EFAMA publishes 'demystifying' guide to ETPs for European investors

EFAMA publishes 'demystifying' guide to ETPs for European investors

Through its ETF Task Force, EFAMA has released an Investor Education Guide intended to draw out, in a simple form, the defining features for the three main types of exchange-traded products (ETPs) listed across European markets.

The association said it hopes the guide will primarily assist investors in having a clearer understanding of different ETPs and help investors appreciate the differences between them, especially from a risk and product complexity viewpoint. Secondly, the guide could be valuable to other interested stakeholders, including other market participants, policy-makers and financial media.

ETPs is the umbrella term used to refer to investment products that are traded on an exchange, unlike traditional mutual funds. ETPs will often track an underlying asset, such as a stock, an index, a commodity, etc. but can also be actively managed.

Federico Cupelli, senior regulatory affairs adviser at EFAMA, commented: "We believe that a greater understanding around different types of ETPs is needed. This is prompted by the all too frequent confusion between these products, as witnessed again earlier this year during the covid-19-induced market corrections, as well as by retail investors' growing interest in these products."

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Christopher Copper-Ind

Christopher Copper-Ind is editor-in-chief of International Investment. Before this, he was editorial director of The Business Year, from 2014 to 2017.