“It is important to understand the different ways index investments are available to investors. Many index investments are a managed fund similar in structure to most managed funds available to Australian investors. However, they are available in other forms also.”

Listed or Unlisted

An index fund may be unlisted, such as most managed funds, or listed. By ‘unlisted’ and ‘listed’ we are referring to whether the investment is available via direct investment to the fund (unlisted) or whether the fund is to be purchased on a stock exchange (listed – referred to as Exchange Traded Funds (ETFs)).

Reasons why listing of an index fund on a stock exchange can be beneficial include:

Intraday Pricing

– ETFs can be bought or sold at any time during the trading day, just like shares. In contrast, managed funds are priced only at the end of each trading day.

Global Reach

– Australians can trade (buy and sell securities) on many stock exchanges across the world. Thereby, should an ETF listed on say, the New York Stock Exchange be of interest to invest in, an Australian investor can swiftly buy (and sell) the fund. Conversely, Australian investors are unlikely to be able to gain access to American mutual funds (unlisted).

Quick transactions

– Being listed on a stock exchange, settlement occurs in three days after a transaction. Unlisted managed funds can take up to thirty days or more to pay the proceeds of redemption requests from investors.

More choice

– ETFs offer far more choice as to the underlying investment markets available. For example, iShares provide direct access to the China, Hong Kong, Singapore, South Korea, Japan, Taiwan, USA and Europe markets, among others. Unlisted index funds do not usually provide the retail investor with this scope of choice.

Enhanced Index Investing

IndexInvest enhances investment outcomes by applying quantitative analysis strategies – methods which involve a range of market place inputs including the statistical state of an economy and financial market sector/s, price momentum and volatility. By understanding these conditions, better decisions are made as to when and which indexes to invest in.

In addition, IndexInvest evaluates and considers opportunities which derive their primary exposure to an underlying index, however have an engineered overlay which aims to provide an enhanced return. The financial engineering may employ the use of either gearing or derivatives, or both and may utilize other strategies to enhance returns.

IndexInvest is a specialist analyst and adviser.