What ASIC’s review of ETFs means

Alex Burke,  Senior Writer,  No More Practice Education

ETFs are hot property for retail investors and SMSFs, and for good reason – they’re cheap, provide easy access to diversification and can be traded like any other stock. But ASIC’s recent review of the sector has identified some key concerns.

ASIC said the rapid growth of the ETF market prompted the regulator to take a closer look at how it functions. It’s not difficult to see why – according to 2018 Stockspot research, there’s now about $36.2 billion invested in ETFs, which is 33% more than last year.

Using ETFs, you can now invest your client in European stocks, bonds, emerging markets, low volatility companies and even the price of wheat – the possibilities are virtually endless. But before jumping aboard the ETF train, it’s important to consider the potential risks:

The key factor affecting returns

ASIC’s primary concern was the bid/offer spread, or the difference between the highest price a buyer is

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