Site icon Fictionistic

Drawbacks of ETFs

ETFs

ETFs

ETFs are taxed like stocks, so they do not have the tax advantage of investment funds, which allows transfers between different funds without having to pay capital gains.

Here also take into account the costs charged by broker platforms when making transactions. 

ETFs are complicated products and you need the investor to be well informed about their operation before starting to invest in them. For example, it is necessary to know that ETFs are not settled the next day as the funds can be, but within two days. That means that if you liquidate an ETF to invest the capital in a fund the next day, you could not do it. 

On the other hand, ETFs have two prices, one for an offer and one for demand. If the spread is large, it can be said that the ETF or the market in which it is trading is not very liquid, so it will be more difficult for the investor to sell at a target price. Therefore, it is important to train well before investing. 

Exit mobile version