Australia, it’s time to refresh your Revolut App because Exchange-traded funds (ETFs) are now live. And to celebrate, we’re offering unlimited commission-free trades until the end of 2022, see our promotional terms for more details. 🎉
Whether you're a first time investor or an experienced trader, here are some tips to help you get to know ETFs.
What’s an ETF? 🤔
All these fancy investment terms can get confusing, so let’s break it down…
An ETF is a collection of multiple stocks bundled together in a single fund that trades on major stock exchanges. ETFs often consist of thousands of stocks grouped by theme, industry, or country. For example, the ‘Global X Autonomous And Electric Vehicles’ ETF contains a variety of electric vehicle shares, including Tesla.
Like a normal stock, such as Tesla, you can buy and sell ETFs. If you invest in an ETF and its price increases then you’ll make money. But, you can also lose money if your ETF’s value drops. These price shifts can happen throughout the day, which you can track in real-time through your Revolut app.
Why invest in ETFs? 🧐
ETFs are generally considered to be an easy, efficient way to diversify your investment portfolio. That’s because your investment is split up across hundreds, or even thousands, of stocks, instead all going toward one company’s stock.
Diversification can lower your portfolio’s overall risk because different stocks within the basket may do well at different times. But remember, ETFs do not always guarantee diversification. The Gold Shares SPDR ETF, for example, exclusively tracks the price of the gold market, so your investment would be concentrated to a single commodity.
Are there any fees? 💰
There are usually two types of costs associated with ETF trading:
- Trading commissions – brokers and investment platforms charge these fees when customers place a trade. You can find Revolut’s fee schedule here. And don’t forget, we’re offering unlimited commission-free trades in Australia until the end of 2022.
- Ongoing charges – these fees, which are sometimes referred to as the ‘total expense ratio’, are charged by the fund company or ETF provider (e.g. iShares or Vanguard). For example, ongoing charges for investing in the SPDR S&P 500 ETF (SPY) are ~0.095% per year. Learn more about these fees on each fund’s prospectus page, which you can find on the asset detail page in the Revolut app.
Which ETFs are hot at Revolut? 🔥
As of August 2022, Vanguard Total Stock Market Index Fund (VTI) is the number one traded ETF on the Revolut App.* The VTI, which includes companies like Apple and Amazon, seeks to track the performance of a benchmark index (CRSP US Total Market Index) that measures the investment return of the overall stock market.
*Top traded ETFs by Revolut customers globally, data is ranked by the number of orders placed in 2022 and is accurate at the date of publishing the article.
How do I get started? 🏁
You can make an ETF trade starting at just USD$1, it’s easy:
- Check you’ve got the latest version of the app
- Head to Home > Hub > Stocks
- Sign up for ‘Stock Trading’
- Transfer funds into your USD investment pocket
- Tap ‘Invest’ and choose an ETF that suits you
And remember, every investment has risks, including ETFs. So, always read the relevant product disclosures before making any investment decisions.
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