I&M Bank Kenya - ETFs & Index Funds

ETFs & Index Funds

Passive, low-cost index tracking

ETFs & Index Funds

An Exchange-Traded Fund (ETF) is an investment fund that holds a basket of assets such as stocks, bonds, or commodities and is traded on a stock exchange like an ordinary share. Investors can buy and sell ETF shares throughout the trading day. An index fund is a type of mutual fund or ETF designed to track the performance of a specific market index, such as a stock market index. Instead of trying to outperform the market, it aims to replicate the returns of the chosen index.

Features

Features of ETFs

  • Traded on stock exchanges.
  • Provides diversification through a portfolio of assets.
  • Generally has lower fees than actively managed funds.
  • Can be bought and sold throughout the trading day.
  • Offers exposure to specific markets, sectors, or indices.

Features of Index Funds

  • Passively managed.
  • Tracks a specific market index.
  • Typically has low management costs.
  • Provides broad market diversification.
  • Performance closely matches the underlying index.

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