Question: Would you mind explaining a little about exchange traded funds (ETFs). I notice they’re not cheap to invest in. Do they pay a dividend or do they simply represent (hopefully) a gain in the value of a stock?
Answer (By Paul Rickard): Most ETFs passively track an index, such as the S&P/ASX 200. Because the ETF invests in the underlying shares that make up the index, it receives dividends and then passes on the income as a distribution to its unit holders. Typically, distributions from the ETF are paid quarterly.
Most of the ETF providers, such as iShares or Vanguard, have detailed information explaining how ETFs operate. See www.ishares.com.au or www.vanguardinvestments.com.au
Question: I enjoyed your recent conference and also Charlie Aitken’s recent article on opportunities in Asia. What do you see as the best way for a small investor to access this opportunity? If it is through an ETF, can you run through some of the key ones for Asia? And can you explain the difference between Platinum Asia, which gives a healthy dividend, and the Platinum Asia Fund and Platinum International Fund, which are listed but don’t have a dividend reported on the ASX web site.
Answer (By Paul Rickard): The Platinum Asia Fund (ASX Code PAAX) is a feeder fund for Platinum’s unlisted Platinum Asia Fund. The former only invests in the unlisted fund. It pays annual distributions – the first distribution was paid recently for the period ending 30 June 18.
Vanguard, iShares and Betashares offer exchange traded funds that track various Asian indices (see www.ishares.com.au www.vanguardinvestments.com.au , www.betashares.com.au )
Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regard to your circumstances.
