In this article, we will examine two tools that are very similar and often serve as alternatives to one another, yet have several key distinctions.
Both tools are referred to as ETFs and mutual funds (ПИФ). What exactly is an ETF?
An ETF, or Exchange-Traded Fund, is a type of security. When investing through an ETF, investors acquire shares of the fund itself rather than purchasing stocks or bonds of a specific company.
This structure minimizes the risk of losing the entire investment and potentially increases returns.
For instance, if you invest in an index ETF or bond funds, you will typically earn a return on these instruments even if individual stock prices fluctuate. However, when choosing between an ETF and a mutual fund, it's essential to review the reliability rating, dividend history, profit data from previous years, and the amounts you can expect to see.
For example, if an ETF has no profit information but holds a AAAA rating, it would be advisable to invest in that particular fund.
In addition to ETFs, there are mutual funds (ПИФ).
A mutual fund is an investment fund that purchases shares of other funds (ETFs), thereby acquiring their value. Consequently, the more shares of other funds a mutual fund purchases, the higher its potential returns will be. In this case, you are not investing in an ETF directly but rather acquiring shares that already incorporate the value of the ETFs.
Purchasing shares of a mutual fund can be more advantageous, as you end up acquiring a larger quantity of ETFs compared to investing directly in an ETF.
You will not lose money if a specific company goes bankrupt. However, risks still exist, as you will be purchasing shares yourself and may not be able to oversee this process fully. Presently, there is a vast number of funds that purchase ETF shares both in Russia and abroad.
Therefore, you can review the rankings of mutual funds, select the fund that best fits your needs, and purchase shares accordingly.
