Investing in Exchange Traded Funds (ETFs)
What a tumultuous couple of years our world has experienced due to COVID-19. From a financial perspective, for many, this has caused stress and concern due to the financial downturn and the state of the stock market, and consequently your superannuation and investments.
As is often the case, many people panic sell, however, clients who have an ongoing relationship with a financial adviser are less likely to take this course of action.
According to Synchronised Business Services, "At the start of April (2020), Investment Trends observed that while Aussie investors are concerned about our country’s rising debt levels, they were still expecting “modest positive returns from the Australian share market”.
You may see this as an opportunity to buy into the stock market or to add to your existing portfolio.
At Sound Life, we suggest Exchange Traded Funds or ETFs as an investment option. Despite COVID-19 we have seen that our clients who have invested in ETF's which offer a diversified portfolio have not been hugely impacted, nor have they panic sold!
An ETF ( Exchanged Traded Fund) is a parcel of direct shares listed on the stock exchange with different filters to match the different purposes of that particular ETF.
An ETF can be bought and sold through a broker or an online share trading platform. This allows for transparency as investors can see real-time trading movements - prices when they are bought or sold.
At Sound Life, we use Sentinel Financial Services as our platform to access and provide our clients with a portfolio of varied ETF’s. There are over 6000 ETF's globally to choose from.
If we use an ETF that tracks the ASX200 as an example, effectively you would be purchasing a diversified range of the top 200 companies traded on the Australian Stock Exchange.
Prior to COVID-19 our Sound Life team identified that ethical and responsible investing was gaining traction. Now, in 2022, we may well see a rise in ESG investments.
As Synchronised Business Services identified in 2020, according to a report by the University of Melbourne, local air and water quality dramatically improved in several areas that had implemented shutdowns. “Emissions have dropped, and worldwide, the demand for coal and oil is lower than it has been in a long time – due in large part to the decline in demand from transport and slowdown in manufacturing,” the report noted.
Having demonstrated that widespread behavioural change is achievable, the push towards change for environmental reasons may well drive investors to focus more closely on companies with good ESG credentials."
If you are considering investing in ETF's, you may wish to have some ESG representation within your suite, particularly if it aligns with your own family values and ethics. At Sound Life, we have provided some options within our recommended allocation of funds.
ETFs - whether ESG companies or not - are a simple to use, low-cost, flexible and transparent mid to long term investment option.
If you'd like to explore this further, we'd love to discuss this with you. Please contact our office on 98411 688 or email us directly.
Sound Life & Superannuation Agencies Pty Ltd trading as Sound Life Financial Services is the Authorised Representatives of Synchron, AFS Licence No. 243313.
The information contained in this article is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.
