ETFs
I'm looking at your new CORE ETF Portfolio but I am nervous about buying into ETFs as I have heard that it can be tricky to sell an ETF holding. Is this something thaty investors should worry about?
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Answer
Hi Mark,
ETFs are as liquid as their underlying holdings, some are very liquid and deep whereas others are not. The ETFs we look at are liquid and listed on the ASX. Importantly, market makers participate in the ETF market, where they make a buy and sell price. The volume shown is only a fraction of what can be traded. If you are dealing in big volumes, it pays to talk to a broker who can liaise directly with a market maker to get volume done at a specific price.
It’s also important to understand that at times even if the spread between the bid & offer appears wide the real trading market price is likely to somewhere between the two depending on the underlying composition of the ETF hence, we would edge bids/offers up or down as opposed to simply crossing the spread and hitting the respective bid or offer.
