S
SL100
Guest
Hi,
Following advice on this board I am interested in investing in index tracking ETFs but am confused at the risks and in particular whether an index tracking ETF actually owns shares in all the companies in the index it is tracking.
In other words am I buying shares in something which is effectively a collection of shares in the index and if it fails or some reason will I at least own my 'share' of its shares?
From a Wikipedia definition (not wanting to start a tangent debate on the quality of info on Wikipedia...):
"Some index ETFs invest 100% of their assets proportionately in the securities underlying an index, a manner of investing called "replication." Other index ETFs use "representative sampling," investing 80% to 95% of their assets in the securities of an underlying index and investing the remaining 5% to 20% of their assets in other holdings, such as futures, option and swap contracts, and securities not in the underlying index, that the fund's adviser believes will help the ETF to achieve its investment objective. For index ETFs that invest in indexes with thousands of underlying securities, some index ETFs employ "aggressive sampling" and invest in only a tiny percentage of the underlying securities."
What I think I would like is a 'replication' index tracking ETF fund.
Does anyone know how to identify which index ETFs (that can be invested in from Ireland) are of this type?
Thanks in advance for any help!!
Following advice on this board I am interested in investing in index tracking ETFs but am confused at the risks and in particular whether an index tracking ETF actually owns shares in all the companies in the index it is tracking.
In other words am I buying shares in something which is effectively a collection of shares in the index and if it fails or some reason will I at least own my 'share' of its shares?
From a Wikipedia definition (not wanting to start a tangent debate on the quality of info on Wikipedia...):
"Some index ETFs invest 100% of their assets proportionately in the securities underlying an index, a manner of investing called "replication." Other index ETFs use "representative sampling," investing 80% to 95% of their assets in the securities of an underlying index and investing the remaining 5% to 20% of their assets in other holdings, such as futures, option and swap contracts, and securities not in the underlying index, that the fund's adviser believes will help the ETF to achieve its investment objective. For index ETFs that invest in indexes with thousands of underlying securities, some index ETFs employ "aggressive sampling" and invest in only a tiny percentage of the underlying securities."
What I think I would like is a 'replication' index tracking ETF fund.
Does anyone know how to identify which index ETFs (that can be invested in from Ireland) are of this type?
Thanks in advance for any help!!