What are the benefits of trading an ETF?

Category: etfs-faq

One of the most obvious benefits is that ETFs are probably the most cost-effective way to expose your account to all those underlying securities held by the ETF in question.

Another benefit is the diversification offered by ETF investing. Rather than having your account exposed to the fortunes of a handful of securities that you’re trading individually, an ETF allows you to passively allocate capital to a large number at once.

Furthermore, when trading an ETF (or indeed an index), you only have a single trade to manage.

In addition, ETFs also distribute the dividends of the underlying securities held in the ETF portfolio proportionally to its investors, and there may also be some tax advantages to trading an ETF depending on your jurisdiction.

Finally, ETF investing is much more suited to beginners, due to the inherent diversification of the product.