ETF investing and ETFs
ETFs are a cost-effective way to diversify your investments
Exchange-traded funds (ETFs) are an easy, inexpensive and efficient way to seek returns. They are an excellent choice for investors who want to reduce investment risk through diversification at low cost.
Real-time trading on stock exchanges
ETFs are traded on stock exchanges in the same manner as shares. You can buy and sell ETFs during the opening hours of stock exchanges.
ETFs provide unlimited opportunities
Through ETFs, you can invest in anywhere since we offer more than 800 ETFs throughout the world. Diversify your investments across all geographical areas or in various sectors, commodities, currencies or fixed-income securities.
ETF investing and ETFs
ETFs (exchange traded funds) are investment products that invest their assets automatically in various stocks in accordance with the index they track. ETFs are mainly passive funds that don’t have active portfolio managers. For this reason, ETF investing is very cost effective.
You can invest in ETFs in the op.fi service (in Finnish) in the Finnish, Swedish and German markets where you can trade in over 700 different ETFs. Add global and particularly European fund markets to your portfolio easily and cost-effectively by using ETFs. You can find lists which sort ETFs by factors such as the geographical market, megatrends, responsibility and emerging markets as well as leveraged, crypto and fixed-income ETFs.
Try the ETF search engine
Have a look at our extensive range by using our ETF search engine. You can search and filter ETFs using various criteria. After finding an ETF that suits you, read the fund’s Key Investor Information Document and Fund Prospectus. They explain what kind of investment product the ETF is and how the index it tracks is constituted.
Get to know the ETF search engine (in Finnish)
We only broker ETFs that have a marketing licence, in other words, they are registered in Finland.
ETFs, or exchange traded index funds
Although most ETFs are passive index funds, you can find diverse ETFs in the markets.
- For example, an inverse ETF allows you to make an inverse investment relative to the benchmark index performance, which means that the ETF’s value increases when the equity market declines.
- A leveraged ETF seeks, say, a double or triple return relative to the benchmark index.
Most ETFs pay a dividend on their units based on the dividends paid on the fund's holdings. The dividend payment dates vary by ETF. As a rule, dividends are paid out monthly, quarterly, semi-annually or annually. Some ETFs do not pay out dividends but reinvest them within the ETF, which increases the value of the ETF unit.
Any capital gains and dividends from ETFs are subject to tax in accordance with the capital income tax rate. More information on taxation is available on the website of the Finnish Tax Administration.
How do I start investing in ETFs?
To start investing, you need to open an investment service package. You can trade in ETFs via the op.fi service in the same manner as in stocks. Before confirming an order, you always need to acknowledge that you have read the ETF’s Key Investor Information Document. The trading fee is the same as in stock trading and depends on the market place.
Physical ETF and synthetic ETF – what’s the difference?
Exchange-traded funds (ETFs) can be divided into two categories based on their structure:
- traditional physical, or cash-based, ETFs
- synthetic, or swap-based, ETFs
Both have their pros and cons. Both track the same index and seek the same return.
Synthetic ETF uses derivative contracts to achieve the targeted profit. For this reason, synthetic ETFs involve a counterparty risk. A counterparty risk arises from the uncertainty as to whether the counterparty to a derivative contract is able to fulfil its payment obligation towards the ETF.
Physical ETF owns the securities that make up the index it is tracking. A physical ETF may also be exposed to a counterparty risk if it seeks additional returns through stock lending, in other words, by lending stocks it owns to investors with no holdings in the ETF.
What is a thematic ETF?
A thematic ETF means that the ETF builds its investment philosophy around a particular theme. The popularity of thematic ETFs is supported by identified global megatrends that people want to participate through investments, too. Themes around which a thematic ETF can be built include technological breakthroughs, ageing population and clean energy production as a way of combatting climate change.
To make it easier to choose among various options, we have put together an exhaustive list of thematic ETFs on the market.
Stock investment services are provided by OP cooperative bank. Please note that investment always involves risks. The value of investments can rise and fall, and an investor can lose part or all of the money they invest.