Summary
What exactly is an ETF?
An ETF is a fund, traded on an exchange, that tracks the performance of a chosen index by investing in a range of assets intended to replicate the index1 holdings.
ETFs can be traded as easily as stocks on a regulated market exchange, but they have the additional advantage of providing diversification2 across a variety of markets at low costs.
What do ETFs invest in?
You can use ETFs to invest your money in a huge range of areas, including:
- Equities and bonds markets, replicating very well-known global stock indices, such as Euro Stoxx 50 and S&P 500, or more specific indices in different currencies
- Specific regions, such as the US, Asia and emerging markets or countries, like China, India and the US
- Sectors of interest, such as energy, technology and healthcare and other long-term trends such as energy transition and smart cities
- ESG (environment, social, governance) and climate strategies, if you are looking to make a difference for the world with your responsible investments.
What are the advantages of ETF investing?
- Cost-efficient – ETFs generally have lower costs than actively managed funds
- Transparency – ETFs track publicly disclosed indices with transparent, rules-based methodologies. Additionally, our ETFs are UCITS compliant3, which means strong disclosure constraints and high level of transparency for investors.
- Accessibility – shares in ETFs can be easily bought and sold on an exchange
- Diversification – ETFs offer a huge variety of investment opportunities
What about the risks?
- Investment risk – as with all investments, ETFs may fall in value as well as go up. In addition to the risk of the loss of the invested capital, ETF investors also face the risk associated with the markets to which the ETF is exposed as well as the one associated with the volatility of the securities/currencies composing the underlying index.
- Performance – ETFs are designed to match the performance of a chosen index, not to outperform it, and the fund investment objective may only be partially reached.
How do I choose an ETF?
First, decide how much risk you want to take with your money. A guide to the risk level of every ETF is available on the respective information pages.
Then choose the area of the market or market theme you would like to invest in.
Amundi ETF is already the largest European ETF provider4, offering investors a broad range of choice across asset classes, geographies, sectors and themes.
We’re confident that whatever area of the market you want to invest in, you will find a cost-efficient, easy-to-access ETF to suit you among the 300+ ETFs5 that we have created over the years.
Find the ETF that suits you on our dedicated ETF website: https://www.amundietf.com/
1 An index represents a basket of stocks selected as representative of a particular market or business sector.
2 Diversification does not guarantee a profit or protect against a loss.
3 UCITS: “Undertakings for Collective Investment in Transferable Securities” – European Directive 2014/91/EU
4 Source: ETFGI, April 2024, Amundi ETF is the leading European headquartered ETF provider within the European market.
5 Source: Amundi ETF, as of end-March 2024.
Unless otherwise stated, all information contained in this document is from Amundi Asset Management S.A.S. and is as of 10 June 2024. Diversification does not guarantee a profit or protect against a loss. The views expressed regarding market and economic trends are those of the author and not necessarily Amundi Asset Management S.A.S. and are subject to change at any time based on market and other conditions, and there can be no assurance that countries, markets or sectors will perform as expected. These views should not be relied upon as investment advice, a security recommendation, or as an indication of trading for any Amundi product. This material does not constitute an offer or solicitation to buy or sell any security, fund units or services. Investment involves risks, including market, political, liquidity and currency risks. Past performance is not a guarantee or indicative of future results.
Date of first use: 1 July 2024
Doc ID 3633887
Marketing Communication
It is important for potential investors to evaluate the risks described below and in the fund’s Key Information Document (‘KID’) or Key Investor Information Document (“KIID”) for UK investors and prospectus available on our websites www.amundietf.com.
CAPITAL AT RISK - ETFs are tracking instruments. Their risk profile is similar to a direct investment in the underlying index. Investors’ capital is fully at risk and investors may not get back the amount originally invested.
UNDERLYING RISK - The underlying index of an ETF may be complex and volatile. For example, ETFs exposed to Emerging Markets carry a greater risk of potential loss than investment in Developed Markets as they are exposed to a wide range of unpredictable Emerging Market risks.
REPLICATION RISK - The fund’s objectives might not be reached due to unexpected events on the underlying markets which will impact the index calculation and the efficient fund replication.
COUNTERPARTY RISK - Investors are exposed to risks resulting from the use of an OTC swap (over-the-counter) or securities lending with the respective counterparty(-ies). Counterparty(-ies) are credit institution(s) whose name(s) can be found on the fund’s website amundietf.com or lyxoretf.com. In line with the UCITS guidelines, the exposure to the counterparty cannot exceed 10% of the total assets of the fund.
CURRENCY RISK – An ETF may be exposed to currency risk if the ETF is denominated in a currency different to that of the underlying index securities it is tracking. This means that exchange rate fluctuations could have a negative or positive effect on returns.
LIQUIDITY RISK – There is a risk associated with the markets to which the ETF is exposed. The price and the value of investments are linked to the liquidity risk of the underlying index components. Investments can go up or down. In addition, on the secondary market liquidity is provided by registered market makers on the respective stock exchange where the ETF is listed. On exchange, liquidity may be limited as a result of a suspension in the underlying market represented by the underlying index tracked by the ETF; a failure in the systems of one of the relevant stock exchanges, or other market-maker systems; or an abnormal trading situation or event.
VOLATILITY RISK – The ETF is exposed to changes in the volatility patterns of the underlying index relevant markets. The ETF value can change rapidly and unpredictably, and potentially move in a large magnitude, up or down.
CONCENTRATION RISK – Thematic ETFs select stocks or bonds for their portfolio from the original benchmark index. Where selection rules are extensive, it can lead to a more concentrated portfolio where risk is spread over fewer stocks than the original benchmark.