Overview

An ETF, or an exchange traded fund, is most commonly an investment product made up of a basket of securities that typically tracks an equity, commodity or a debt index. It is a single security that trades like a stock and gives you single-click exposure to an entire market, sector or commodity. An ETF trades throughout the trading day just like a stock. It is an investment product that is similar to an index fund in that it will primarily invest in the securities of companies that are included in a selected market index, seeking to achieve the same returns.

How popular are ETFs?

UAETF is the first fully-tradable, fully fungible, liquid, and transparent exchange-traded fund in the MENA region. ETFs though, are decades old — they grew in popularity in other markets in the 1990s. For more than a decade, they’ve continued to grow in popularity in both bull and bear markets. Today, investors around the world choose ETFs to structure their portfolio.

In fact, the world’s most-traded security is an ETF which tracks the S&P 500. Investors own more than USD 3 trillion in ETFs & ETPs, and in 2015, the level of assets in ETFs surpassed those held by hedge funds for the first time

Why are ETFs so popular?



How do ETFs precisely match the rise and fall of the underlying securities?

Even though ETFs trade like shares and are quoted throughout the day, the one key difference between them is that in equities, due to the finite supply of stocks available for purchase, large trades send prices up and down in response to changes in demand. On the other hand, an ETF’s performance is determined by the performance of the underlying securities, and “Authorized Participants” or APs make sure that supply and demand stays in balance through “creation” and “redemption”.

What is the difference between “passive” and “active” ETFs?

The majority of ETFs are passively managed, meaning they track the performance of a individual market or specific stocks, bonds, commodities or industries. Active ETFs on the other hand are actively managed and can be leveraged to multiply returns, inversed to perform opposite the tracked index or use representative sampling to better achieve the investment objective. UAETF is a passively managed ETF.

What are the key advantages of