6---exchange-traded-funds.pdf