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Migration of Exchange Traded Fund (ETF) products

Discussion in 'Exchange Traded Funds (ETF)' started by Simon Hampel, 20th May, 2008.

  1. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    I saw this on the CommSec website: News

    I was wondering what the net effect for investors is? Does this change the way we invest in ETFs?

     
  2. austing

    austing Well-Known Member

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    Hi Sim,

    I was just about to start investing substantally in ETFs. Personally putting them in with warrants has turned me off them. I don't ever trade warrants and derivitives which I think you have to completed a separate application for stating that you understand the risks involved. So I assume now that if you want to trade/invest in ETFs the warrant application will have to be completed.

    I assume they may also put LICs into this group at a later date? I do own various LICs and would be very unhappy with such a change.

    Anyhow this in my mind is really stupid. Very conservative investors are put off anything that is lumped in with derivitives area. Hence new investors may avoid ETFs more so after this change.

    Add to this that there is an upcoming major tax review don't be surprised if LICs lose their CGT discount due to the fact that they use a company structure. This happened after the Ralph Review and LIC share prices plummeted. However Costella stepped in to reverse the change due to pressure from the major LIC lobby groups. The ATO was far from happy as it created unnecessary complexity for a discrete group of companies. One can't count on Labour stepping in like Costella did if LICs were to once again treated like all other companies in the future.

    So given these issues I'm tempted to go back to investing directly in individual stocks. Major banks and other blue chip dividend paying stocks form a major holding of the large LICs anyhow.

    Some more info on the ETF migration is found here:

    https://www.asxonline.com/intradoc-...vices/documents/communications/asx_020873.pdf

    Cheers - Gordon
     
    Last edited by a moderator: 21st May, 2008
  3. Tim

    Tim Well-Known Member

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    Sim,

    my understanding of this(after contacting ASX and StreetTracks) is that the move is more related to the computing platform and processing rather than any change in the nature of the security itself.

    Tim
     
  4. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    I'm more concerned (like Gordon), with how it affects the process by which we invest in ETFs - has the process for investing changed (in concept or in the details) with this move?
     
  5. DaveA

    DaveA Well-Known Member

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    what about brokerage charges...

    arnt options etc usually more expensive to trade than normal stocks.... so may make the entry fees into this a bit higher..
     
  6. ashwright

    ashwright Well-Known Member

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    It is still a three letter code. I would have thought it would have looked the same from a broker order point of view?