The aim of an Exchange Traded Fund (ETF) or Tracker Fund is to track the performance of a specified index (like the FTSE 100) and to provide you with the same return as that index, less fees. As a fund, your ETF investment gives you access to a portfolio of companies (shares), bonds or other asset types (such as commodities or property).
Like a share, an ETF is bought and sold on a stock exchange. Consequently, ETFs offer you the best of both worlds – the diversification of an investment fund, with the easy tradability of a share.
Buying a single ETF gives you exposure to a specific market. Alternatively, you can buy a range of ETFs over several markets in order to implement a more sophisticated investment strategy.
In short, ETFs represent building blocks which can help you create the investment portfolio you want.
The i-Shares Consumer Staples ETF is one that is available on the Australian Stock Exchange, under the ticker IXI.
The Fund seeks to track the investment results of the S&P Global 1200 Consumer Staples Sector IndexTM (the “Underlying Index”), which measures the performance of companies that S&P Dow Jones Indices LLC (“S&P”), a subsidiary of McGraw Hill Financial, Inc. deems to be part of the consumer staples sector of the economy and that S&P believes are important to global markets.