ETFs 101: Understanding Bid and Offer Spreads

Among the issues investors need to consider when buying and selling exchange traded funds (ETFs) are buy and sell spreads. Spreads are often seen as an unavoidable cost of trading and investing, and are not unique to ETFs per se. What’s more, the competitive nature of open exchange markets – as well as the impact of dedicated market makers – help to ensure ETF bid-offer spreads are as tight as possible. An ETF’s buy-sell spread is the difference between the price at which investors can buy the ETF on the exchange and the (lower) price at which it could be sold back to the market. This ‘spread’ can be seen when looking at the websites of online brokers and is also displayed by the ASX on the market data pages of its website. For more click the link: (VIEW LINK)