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!

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Exchange Traded Fund: ETF (An Alternative to Unit Trust)

The unit trust (mutual funds) industry is such a hot industry in Malaysia. Everybody is telling their friends and families to get on board! Unfortunately, there are a number of drawbacks when it comes to unit trust investments. Some of them are:

1. Absurdly high service charge
2. Absurdly high annual management fee
3. Quite difficult to get in and out

As far as I’m concerned, the first two are the main problems. I find that paying 5% to 6.5% is somewhat idiotic and immoral unnecessary.

So today, we shall be looking at Exchange Traded Funds or ETFs. This can very well be an alternative to the conventional unit trust investments. Please note that when I used the words unit trust and mutual funds, they both refer to the same thing.

Now, talking about ETFs, we can’t be comparing ETF with the unit trust industry as a whole. ETFs are essentially similar to unit trust’s index funds. The purpose of ETFs and index funds are to match the performance of the index that they are tracking. For example, a fund that tracks the S&P 500. They can also be called as tracker funds.
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Stock Market Behaviour: What’s up with Wall Street?

I still remember the interview that I watched on TV3’s Ringgit Sense a while back involving our second Finance Minister, Tan Sri Nor Mohamed Yakcop. According to him, speaking of international trade, we are relying less and less on the United States of America. This was when he was questioned about the impact on Malaysia if the US goes into a recession.

However, as we have seen up until today, we are still being affected by what has happened in Wall Street overnight, stock market-wise of course. So, what’s up with that? Generally, if the Dow Jones declines, it will somehow influence the direction of the local market the next day.

Now, based on my limited knowledge, I shall try to explain this peculiar occurrence.

First of all, we need to understand that the stock market is not driven by economic data, or any fundamental data for that matter. This is especially true in the short-term.

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