An expert talks about the advantages of an exchange-traded mutual fund

Exchange-traded mutual fund (ETF) is a type of unit investment fund (UIF), a form of collective investment where investors' funds are pooled into a common portfolio and invested in certain assets (stocks, bonds, currencies). Depending on the portfolio structure, most mutual funds are concentrated on stock indices. This means that their portfolio largely repeats the composition of the index chosen as a benchmark, Capital Lab partner Evgeny Shatov told Izvestia on January 27.

"In international financial and investment practice, BPIFs are known as ETFs (exchange traded funds). Everyone can invest in this instrument by buying a unit of BPIF or ETF shares on the stock exchange through a broker," Shatov explained.

According to him, mutual funds, including BPIF, have several advantages, such as an optimal ratio between risk and return. Conservative strategies of investing in stock assets - highly liquid stocks and reliable bonds give an opportunity to get a relatively low level of risk, but the yield is usually higher than interest rates on bank deposits.

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In addition, the portfolio is managed by professionals with the necessary knowledge and access to up-to-date market information, and the distribution of assets by analogy with stock exchange indices and their structure allows to level most of the market risks.

"BPIF units can be easily bought or sold on the stock exchange. This increases their liquidity in the market, as such an asset can be realized at any time at the current market price. The investor has an accurate idea of the dynamics of the value of shares of a particular exchange-traded fund in a given period", - said Shatov.

According to the expert, unlike personal investing, when the amount of investment depends on the value of a certain asset, the purchase of units of BPIF does not require significant capital. An investor does not need to select assets and make transactions on his own - a team of professional managers does it.

According to the expert, despite the advantages of the BPIF, there are also disadvantages, such as market risks associated with changes in the value of assets in the fund portfolio (stocks, bonds, currencies, derivatives).

Also the risk of bankruptcy or termination of the fund. In this case, the investor will be paid only that share of the remaining assets of the mutual fund, which is determined by the size of his unit.

"At the risk of bankruptcy or termination of the fund's activity, the investor will be paid only that share of the remaining assets of the UIF, which is determined by the size of his unit," - summarized Shatov.

The information in the material is not an investment recommendation.

Earlier, on January 18, Evgeny Shatov told "Izvestia" about current investment instruments. According to him, in conditions of high interest rates, deposits remain one of the most attractive instruments for capital preservation. The level of deposit rates in the largest banks reaches 23%, which allows you to get a stable income with minimal risks.