Why are there ETFs in my investment mix?

Updated by Laurène

Selma invests in exchange-traded funds (ETFs) because they are low in costs, transparent and have clear goals.
Just a heads-up: you can invest with Selma without getting into these details. ūü§ď¬†

ETF ‚Ästwhat, why?¬†¬†

Based on¬†your investment mix,¬†Selma invests in exchange-traded funds or¬†ETFs. These ETFs have several advantages, which is why we ‚̧ԳŹ ¬†them:

  1. Risk diversification

    With one single ETF you can buy hundreds of stocks or bonds and so quickly spread out your risk. 
  2. Clear goals

    Other than common mutual funds, ETFs focus on tracking a¬†specific index e.g. the SPI¬ģ. SPI¬ģ is Switzerland's major stock index containing over 200 listed Swiss companies. Because ETFs follow indexes, they are more predictable in their actions. This also reduces costs and risks in comparison to actively managed funds.
  3. Low in costs 

    The total costs of ETFs at Selma range from 0,07 to 0,93% TER per year. TER stands for total expense ratio. 

    These costs are significantly lower than the ones of mutual funds that can be as high as 6% (Swiss Fund Data). As ETF’s track a certain index rather than trying to beat it, they can reduce costs like management fees, shareholder accounting, service fees or marketing costs.
  4. Intraday tradability
    It might take several days to buy and sell mutual funds. ETFs are traded on a stock exchange. Because of their higher liquidity, it's much easier to sell and buy them daily.
  5. Transparency

    It's nice to know what you're getting. Compared to mutual funds, ETFs are more clear on what kind of stocks, bonds or commodities are in it. 

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