ETF Considerations

Considerations of using ETFs

Before you invest there are several elements you need to take into consideration to make sure that the investment meets your expectations.  Costs, dividend and tax are a few considerations. Additionally you need to bear objectives, strategy and risks in mind before you decide to invest.

Risk considerations

iShares ETFs are a simple and cost-effective way to gain exposure to different markets. The aim of iShares ETFs is to offer investors returns based on the performance of the relevant underlying index. Using ETFs as building blocks, you can spread the risk of individual companies, entire sectors or even whole countries suffering losses. However, they will not mitigate all market risk, and you can still lose some, or all of your investment should the value of the underlying shares decrease. Note that the risks you expose yourself to are different per fund. For example investing in an ETF with an international focus might expose you to currency risk and an emerging markets ETF is likely to expose you to less liquid and less efficient securities markets. Looking at fixed income ETFs, you have to bear in mind that the price of bonds will generally be affected by changing interest rates and credit spread. The specific risks for each ETF be found in the prospectuses.

As ETFs are not risk free, before investing we recommend you:

• Assess your investment objectives.
• Select investments to match these or consult an adviser to help you do this.
• Spend time understanding your investment choices before investing.