The appeal of ETF investing

Exchange-traded funds (ETF) have been the most successful financial product of the new century, and ETFs focused on the Middle East have mushroomed in just the last year to nearly a dozen that trade in New York, London and elsewhere in Europe.

ETFs are gaining adherents because they are cheap, tax efficient and transparent in their holdings and operations. They trade throughout the day, rather than only at market close, and are free of red tape such as redemption fees and rules against frequent trading. They target more asset classes than do mutual funds, including gold bullion, agricultural commodities and currencies. Hundreds of them target specific industries and sectors, allowing individuals to fine-tune their holdings.

While the US market for ETFs is the oldest, largest and most liquid, substantial trading has grown up in global bourses, particularly those of the English-speaking world. With many financial advisers counselling their expatriate clients to invest strictly in their home marketplaces, that is particularly easy to do with ETFs.