Free Exchange Traded Fund & CIMBinvest Walkthrough Seminar
On 5 December 2009, there will be a FREE workshop organised by Daiwa Asset Management Co. Ltd. and supported by CIMB Investment Bank Berhad exclusively for all i*Trade@CIMB customers.
What is an Exchange Traded Fund?
An Exchange Traded Fund(ETF) is a new type of investment vehicle offered on the Bursa Malaysia.
When you buy an ETF, you enjoy exposure to this entire portfolio of securities with only one purchase. And you can sell it in a single transaction as well.
Why Invest in ETFs?
TRADE LIKE STOCKS
Just like stocks, you can buy and sell anytime throughout the trading day.
Because ETFs are traded in board lots, you can trade as little as the minimum board lot size set by the exchange, yet gain exposure to the full range of securities held by the fund. On the Bursa Malaysia, the minimum board lot is 100 units.
FULLY TRANSPARENT
Prices are available real-time throughout the trading day. What’s more – the investment portfolio is fully transparent as it tracks an index.
Since prices of ETFs are distributed in the same manner as trading prices for other securities listed on the Bursa Malaysia, you always know the value of your holdings.
EFFICIENT WAY TO DIVERSIFY
You can easily gain exposure to a group of securities – in a single transaction and at a lower cost compared to managed funds.
When you buy an ETF, you buy an exposure in a basket of securities without the costs of having to buy all the underlying securities yourself. Because there are many securities in the underlying portfolio, you can participate in the gains experienced by any of them.
What Is an ETF?
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Frequently Asked Questions (FAQs)
- How to invest in ETFs? Where to buy ETFs?
Similar to trading in stocks, you will require two accounts:A Central Depository System (CDS) account &A trading account maintained with a brokerYou may buy or sell ETFs through your remisier or via online trading during normal trading hours.
- What do I have to pay when buying and selling ETFs?
Like buying and selling stocks, investors need to pay brokerage commission, stamp duty and clearing fees.
- What determines the price of an ETF?
The market price of an ETF is usually very close to the Net Asset Value (NAV) of the fund ie. market value of the underlying stocks and any net income not distributed.
However, the price of an ETF can be affected by demand and supply in the market.
- What are the expected returns?
Investment returns generally correspond to the price and yield performance of their underlying indices.
- What is the minimum investment units?
ETFs are traded in minimum traded lots (board lots) of 100 units.
- Do ETFs pay dividends?
Most ETFs pay dividends to their holders either half yearly or yearly. You are advised to refer to the distribution policy in the prospectus or offering document of the ETF.
- How are transactions in ETFs settled?
In the same manner as share transactions ie. not later than 3 working (market) days after the transaction date (T+3).
- Is there any risk?
Yes, investing in ETFs, as in investing in stocks, is subjected to the same ups and downs of the market.
The performance of the ETF may be directly affected by the performance of its component stocks or bonds. - What should I do before investing in an ETF?
You are advised to know the following before investing:
Investment objective & strategy of the ETFInformation on the index that the ETF is trackingDividend policyFees & charges that will be borne by you as an investorSources of trading information of the ETFInformation about the management company
PRODUCT COMPARISON
| ETFs | Stocks | Unit Trust | |
|---|---|---|---|
| Diversification | X | – | – |
| Real-time dissemination | X | X | X |
| Trade via | Broker | Broker | Agent |
| Purchase of ETF / Stocks / Unit Trust | T+3 | T+3* | Upfront |
* T+3 means the 3rd market / business day after trade date.
Finance & Investment Tips : Definition of Exchange Traded Funds
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Mr Lim Chee Kiong from CIMB-GK Securities Pte. Ltd, will demonstrate the features of CIMBinvest, the online cross border share trading platform to trade in the Non-Ringgit markets which include the Singapore Stock Exchange (SGX), Hong Kong Stock Exchange (HKSE), New York Stock Exchange (NYSE), NASDAQ and American Stock Exchange (AMEX).
Mr Kyu II Oh from Daiwa Asset Management (Singapore) Ltd, will share the Overview of the Exchange Traded Fund and also Daiwa FTSE Shariah Japan 100, the First Shariah Compliant ETF listed on SGX.
Mr Atsushi Tahara from Daiwa Asset Management Co. Ltd, will cover the outlook on the Japanese equity market.
Workshop Details:
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Date |
5th December 2009 (Saturday) |
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Programme |
9.00am – Registration
9.30am – Introduction to ETFs
10.00am – Outlook on Japanese Equity Market
10.45am – Tea Break
11.00am – Daiwa FTSE Shariah Japan 100
11.20am – CIMBinvest (Cross Border) Online Trading Platform Walkthrough
12.50pm – Q&A
1.00pm – Refreshment |
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Venue |
CIMB Auditorium Ground Floor Bangunan CIMB Jalan Semantan Damansara Heights Kuala Lumpur |
Don’t miss this OPPORTUNITY to learn about the investment opportunities in the current market condition.
For registration, please call i*Trade@CIMB Call Centre at 03-2084 9890 not later than 3rd November 2009 (Thursday).
Registration is on a first-come-first-serve basis.
[…] Free Exchange Traded Fund & CIMBinvest Walkthrough Seminar […]
Understanding exchange-traded funds
By FINTAN NG
THE average Malaysian investor probably has a hard time understanding what exchange-traded funds (ETFs) are, how they work, and the risks and benefits of investing in them.
Although such securities products have been traded on Bursa Malaysia for five years, retail interest in them has yet to really take off.
There are five ETFs listed on the local stock exchange currently, with the two most recent funds listed in early July by CIMB-Principal Asset Management Bhd.
This is a small number compared to the 73 ETFs listed on the Singapore Stock Exchange and the 131 on the Hong Kong Stock Exchange. Globally, as at June 30, there are 2,252 ETFs from 130 providers, with 4,637 listings on 42 exchanges, representing assets of more than US$1 trillion.
“This clearly shows there is a vast potential to be tapped in the Malaysian market,” AmInvestment Bank Bhd funds management division chief executive officer (CEO) Datin Maznah Mahbob tells StarBizWeek.
However, CIMB-Principal CEO Campbell Tupling says the main challenge faced by ETFs in the local market is the lack of awareness about this relatively new instrument in Malaysia.
Both Maznah and Tupling say their respective banks hold roadshows, investment conferences and other awareness campaigns on ETFs to educate the public on how the funds work.
“We’re playing our part to help increase market liquidity by encouraging more participation from other market makers and adopting a more liquid fund structure for our new ETFs,” Tupling says. The first ever ETF to be floated on Bursa was the ABF Malaysia Bond Index Fund, managed by AmInvestment Bank. Listed in July 2005, it was then the region’s only bond ETF, tracking Malaysian government bonds.
Then came the country’s first equity ETF – the FBM KLCI etf (then known as the FBM30etf), which tracks the top 30 stocks by market capitalisation on Bursa.
This fund, listed in July 2007, is also managed by AmInvestment Bank, while i-VCAP Management Sdn Bhd manages the MyETF Dow Jones Islamic Market Malaysia Titans 25, which was listed in early 2008.
According to Tupling, portfolio diversification is one of the main attractions of ETFs.
“ETFs are open-ended investment funds that track the performance of an index by holding a basket of securities that allow investors to gain exposure to various companies, or fixed income securities with just one trade,” he says, adding that such products provide access to a wide variety of markets and asset classes.
Tupling says an ETF’s diversity is a quality much desired by investors to smoothen out instability (for example the losses and gains in the value of investments).
Maznah and Tupling say ETFs are flexible where trading is concerned since units are traded throughout the day.
Maznah points out that it is easy for investors to buy and sell the funds, which can be done through their remisiers during trading hours, or online.
Tupling says the flexibility comes in handy as investors can dispose their investments should an ETF that tracks a volatile market suddenly start to tumble.
“In a traditional unit trust fund, the sell order is transacted at the fund’s net asset value (NAV) at the end of the day, regardless of when the order to sell during the same day is put in,” he says.
Of course, with any investment, there are risks. In the case of ETFs, they face the same market risk as stocks and equity unit trust funds. “If the market that an ETF tracks does badly, the ETF in itself will also perform poorly,” Tupling says.
Maznah says that an ETF may not be able to follow closely the performance of the index due to a variety of reasons such as failure of the trading strategy, fees and expenses.
“The units may trade at a discount or premium against the NAV of the fund, subject to the demand and supply of the units,” she says.
ETFs are characterised by their lower costs versus, for example, those of unit trusts. Maznah says transaction costs are generally lower than unit trusts, while investors do not need to pay entry fees.
“They also pay lower management fees because the funds are passively managed funds. The annual management fees for ETFs are generally below 1% (of NAV),” she says.
Both CEOs say costs are considerably lowered since buying into, for example, an equity ETF meant buying into a basket of securities with one brokerage fee instead of purchasing those same stocks individually.
“As such, ETFs are more cost-effective to acquire and maintain over the long run, a trait that is especially appealing to the typical buy-and-hold investors,” Tupling says.
fr:biz.thestar.com.my/news/story.asp?file=/2010/8/14/business/6839687&sec=business