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Exchange-traded funds (ETFs) are open-ended mutual funds that can be traded in a stock exchange, just like ordinary shares. Typically ETFs are designed to track the performance of a stock index, such as the SET50 index, a sector-stock index. An ETF enables investors to trade instantaneously on a stock exchange. This is different from a mutual fund, which is normally traded only at end-of-trading day prices.
Although introduced in Thailand only this year, ETFs have become very popular investments in the world over the last decade. Because they can be bought or sold at any time during trading hours at the prevailing price when the order is executed. Furthermore, an ETF also offers diversification because the fund invests in a portfolio of stocks that replicate a return of the stock index. Investing in an ETF is an alternative way of investing for just about any investor. |
The Stock Exchange of Thailand (SET) encouraged the creation of the first equity ETF in Thailand, the ThaiDEX SET50 ETF , which listed on the exchange on September 6, 2007. This ETF, which is managed by a selected consortium, has the SET50 market-weighted index as its underlying asset. Since the SET50 is comprised of 50 blue-chip stocks from various business sectors, such as the energy, banking, construction materials and other major business sectors, investing in the SET50 ETF is similar to investing in stocks in the SET50.
How to buy and sell ETFs?
Investors can buy and sell ETF units throughout the trading day with an ordinary brokerage account. The process of buying and selling is illustrated in the figure below. 
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