ETFs aren’t getting cheaper – and four other trends in index funds

ETFs aren’t getting cheaper – and four other trends in index funds

ETFs are easy to use and inexpensive. But the trend towards ever cheaper products is coming to an end and the market is also moving in other ways. Investors need to consider these five trends when investing in 2024.

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People don’t talk about money, but they do talk about investments. No wonder, after all, the years of low interest rates have made people less reluctant to invest in the capital market. The newly developed investment culture has persisted despite the interest rate turnaround; many people like to talk about investment products and strategies. Conversations in lively circles show that although there are always those who parrot the latest hype from the Internet, the masses like it simple and uncomplicated. It invests in exchange-traded funds, so-called exchange-traded funds, or ETFs for short. They usually track an index and are cheaper compared to active funds.

However, it is not enough to say “I invest in ETFs”. That’s about as meaningful as “I eat food.” This means: ETFs are not an asset class like stocks or bonds, but rather a vehicle for investing in one or more asset classes and are therefore very similar to a classic mutual fund. Before investing in an ETF, the question is which strategy or market the money should flow into. German stocks or US government bonds?

The choice may be confusing, because in addition to the standard ETFs on the DAX, the industrialized countries index MSCI World or the global bond index Global Aggregate, there are increasingly sophisticated products for certain strategies. The market for ETFs is changing in terms of supply, costs and range. Five trends can currently be observed.

Source: Stern

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