What are ETF's?

ETF passive funds and trackers are different names for the same product. An ETF is generally a simple and straightforward investment. Through an ETF you buy a piece of an index such as the AEX, FTSE, DAX or a global equity index. Investing in ETF's is therefore called index investment. If the FTSE rises, your ETF becomes more valuable, and vice versa. ETFs are transparent, offer a good spread and low management costs. Due to this simplicity, they are becoming increasingly popular.

ETF's versus investment funds

ETFs are successful because they are a cheaper alternative to investment funds. In particular, low management costs - some ETFs already follow an index for 0.15% - make them attractive. Compared to an investment fund that is set at 1.5%, you save more than 1% on annual costs. In addition, according to various studies, the results of ETFs on average are significantly better than those of investment funds, which are actively managed by a fund manager whose goal it is to perform above the benchmark index. 

However, the majority of mutual funds remain below the index that they aim to exceed. Therefore, with an ETF, you not only pay lower management costs, but you also have a greater chance of achieving higher returns than with an investment fund with the same benchmark.

Why invest in ETF's?

ETFs, like investment funds, are an ideal investment tool for new investors. You can work with ETFs in a low-threshold way to boost your asset growth. They are transparent, have low management costs and offer a good spread. For example, if you buy the iShares MSCI World, you invest in one transaction in the MSCI World Index, which consists of over 1,600 shares of the world's largest companies. ETFs also offer the opportunity to invest in sectors and themes that are usually inaccessible.

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