Exchange traded products (ETPS)

Some are riskier than others

Exchange traded products (ETPs) are investments that can be bought and sold on an open market, such as the ASX. There are lots of new exchange traded products available to retail investors, with varying degrees of risk and complexity.

Most are relatively easy-to-understand, however some can be quite complex. Here we explain the differences between different types of ETPs.

AQUA market

In Australia, exchange traded products are quoted on the ASX listing market or the ASX Quoted Assets (AQUA) market.

Products that are traded on the AQUA market are issued by a third party, giving investors exposure to the underlying assets, without owning those assets. The issuer does not have control over the assets it's tracking, but the value of the fund is linked to the performance of the underlying assets.

The AQUA market offers trading at net asset value (NAV) in products such as:

  • ETFs (including synthetic ETFs)
  • Structured products
  • Exchange traded managed funds (including exchange traded hedge funds)

Products quoted on the AQUA market must contain labels such as 'synthetic' or 'collateralised' in their title, where appropriate.

Similar products listed on the ASX listing market may not comply with the same AQUA market listing requirements.

Types of exchange traded products

Here are the different types of exchange traded products:

  • Exchange traded funds (ETFs) - A type of managed fund that can be a low-cost way to get investment returns similar to a share index or another underlying asset. 
  • Synthetic ETFs - A type of managed investment that can be bought or sold like shares. It uses complex products like derivatives to achieve investment objectives such as replicating returns on an index.
  • Other exchange traded products - Other products traded on the ASX AQUA market that can be riskier than ETFs. They include structured products, exchange traded managed funds and exchange traded hedge funds.

Before investing in these products, read the disclosure documents for further information about the specific features of each product, and consider getting professional financial advice.

You can also complete one of the ASX's free online courses on exchange traded funds (ETFs) and exchange traded products (ETPs)

There are many different types of exchange traded products, varying in risk and complexity. Seek financial advice if you are not sure if this type of investment is right for you.


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Last updated: 09 Sep 2016