When finance professionals talk about a global ETF, they are usually referring to nearly any kind of exchange traded fund (ETF) with a global scope or focus. An exchange traded fund is a specific kind of market traded instrument that allows flexibility for diversified trades. A global ETF will usually include equities or holdings from countries or regions around the world.
Exchange traded funds get traded over public exchanges and through online or other types of brokerage accounts, much like individual stocks, mutual funds, or other “single ticker” investments. A fund or equity with a single ticker symbol is often traded throughout a market day. Companies that create and manage ETFs give individual investors the ability to “get into and out of” various funds with ease, and to keep their holdings relatively liquid.
There are many different types of exchange traded funds, and many global ETFs can be created in various sectors. Types of common ETFs include stock ETFs, commodity ETFs, currency ETFs, and bond related ETFs that involve corporate or municipal bond holdings. There are also index fund ETFs that track an index, providing a more stable alternative for a single investment.
In practical terms, investors can use ETFs to make a single play on a stock sector, currency, commodity, or other underlying asset. For example, a gold ETF might put together a collection of gold mining stocks, raw gold equities, gold vendor equities, or anything else tied to the value of gold. The gold ETF can mirror the price of gold, or leverage the value of gold for bigger potential gains. The sheer variety of ETFs on the public market allows investors to make plays on the price of gold or most any other commodity in similar ways.
With a global ETF, investors are often taking advantage of potential economic gains in foreign countries. Global ETFs can include “emerging market” assets from companies that are expected to experience rapid growth in future years. These kinds of funds can include investments in the investor’s home country, as well as those of nations far across the world.
Investors who want to begin to be involved in a global ETF should look at tax factors, as well as any fund costs or commissions. The investor should read up on what is included in a ETF, which can be kind of like a “sausage,” where the finished product does not immediately display or identify its contents. Savvy investors will get to know the world of global ETFs before buying and selling these fairly accessible funds.