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Exchange Traded Fund, another investment class for investors

Exchange Traded Fund, commonly known as ETF, is an investment class that has gained much popularity amongst retail and institutional investors for its low expense ratio, wide range of investment choices, diversification and low investment threshold.

It simplifies investing for new and seasoned investors who need help picking individual securities or who do not have the time to monitor or pick individual securities. Investing in an ETF can diversify our exposure to different asset classes.

Entry prices are irrelevant
To make a spectacular gain from a stock investment, one needs to get both the entry point and exit point right. While we do not have a crystal ball, every one of us enters a share purchase transaction with the hope of making a gain.

However, when the hope does not materialise, and the investment turns sour subsequently, be it due to a misjudgement or a black swan event, more often than not, the decision of whether to continue to hold on to or to exit the investment depends largely on the entry cost. Rationally, the entry price of a stock investment is irrelevant to an exit decision.

Continuing disclosure of price-sensitive information is the bedrock of a fair, orderly and transparent stock market. It is the basis of informed investment decision-making. It creates a level playing field so that there is parity of information – that there is no preferential knowledge of such information as this may give rise to undue advantage to the person who possesses the preferential knowledge.