My First Dip – iShares MSCI Emerging Markets (IEM) ETF

In my introduction to Exchange Traded Fund (ETF) entry, I wrote that I plan to allocate some money towards Exchange Traded Funds (ETFs). Well, I just did.

I took a position in an ETF last week.

The process was rather simple. I logged onto my online trading platform, placed an order with my broker, wait for my order to be executed, and voilà!

I only took a small position in that fund with brokerage fees totalled $19.95. If I decide to exit in the future, it’ll be another $19.95. All in all, to enter and exit my ETF position, it’ll cost me around 1.97% of my total investment (compare that to 5% charged by Malaysia’s mutual funds). By the way, my broker only charges $19.95 to buy and $19.95 to sell for any amount up to $25,000 and 0.12% for trades above $25,000. So, do check with your broker about their brokerage fees and calculate your own cost.

The name of the ETF is iShares MSCI Emerging Markets (ASX Code: IEM). It was designed to track the MSCI Emerging Markets Index. I am constantly on the lookout for exposure to developing markets out there, so this fund fits into my portfolio perfectly.

The annual management expenses and fees as at 01/01/08 is 0.74%.

The fund’s average annualised performance since inception (inception date 07/04/2003) stands at 28.05% p.a.. Morningstar gives this fund 3 stars.

Anybody out there who have invested in ETFs or are about to invest in ETFs, do share your experience here.

Now enjoy a song by Sara Bareilles entitled “Love Song”.

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Cheers folks.

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Disclaimer: This article is not a specific nor general advice on managing or investing your money. This article does not constitute a recommendation nor does it take into account your investment objectives, financial situation nor particular needs.

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About nadlique

This blog is about the journey of a 28-year-old Malaysian towards financial freedom. This blog was started back when the blogger was 21 years old. However, his journey towards financial freedom had begun way before that. Materials such as investing, business, entrepreneurship, equities, and real estate are presented. The author also posts his thoughts and observations on life in general.

Comments

  1. oh, what’s the minimum limit for the investment then?

  2. Nadlique,

    Is it an industry standard in Australia to charge 19.95 per transaction? That’s quite pricey.
    My brokerage account in USA at http://www.zecco.com charges me NIL and it’s a fully regulated broker (I’ve done the due diligence). I couldn’t care less about the lack of research tools since they would not help most of the times anyway. Even though I haven’t checked brokers in Australia, as a developed country, it should have a better pricing broker.

  3. Hi there Joe,

    Here in Australia, it differs with each broker. As to my broker, they charge one of the lowest brokerage fees in Australia. The cheapest so far that I know of charges only $17.95.

    With regards to my broker, they charge $19.95 for trades of up to $25,000 (I’ve mistakenly wrote $10,000 in my article), and 0.12% for trades above $25,000.

    There are brokers out there who do not charge any fees at all. Just that, with them, you are only allowed to trade Contract-for-Differences (CFDs) and not the conventional shares.

    I guess it’ll be a while before Australia starts introducing no-brokerage-fees traditional brokers.

  4. Hi Raf,

    For listed securities (i.e. listed on the exchange), the minimum you can start with is $500. That’s assuming you don’t own anything in that particular security yet. After that, you can buy as little or as many as you want. But bear in mind that every trade will still incur you brokerage fees. So, it doesn’t make sense buying one new unit at $10 but charged with $20 worth of brokerage fees.

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