Why trade with WBS?
We offer your all the right tools to profit from ETFs. We will provide you with a personal account manager to explain everything about the platform and the market tools it has.
This manager will be your guide and will teach you how to spot an excellent trading opportunity. All the knowledge for the market will be at your disposal. WBS is a regulated broker, so you have to focus only on profit exploration.
What are ETFs?
Imagine ETF as a basket of assets, and you can trade this basket as a single stock. That takes away all the hassle, all the fees of buying and selling all these assets individually.
What is the underlying mechanics of ETF? The provider designs a fund that fund tracks the asset performance and is sold to investors. Thus, the shareholders own a piece of an ETF and not the assets that create the fund.
Do you want to know what types of ETFs are there? WBS will tell you
One can use ETF for many reasons: to generate incomes, hedge or offset risk in a portfolio, or simply speculate. There are different types of ETFs too. For example, bond ETFs gather bonds – as the name suggests – corporate, state, government, and local bonds. The industry ETFs track an industry sector – the tech one, the energy sector, or banking. ETF could put commodities in the investing basket such as crude oil, gold, platinum or, even grain. Of course, there is a currency ETF which to works with any foreign currencies.
The diversification
There are a great variety of the containing pieces of an ETF basket. One direction could be the marketing vertical. From stocks to commodities, for example. Imagine the enormous effort that it would have been to all the containing pieces.
The transparency
There is no problem for anyone with an internet connection to access the holdings of any fund. They are fully disclosed to the public. Thus, he or she can see what their price activity is and check if everything is OK.
The tax benefits
One of the positives with mutual funds is that the taxes incur during the period of investment. Otherwise, the investors must pay taxes when selling the investment. Here are three of the advantages of these investing instruments. Keep them in mind while reading about their disadvantages and decide whether trading them could be the right thing for you.
On the other hand – here are the disadvantages of the ETF. Among them, we can mention the trading costs, the mere task of finding buyers, and the possibility of closing.
The trading costs
Certain online brokers could impose fees because the ETF is traded on the exchange. Nevertheless, many brokers have decided to remove the commissions of ETF. Every trader on WBS can check the terms and conditions of trading such an investing instrument and the advantages.
To find a buyer
Low liquidity is a typical thing about the ETF. In human terms, when you try to find a buyer for the specific ETF, it could be a hard time. This type of investment instrument is not traded frequently, so it is a tricky task to sell it.
The possibility of an ETF to close
As a specific investing instrument, ETFs are highly dependent on the assets that have been brought in. There is even a possibility for the fund not to be able even to bear the administrative costs. The market is a live matter, and the investor faces different situations. One of them could be selling sooner than planned. In this case, it is an option to sell at a loss, trying to cope with the specific case.
Online trading provides the opportunity to trade stocks, ETFs, and so on without the hassle of owning them, and that is why our clients can profit no matter where the price goes. This particular case could not be that advantageous because the clients are not holding the actual portfolio of shares.
Is there any risk when trading ETFs?
As with any other type of investing, this instrument carries some risk with it. Here are several examples.
Tracking error
When there is an error between the returns of the reference index or asset and the ETF. Any difference besides 0 represents a failure in the replication of the reference itself. This type of error is calculated based on the prevailing price of the reference asset or index and the ETF.
Liquidity risk
There are ETFs that are characterized by high volume, high liquidity, tight spreads, and volatility. By contrast, with mutual funds, all the purchases or sales of the day are made on the same price level at the end of the trading session.
Price stability
Many experts say that trading ETFs on commodities can alter the market of commodities itself. The best example is between 2007 and 2009, when the short-selling of estates led to the United States bear market.
What are the extra benefits of trading ETFs on the WBS platform?
Our platform provides you with protection from loss positions from which you can only gain money.
On top of that, you have training sessions and a personal account manager who will answer all your questions about the platform and trading itself.
Register here and start trading ETFs now!
