Investing in ETFs

ETF is short for “exchange traded fund”. It is a managed fund that you can buy or sell on a stock exchange just like an individual stock.

ETFs bundle a range of different assets into one investment, for example, a basket of shares across a number of industries. This helps investors easily expand and diversify their portfolio in one go.

An ETF combines the diversification of a managed fund with the convenience of trading on a stock exchange. You can also track the net asset value (NAV) on a daily basis.

• A simple way to diversify: ETFs pool together a number of different assets into one investment, making it easy for investors to diversify their portfolio. Diversification is an effective way to lower risk when investing.

• Easy to trade: ETFs can be bought and sold on the stock exchange daily, just like ordinary shares.

• Low-cost: ETFs typically offer a lower-cost way to access a large number of assets compared to buying all the assets in the ETF individually. Before investing, it’s important to know and understand the fees and costs involved.

• Access to a broad range of markets,assets and strategies: There are a wide range of ETFs that target different markets (eg. international shares), sectors (eg. information technology), asset types (eg. bonds) or strategies (eg. ethical investing). Some of these areas may be otherwise difficult to access for individual investors.

• A hands-off approach: When investing in an ETF, you free yourself from the everyday decision-making of what shares to buy or sell.

• Transparency: As ETFs are traded on exchanges, live pricing is publicly available to everyone. ETFs also disclose their holdings publicly each day, whereas managed funds typically do this monthly or quarterly.

This is general information only and does not take account of your individual investment objectives, financial situation or needs. Before acting on it, consider its appropriateness to your circumstances and read the Financial Services Guide, the Product Disclosure Statement and Target Market Determination relevant to the product which is available on our website.

ETFs can be purchased through online broking platforms such as Commsec, NAB Trade, Superhero, and Self Wealth or through a stockbroker. Simply search the ticker code 'AEAE', check the iNav and place an order as you would when purchasing any other share.

Investors should read the Product Disclosure Statement (PDS) and Target Market Determination (TMD) prior to making any investment decisions.

Passive ETFs aim to match the performance of a specific market index, for example, the ASX200.

Active ETFs are managed by professional fund managers who actively pick and trade stocks with the aim of outperforming the benchmark, or in line with a specific investment philosophy, for example, ethical investing.

All product fee information is available on the fund profile pages.

Investors who invest in an Australian Ethical ETF through their broker will be issued with a Holder Identification Number (HIN) issued automatically through their broker. This is their reference number linked to both their investment with their Australian Ethical ETF as well as other securities they have purchased through their broker.

Investors who invest directly with Australian Ethical will be issued a Securityholder Reference Number (SRN). This is a unique identifier for their investments held with Australian Ethical’s registry provider Boardroom.

An indicative Net Asset Value (iNAV) is a price calculated by a third party agent we have engaged to provide an indication of the real time value of a unit of the ETF throughout the trading day. The iNAV value will move throughout the trading day as the value of the individual companies which make up the portfolio move in value.

The iNAV provides a reference point to assist investors in understanding if they are purchasing or selling units in the ETF at, or close to the NAV per unit.

The iNav is published on the ETF product page.

The price you buy and sell units in the ETF at will be based on the market price at the time you place your order with your broker, as well as the type of order you place with your broker. The price will not be the same as the iNAV due to trading spreads and liquidity conditions at the time your order is filled, however it should still be relatively close to the iNAV.

If you invest in an active ETF through a broker there is no minimum investment amount. Most brokers set a minimum investment amount of around $500.

If you invest directly into an Australian Ethical Managed Fund through our paper or online application form the existing minimum investment amounts apply.

If you made your investment through a broker you can instruct your broker to sell your units on the exchange by placing a sell order. Contact your broker if you need any specific information on how to do this through their trading platform.

If you invested directly with Australian Ethical through our paper or online application form then you can submit a withdrawal form.

Distributions can be paid as either a cash payment to your nominated bank account or reinvested by buying more units in your investment fund. This is the same as our existing managed funds.

It is important that you setup your distribution preference by logging in (or registering) to the InvestorServe portal managed by our registry and administration provider Boardroom:

• Distribution reinvestment: To have your distribution purchase additional units in this fund simply log into the Investorserve portal click on ‘Payment Instructions – Reinvestments’ and follow the prompts to add a reinvestment plan.

• Cash payment: To have your distribution payments paid to your bank account simply log into the InvestorServe portal and add your bank account details in the ‘Payment instructions – Banking information’ tab.

It is important to keep your contact details up to date in the InvestorServe portal. Some details will need to be updated directly with your broker, these details will be unable to be updated through the InvestorServe portal.