While most common Exchange-Traded Funds (ETFs) are comprised of stocks, The Tolea ETF is actually a bond ETF. A bond ETF is a good option if you are in search of an investment offering you instant diversification of assets while providing you with the safety and lower risks bonds are known for.
An Exchange Traded Fund (ETF) is a collection of assets such as bonds into a single asset that is traded on an exchange throughout the day. Here are a few reasons why you should consider putting your money into the Tolea ETFs:
An ETF can offer you the chance to access multiple assets of various risks and returns for the price of a single asset, instantly diversifying your portfolio. A bond ETF can be comprised of bonds across maturities and interest rates. This will help to reduce balance your overall level of risk in your investment portfolio.
2. Passive investment
A bond ETF can offer you a largely hands-off investment experience by automatically reinvesting the interest you earn and replacing the matured bonds in the fund. To make the most out of your investment, you can hold onto your shares in the ETF and sell them when their value has increased.
3. Less risk
Investing in a bond ETF offers you relative safety because you are exposed to less risk than other ETF's such as one made up of stocks which are inherently more risky. Bonds, especially government bonds, are one of the lowest risk investment options because they are fully backed by Central banks which are historically unlikely to default on their debt obligations. Therefore, your initial investment and interest earned are guaranteed.
4. Cost efficient
Most ETFs have lower administrative and operation costs (Total Expense Ratios) compared with other investment options. As an investor you are receiving a higher return on your investment because less of your money is going towards the payment of costs. You can also access multiple bonds for the price of one bond ETF investment, saving yourself from the extra transaction fees that would be involved in purchasing the bonds individually.
ETFs are required to provide daily updates about their holdings including underlying assets, returns and asset value. This means that throughout your time as an ETF investor, you should have access to information about your investment at your fingertips.