Deep, deep dive
- Step 1: Figure out what ETFs work best for your risk appetite
- Step 2: Look at the types of investments (or the index) that the ETF tracks
- Step 3: Look at past performance: what returns have the ETF produced?
- Step 4: Look at past performance: how well has the ETF tracked the underlying index? (the closer the difference is to zero, the better!)
- Step 5: Be careful about fees
- Step 6 (Optional): Once you’ve selected a few options based on steps 1-5, check that the NAV of each unit is close to the market price
Step 6 (Optional): Once you’ve selected a few options based on steps 1-5, check that the NAV of each unit is close to the market price
The current Net Asset Value (NAV) of each ETF simply tells you the value of the assets in a particular ETF. It does NOT tell you which fund is performing better. You should, however, check to see if the NAV of each unit is close to the market price of the unit. This is especially important in Malaysia as there might be liquidity issues when you trade ETFs (essentially if not many people are trading ETFs, the share price might not accurately reflect the NAV at the time). So, make sure to be aware of those two figures and compare them to check the share price being quoted is an accurate reflection of the ETF.
Check the ETF price:
Checking the price of each ETF can be done on the Bursa Malaysia website (www.bursamalaysia.com). In the “get quote” search bar, type in the respective ETF’s code (for example 0823EA for the CIMB FTSE China 50 which we’ve listed in the table above). The latest share price for the ETF will pop up.
Check the NAV of the ETF:
You can check the NAV of the ETF by going to the fund manager’s website. It’s usually listed under a fund values section in the respective ETFs homepages. Alternatively, you can go to Bursa, click on the specific ETF you are interested in, and look at the daily NAV value.
Finally, how do you buy ETFs if you’ve never invested in the stock exchange before?
If you’ve never invested in the stock exchange before (click here to read about buying stocks), then you’ll need to open an account
Since ETFs are bought and sold on an exchange the same way shares are, ETFs are priced and traded throughout the day.
Buying ETFs can be slightly more difficult compared to buying unit trusts.
Two ways to buy ETFs
- Buy via your stock broker or through a trading account with your local bank
- Buy via an online trading account (to learn more, click here)