What is an ETF?
An ETF holds a basket of company shares.
Maelor buys an ETF unit. The ETF holds company shares. What does his purchase give him?
A stake in the fund as a whole
His unit represents a proportion of the fund’s investments and their gains or losses.
An ETF investor shares in the fund’s gains and losses through a unit.
A unit connects its owner to the fund’s whole basket. The fund holds the company shares in its own name.
One company share of his choice
The company shares belong to the fund. Buying a unit gives Maelor a stake in that fund.
A loan paying fixed interest
A fund unit carries gains and losses. It gives no promise of fixed interest or repayment.
A bet on price with no ownership
Maelor owns the unit he buys, which makes him a part-owner of the fund.
Who is behind it
How a lesson is made
Every number in the lessons is either calculated or taken from a dated source. A lesson opens only after a person has reviewed it, and any change is reviewed again.
We teach you about money, but we never tell you what to buy. We don't sell investments or earn anything from your choices.
Sources
- ASIC Moneysmart: ETF units and holdingsAn investor owns units in an ETF, while the ETF provider owns the underlying shares or assets. Coverage can span markets or a narrower sector.
- Investor.gov: Fund ownership and chargesA fund pools investors’ money, and each unit represents a proportion of its portfolio and results. Ongoing charges cover running costs, including management. Funds can differ in how investors buy and sell their units.