ETF or “Tracker” stands for Exchange-Traded Fund. It’s a financial instrument which typically aims to replicate the performance of an index or basket of assets.
These indices are usually made up of tens or even thousands of equities and/or bonds and are generally based on countries, regions, themes, etc. This enables you to diversify and spread out your investments across different equities and bonds, without having to monitor each one in detail.
"}},{"componentType":"sectionTitle","title":"A simple way to understand ETFs"},{"alignedImage":{"position":"right","extension":"svg","original":"https://assets.ing.com/asset/333597f3-22fc-4d02-9d8a-a4bedfff80e7/Basket-with-lots-of-shopping_Spot.svg","transformBaseUrl":"https://assets.ing.com/transform/333597f3-22fc-4d02-9d8a-a4bedfff80e7/Basket-with-lots-of-shopping_Spot"},"componentType":"paragraph","richBody":{"value":"An ETF can be understood as a basket of investments:
Instead of choosing each one yourself, an ETF brings multiple assets together in a single instrument. You buy one ETF…
…and instantly invest in many assets at once.
Picking individual stocks is like building your own playlist, one song at a time.
An ETF is like pressing “Play” on a ready-made playlist.
Simple, efficient, and easy to start.
"},"title":"Imagine this…"},{"componentType":"sectionTitle","title":"How do ETFs work?"},{"componentType":"paragraph","richBody":{"value":"ETFs are traded on an exchange, in a similar way to shares.
That means:
One investment can provide exposure to multiple underlying assets.
"}},{"componentType":"sectionTitle","title":"Why do some people choose ETFs?"},{"componentType":"paragraph","richBody":{"value":"ETFs are often used by investors for several characteristics, including:
One ETF can include hundreds of companies.
This helps reduce the impact of any single one.
Take into account that diversification does not protect against market-wide losses.
No need to pick individual stocks.
You invest in a whole market, sector, or theme.
Some ETFs may involve lower ongoing costs than certain actively managed funds, depending on the product.
Just like a stock, you can buy or sell during market opening hours.
"}},{"componentType":"sectionTitle","title":"What are the risks to keep in mind?"},{"componentType":"paragraph","richBody":{"value":"Like all investments, ETFs also involve risks. Understanding them is key before investing:
The value of an ETF can go up and down depending on market conditions. You may get back less than you invested.
In extreme cases (e.g. strong market downturns), you could lose part or all of your invested capital.
If the ETF includes assets in foreign currencies, exchange rate fluctuations may impact returns.
An ETF may not perfectly replicate the performance of its underlying index.
Some ETFs may be harder to sell quickly under certain market conditions.
This means ETFs can be easier to access, but they are not risk-free.
"}},{"componentType":"sectionTitle","title":"Why ETFs can help you get started"},{"alignedImage":{"position":"right","extension":"svg","original":"https://assets.ing.com/asset/f86e0396-4024-48a9-b5d6-b2cec7346a2b/Woman-Question-spot.svg","transformBaseUrl":"https://assets.ing.com/transform/f86e0396-4024-48a9-b5d6-b2cec7346a2b/Woman-Question-spot"},"componentType":"paragraph","richBody":{"value":"Many people hesitate to invest because it feels:
ETFs can help simplify access to markets, but they should always be considered as part of a broader investment approach, aligned with your objectives, time horizon, and risk tolerance.
"}},{"componentType":"sectionTitle","title":"A different way to look at investing"},{"alignedImage":{"position":"left","extension":"svg","original":"https://assets.ing.com/asset/0187ddfe-b673-4ac5-b8a9-4d2b6dbeb659/Woman-telescope-scene.svg","transformBaseUrl":"https://assets.ing.com/transform/0187ddfe-b673-4ac5-b8a9-4d2b6dbeb659/Woman-telescope-scene"},"componentType":"paragraph","richBody":{"value":"Instead of asking:
“Which stock should I pick?”
You can ask:
“Which market or theme do I want exposure to?”
While keeping in mind that markets can fluctuate over time.
"}},{"componentType":"sectionTitle","title":"In a nutshell"},{"componentType":"paragraph","richBody":{"value":"ETFs or trackers are:
ETFs can be a starting point, provided you understand how they work and the risks involved.
"}},{"componentType":"sectionTitle","title":"FAQ"},{"accordionList":[{"richBody":{"value":"For all the costs and taxes associated with tracker investments, we refer you to:
"},"textLinks":[{"text":"Overview taxation per product (PDF)","url":"https://assets.ing.com/m/dc241d6bf892e242/TaxationPerProductEN.pdf"}],"title":"What are the fees and tax"},{"richBody":{"value":"A synthetic ETF is designed to replicate the returns of a selected index, just like any other ETF. But instead of purchasing the underlying assets, it holds a basket of securities that may be unrelated to the index they track. The performance of this basket is then swapped against the performance of the index via a swap contract with a counterparty, in most cases an investment bank.
Both replication methods have their advantages and disadvantages; for example, a physical replication is more transparent than a synthetic one, while a synthetic replicated ETF often has lower management costs than a physical tracker.
"},"title":"What is the difference between physical and synthetical replication?"},{"richBody":{"value":"The total expense ratio (TER) is a measure of the total costs associated with managing and operating an investment fund, such as an ETF. These costs consist primarily of management fees and additional expenses, such as trading fees, legal fees, and other operational expenses.
"},"title":"What is the Total Expense Ratio (TER)?"},{"richBody":{"value":"There are two options when it comes to distribution policy:
An accumulating ETF is a type of ETF in which any dividends that are paid out by its underlying holdings within the ETF are reinvested into the fund by the fund manager at no extra expense. As a result, the value of the ETF increases when a dividend is paid out.
In contrast to accumulating ETFs, distributing ETFs pay out dividends to investors. This means that you receive cash flow and can use the money received however you choose.
Keep in mind that different tax rules apply to both types.
"},"title":"What is a distribution policy?"},{"richBody":{"value":"You can easily buy or sell ETF’s via the ING Banking app or Home Bank.
"},"title":"How can I buy or sell EFT's?"},{"richBody":{"value":"