Invesco FTSE All-World UCITS ETF

A strategy that aims to reduce risk by combining different types of investments.

The stocks and shares of publicly traded companies.

The Invesco FTSE All-World UCITS ETF invests in the physical securities of the FTSE All-World Index. This is known as physical replication. 

A physical ETF tracks the index by buying and holding a portfolio of securities that matches the index’s composition. A physical ETF can replicate an index through sampling or full replication.

The ETF holds a sample of securities from the index that are expected to perform similarly to the actual index, known as sampling. The objective of sampling is to replicate the index performance as closely as possible while reducing the costs that would normally be incurred when holding all the securities in the index (full replication).

Including emerging markets can give you exposure to companies that stand to benefit from high growth opportunities. With developed markets your exposure is in more established companies, which tend to have steadier growth patterns. By combining, you’re investing in the best of both worlds.  However, there is a higher degree of risk than for an ETF that invests only in developed markets.

Accumulating – a fund reinvests income received back into the fund, no income is distributed to investors.

Income – Income generated from investments made by the fund is paid out to investors on a pre-determined basis, for example quarterly.

An investor can look to reduce the impact of currency fluctuations on investment performance by investing in currency hedged versions of a particular fund. 

An Exchange Traded Fund (ETF) is a pooled investment vehicle with shares that can be bought and sold throughout the day on the stock exchange, in the same way that ordinary stocks and shares are traded.

Undertakings for Collective Investment in Transferable Securities, a set of European Union Directives. The directives provide a regulatory framework under which funds authorised in one EU state can be marketed across the EU. 

Similarities

Exposure offered? – Both offer diversified exposure to main asset classes.

Regulated product? – Yes, typically UCITS funds.
 

Differences
 

How do you buy them? – ETFs can be bought via a stockbroker or trading platform, whereas mutual funds must be bought directly from the fund management company.

Where can you buy them? – ETFs can be bought at any time during the day, when the exchange is open, whereas mutual funds are once per day.

How often are they priced? – – ETFs are priced throughout the day, compared to mutual funds which are priced once per day.

How transparent are they? – ETFs are highly transparent, with holdings posted on a provider’s website daily, whereas it varies with mutual funds.

Benefits

Low cost of ownership – ETFs tend to be cheaper than most other funds.

Ease of trading – ETFs can be traded on a stock exchange at any time, when open. May be an attractive feature for investors who are looking for more flexibility around when to buy and sell an investment.

Transparency – ETFs are very transparent and usually disclose their full list of holdings daily on the ETF provider’s website.

Risks

Tracking differences: ETFs may not track an index perfectly. The difference between the fund return and the index return is called ‘tracking difference’.

Capital risk: Like any investment product, the value of an ETF may go down as well as up, and you may not get back the amount invested.