How do ETPs work?
In contrast to actively managed funds, ETPs try to map a benchmark, but do not try to beat it. Due to this passive character, they remain running costs for investors low. Especially with niche products, there are often significant price differences between actively managed funds and ETPs on a comparable index.
As a private investor, ETPs give you the opportunity to simply invest in classes otherwise reserved for institutional investors, such as in commodities and currencies. But there are also ETPs that are currency-hedged, eliminating currency risk.
A good diversification helps you to keep your own risk low, because the following applies: the broader you set up your portfolio, the less dependent you are on the fluctuations of individual positions. Broad ETP offers you a simple and flexible way to access an entire index with just one transaction.
Investors who have already gained experience on the trading floor can use the Use of short and Leverage products achieve good returns even in volatile or falling markets. ETPs give you the option to add such products to your portfolio. In contrast to traditional short and leveraged positions, exchange-traded products do not involve borrowing, but use derivatives.
Tip: You can also save money with ETFs. We have examined the best funds for you.