Passive investing through
exchange traded funds (ETFs) have become more popular over the years, especially as active managers find it difficult to beat the market. As the popularity of ETFs continue to boom, they may become a staple in most investors’ portfolio. As investors learn to invest in ETFs, there are three key points to pay attention to.
3 Things to Take Note When Investing in ETFs
- Forex (FX) And Liquidity Risks
As ETFs are equity-related investments, there are bound to be risks associated with them. While most investors are familiar with market risk (
i.e. ETF is exposed to the price fluctuation of the component stocks that it is tracking), investors often tend to overlook the presence of FX and liquidity risks.
FX Risk
Whenever investors invest in ETFs that are quoted in foreign currencies, they are exposed to FX risk. Based on the ETFs listed on ......