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Equities etc. > [
ETF >>  About ETF Background
for Introduction of ETFs Merits
for Individual Investors When Individual Investor Trades ETFs Outline List of ETFs ] |
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| 1 | Compared with Stocks |
| No Need for Selecting Stocks Purchasing Nikkei 225 ETFs, for instance, has the same effect of purchasing underlying 225 Japanese stocks that has high turnover ratio and volatility. Therefore, even an investor who is reluctant to buy individual stocks can easily purchase the ETFs, as long as the investor thinks the current stock price average is relatively cheap. |
ETFs will not be Worth "0" Yen Bankruptcy risk is extremely low, because of diversified investment. For instance, even if a company of underlying stock goes bankrupt, there is no serious influence on the overall stock price index because another stock is incorporated into the index, instead. |
| 2 | Compared with Ordinary Index Funds |
| ETFs Can be Traded During the
Daytime As for ordinary index funds, investors can trade them only at a single price (base price), even if the index fluctuates steeply. On the contrary, as for ETFs, investors can trade them at various prices on a timely basis, considering the fluctuations of stock price index. |
Lower Cost As it would be rare that an investment trust management company directly trades underlying stocks, investors can cut the cost related to the investment trust management company. As a result of that, fees (including trust commissions), which investors owe, can be at lower level. |
Advantageous Taxation Taxes, such as capital gain tax, are imposed on beneficiary certificates of ETFs in the same way as stocks. So an investor can select advantageous taxes out of them considering their circumstances. [Reference: Taxes imposed on ETFs] |
Margin Transactions is available ETFs is available for margin transactions in the same way as ordinary stocks. The margin transactions ensure the functions of smooth price formation and increase the liquidity of the ETFs market. |
