What is ETF？

An exchange-traded fund (ETF) is an open-end investment fund.。ETFs are listed on an exchange and stocks are traded all day, just like ordinary stocks, it combines the characteristics of index funds and stocks, and its liquidity reflects the liquidity of the underlying basket of stocks。

There are three types of ETFs, namely equity ETFs, leveraged and inverse ETFs, and fixed income and commodity ETFs。The fee range of Malaysia ETF is 0 per year.2-0.8%, relatively low。

How ETFs Work？

When a fund provider decides to create a fund and sell shares to investors, traders can buy ETFs, which are designed to track the performance of the underlying asset。

When investors buy an ETF from a particular fund, they become shareholders, owning part of the ETF but not the underlying assets of the fund。However, ETF investors may receive a one-time dividend or reinvestment in index components that may yield a return different from the underlying assets。

How ETF Prices Are Determined？

The price of an ETF is determined by two factors。While the underlying value of an asset (also known as NAV) has a significant impact on the price of an ETF, there is also a market price for ETFs that investors should understand。

The market price of an ETF is the price at which investors buy and sell ETFs on an exchange.。At any given time, the price may differ from the ETF's NAV, depending on the ETF's supply and demand。

On the other hand, the net asset value of an ETF represents the value of all securities held by the ETF (e.g., stocks or bonds and cash) less any liabilities (e.g., total expense ratio), divided by the number of shares issued。

Types of ETFs

1.Equity ETF

Stocks and equity are the same, both represent ownership of an entity (company) and are traded on a stock exchange.。Equity is defined as the ownership of assets after the debt is paid off.。

2.Leveraged and Inverse ETFs

Leveraged ETFs and inverse ETFs are two types of ETF products that are designed to generate a target multiple return on the underlying index on a daily basis。

In the financial sector, "leverage" is a technique that magnifies investors' profits or losses.。Thus, a leveraged ETF implies that the fund is designed to provide an amplified return on the daily performance of the index。

And the word "reverse" means "opposite."。Thus, in this case, an inverse ETF refers to a fund designed to provide a return or performance that is opposite to the daily performance of the index。

3.Fixed Income and Commodity ETFs

Fixed income ETFs are also known as bond funds.。

Fixed income ETFs invest primarily in corporate, government, municipal, international and global debt.。

A commodity ETF is an exchange-traded fund that invests in a variety of physical commodities, including natural resources, agricultural products, and precious metals.。Commodity ETFs either focus on a single commodity or on investing in futures contracts。

Best broker to trade ETFs in Malaysia:

Tickmill: Regulated by FCA IG: Tradable Over 16,000 Stocks HFM (HF Markets): Trading Leveraged Products Is Risky

As a new trader, you need to choose the right online trading platform or broker, a good broker will help your investment journey。

How to buy an ETF in Malaysia？

Since ETF trading is the same as stocks, you can buy or sell at any time during the trading day。But you first need to open a trading account with a robo-advisor, broker or Malaysia Exchange, and you should also have a Demat account with ETF units。

A Demat account (short for a non-physical account) is an account that holds financial securities such as stocks in electronic form.。

Then you need to provide the following files:

Proof of Identity: ID Card (IC), Passport, Driver's License Proof of Address: Passport, Utility Bill Bank Account Details: Bank Account Statement

After completing these procedures, you can buy and sell ETFs through the account。

Where to buy an ETF in Malaysia？

In Malaysia, investors can buy and sell ETFs in a variety of ways。You can choose to buy and sell through Bursa Malaysia or an international broker。

Malaysia Exchange

Since ETFs can be traded on the stock market, you can easily open a trading account on the Malaysia Stock Exchange to find all Malaysian ETFs available for you to buy and sell。

International Broker Platform

You can also register with an international broker for a more comprehensive ETF purchase list。Buying U.S. stocks through local brokers can cost as little as $25 per trade。You can also buy through international brokers such as TD Ameritrade, Saxo and Interactive Brokers。Some international brokers do not charge commissions when buying US ETFs。

How to Buy a Foreign ETF in Malaysia？

Investing in foreign listed stocks can diversify assets or currencies, and you can invest in international ETFs in two ways。

1.Using foreign brokers

Open a trading account in the country of origin of the corresponding shares。For example, opening a trading account in the United States and buying shares on the New York Stock Exchange (NYSE) can minimize transaction costs。

2.Foreign Stock Trading Using Local Brokers

Opening global trading accounts in Malaysia related to local investment banks and securities firms to purchase foreign shares。While your money is invested overseas, the asset location is local。

List of Malaysia ETFs

ETF Name	Asset Type	Underlying Index	Fund Introduction
ABF Malaysia Bond Index Fund	Fixed Income ETF	Markit iBoxx ® ABF Malaysia Boyd Index	Tracks the Markit iBoxx ® ABF Malaysia Bond Index (the benchmark index), which consists mainly of Malaysian government bonds。
FTSE Malaysia KLCI ETF	Equity ETF	FTSE Malaysia KLCI Index	Tracks the FTSE Bolsa Malaysia KLCI Index, which is made up of the 30 largest listed companies on the exchange by market capitalization。The index is made up of the 30 largest listed companies on the Malaysia Stock Exchange by market capitalization。
MyETF Dow Jones Malaysia Islamic Market (DJIM) Titan 25	Equity ETF (Sharia-compliant)	Dow Jones Islamic Malaysia (DJIM) Titan 25 Index	Tracks the Dow Jones Islamic Market (DJIM) Index, which is made up of the 25 largest Malaysia Stock Exchange listed companies that comply with Sharia law.。Market Value Market Value。
Reliance Asean 40 Malaysia ETF	Equity ETF	FTSE / ASEAN 40 Index	Tracks the FTSE / ASEAN 40 Index, which consists of the 40 largest companies by market capitalization listed on the stock exchanges of Indonesia, Malaysia, the Philippines, Singapore and Thailand, all of which are eligible to be included in the FTSE / ASEAN Index。
Principal China 50 ETF	Equity ETF	FTSE China 50 Index	Tracks the FTSE China 50 Index, which consists of the 50 largest and most liquid Chinese stocks listed and traded on the Hong Kong Stock Exchange。
MyETF - MSCI Malaysia Islamic Dividend (MMID)	Equity ETF (Sharia-compliant)	MSCI SEA IMI Islamic High Dividend Yield Index 10 / 40 Index	Tracks the MSCI Malaysia IMI Islamic High Dividend Yield 10 / 40 Index, which consists of 16 to 30 sharia-compliant securities listed on the Malaysian Stock Exchange。
MyETD - MSCI Southeast Asia Islamic Dividend ETF (MSEAD)	Equity ETF (Sharia-compliant)	MSCI SEA IMI Islamic High Dividend Yield Index 10 / 40 Index	Tracks the performance of the MSCI Southeast Asia IM Islamic High Dividend Yield 10 / 40 Index, which objectively and passively represents dividend yield opportunities in Southeast Asia Islamic equity markets。
TradePlus Islamic Gold Tracker	Commodity ETF (Sharia-compliant)	LBMA Morning Gold Price	Tracking Gold Price Performance
MyETF Dow Jones US Titan 50 Index	Equity ETF (Sharia-compliant)	Dow Jones Islamic American Titan 50 Index	Tracking the performance of the Dow Jones Islamic Market US Titan 50 Index。The 50 largest companies listed (at float-adjusted market capitalization) on relevant U.S. exchanges。
TradePlus S & P China New Tracking Index - USD	Equity ETF	SEP New China Industries other than A-shares Index	Track the performance of SaP New China Sectors Ex A-Shares Index to provide investment opportunities for Chinese listed companies in consumer and service industries。Trading in US Dollars。
TradePlus S & P China Index - Malaysian ringgit	Equity ETF	SEP New China Industries other than A-shares Index	Tracking the performance of the SaP New China Sectors Ex A-hares index, providing investment opportunities for Chinese listed companies in the consumer and service sectors。Traded in ringgit。
TradePlus NYSE FANG + Daily (2x) Leverage Tracker	Leveraged and Inverse ETFs	NYSE FANG + Daily 2x Leveraged Index	Offers 2x leverage on the NYSE FANG + Index, which is made up of some of the world's largest technology companies。
TradePlus NYSE FANG + Daily (-1x) Backtracker	Leveraged and Inverse ETFs	NYSE FANG + Daily 1x Inverse Index	Provides inverse (-1x) exposure to the NYSE FANG + Index, which is comprised of some of the world's largest technology companies。
TradePlus HSCEI Daily (2x) Leverage Tracker	Leveraged and Inverse ETFs	Hang Seng China Corporate Futures 2x Leverage Index	Provides 2x leveraged exposure to the Hang Seng China Enterprises Index, which consists of the 50 largest securities in China that are mainly listed on the Hong Kong Stock Exchange。
TradePlus HSCEI Daily (-1x) Backtracker	Leveraged and Inverse ETFs	Hang Seng China Corporate Futures Short Index	Provides inverse (-1x) exposure to the Hang Seng China Enterprises Index, which consists of China's 50 largest securities listed primarily on the Hong Kong Stock Exchange。
Kenanga KLCI Daily (2x) Lever Tracker	Leveraged and Inverse ETFs	FTSE Malaysia KLCI 2x Daily Leveraged (Price) Index	Provides 2 times leveraged exposure to companies in the Underlying Index (FTSE Malaysia KLCI Index), which consists of the 30 largest companies listed on the Main Board of the Malaysian Stock Exchange。
Kenanga KLCI Daily (-1x) Backtracer	Leveraged and Inverse ETFs	FTSE Malaysia KLCI Daily Short (Price) Index	Provides exposure to companies in the inverse (-1x) Underlying Index (FTSE Malaysia KLCI Index), which consists of the 30 largest companies listed on the main board of the Malaysian Stock Exchange。

Which ETF is Best in Malaysia？

TradePlus Shariah Gold Tracker is by far the best ETF in Malaysia with 1 year total return of 28.65%。

TradePlus Shariah Gold Tracker is Malaysia's first and only Sharia-compliant gold ETF, which allows investors to invest in gold without the hassle of buying, storing and selling bars.。The ETF invests in gold bars, not other investments in gold mines or gold-related companies.。Surprisingly, as long as the minimum requirements are met, investors can redeem units of the ETF as physical gold。

How to Choose the Right ETF？

Determine your investment strategy

Determine your investment strategy, including investment objectives, investment horizon and risk tolerance。When making any financial planning, it is best to determine investment objectives first。After determining the investment objectives, determine a reasonable investment period.。Finally, understand the risk tolerance limits you are willing to accept。

Select the right asset class

Choose the right asset class based on your investment strategy。For example, if your investment goal is to provide adequate retirement funds when you retire at age 55 (currently 35), your investment horizon is 20 years, and your risk tolerance is relatively high。This means you can take a significant investment "loss" without having to sell other assets you own.。

Therefore, stocks are likely to be the best asset class for you。To better understand your risk tolerance, you should take the risk tolerance quiz or test available on the investment website。

Research and understand selected ETFs

The ETF you choose should be appropriate for your chosen asset class and your investment objectives。

Why Invest in ETFs？

ETFs have many advantages, such as low expense ratio, strong liquidity, wide range of investment options, investment diversification and low investment barriers, and are ideal for new investors.。

In addition, Malaysian ETFs generally have lower trading volumes and more market makers。Through ETFs, investors can invest in a geographic region, market, industry, and commodities such as gold。

Advantages of ETFs

Diversification: ETFs offer investment opportunities in a variety of securities, such as indices, and are traded in a manner similar to stocks.。Depending on the ETF program, you can invest in a variety of stocks, countries, sectors and commodities。

Cost-effective: ETFs have lower annual management fees compared to unit trusts, so it's cost-effective to buy and hold ETFs for the long term。

High transparency: Most ETFs track indices, which means that fund companies use passive management when maintaining ETF portfolios, making it easier for investors to understand the performance of ETFs。

Disadvantages of ETFs

Lower dividend yield。

Although there are dividend-paying ETFs, the yield may not be as high as holding high-yielding stocks or individual stocks.。

Less diversification: For certain industries or foreign stocks, investors may be limited to large-cap stocks due to the narrower group of stocks in the market index。

The cost may be higher: if you compare ETFs to investing in specific stocks, the cost will be higher。The actual commission paid to the broker may be the same, but ETFs have management fees, which can lead to higher costs。

Conclusion

ETFs are used by many investors to build portfolios or invest in specific industries, and have many advantages over other managed funds such as mutual funds。

But like any other investment, the risk is always there。The same goes for investing in ETFs。Need to pay attention to its shortcomings before placing an order。Therefore, investors need to be prepared to develop the right investment strategy and risk management before starting to invest.。