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What's on offer if you want to invest in ETFs?

by , 11 March 2015

Exchange traded funds (ETFs) offer you a cost effective way to invest.

Through the different types of ETFs available, you can gain exposure to a number of different shares and sectors.

So what sort of ETFs are available to invest in?

Let's take a closer look…


ETFs that hold the largest companies of the JSE


Making up the Top 40 Index of the JSE are South Africa’s biggest companies. These include the likes of Sasol and BHP Billiton.

Investing in these companies requires a significant amount of money as their share prices are high. So you could consider investing in an ETF that invests in the JSE’s Top 40 Index instead.

These ETFs hold the companies that make up the index. You’ll also benefit from your portion of dividends (paid on a quarterly basis).


Hone in on particular industries with sector-specific ETFs


If there’s a particular sector of the market you want to invest in, you can also do this through ETFs.

Sector-specific ETFs include:

  • The financial sector, including banks and insurance companies;
  • The property sector, including real estate companies;
  • The industrial sector, including construction companies; or
  • The mining sector, including gold and platinum producers.

Depending on the ETF you select, they tend to concentrate on the biggest companies within the sector that make up the ETF’s benchmark index.

Investing in these types of ETFs also entitles you to any type of dividends the companies pay out.


Looking for income from an ETF?


If investing for income is part of your investment strategy, you could opt to buy into an ETF that invests in the best dividend paying companies on the JSE.

These ETFs also pay out dividends on a quarterly basis. The fund manager will regularly review the fund’s shareholdings to ensure it holds the best dividend paying companies.

So there you have it, what’s on offer if you want to invest in ETFs.

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