Exchange Traded Funds - ETF

Interest in exchange traded funds (ETF) among institutional and private investors has grown enormously in recent years. An ETF is an investment product representing a basket of securities that track a particular index such as the Standard & Poor's 500, DAX30 or CAC40 Index. Whereas a traditional index fund can only be purchased or redeemed at a price close to its net asset value (NAV) usually just once a day, an ETF is traded on a stock exchange throughout the day like shares. Essentially, ETFs are open-end index funds that are listed and traded on exchanges, like stocks.

 

ETFs offer diversification in the equity, fixed income, and even commodities markets, low cost, tax efficiency, continuous pricing, and low premiums/discounts from the NAV of the underlying assets. .

 

 At September 2009, the Luxembourg ETF industry had 220 ETFs managed by nine providers and listed on twelve exchanges with assets of € 32.5 billion

 

 

Many ETFs in Luxembourg have been set up under Part I of the 2002 Law or as a Part II fund. Funds established under Part I of the 2002 Law comply with the UCITS Directive and hence benefit from a European passport, according to which they are freely marketable throughout the EU, provided local marketing requirements are met.