ETF trading platform in New Zealand
Choosing a financial market to invest in is an important issue in trading. The ideal way to invest for most investors is inexpensive, passive investments in a few broad spectrum indices. The only way to make such investments in New Zealand is to purchase adequate ETFs through an online broker. There's no need to worry about this, it's no more complicated than opening a bank account or investing in classic mutual funds.
How does an ETF work? An ETF is a passively managed fund that tracks a particular underlying asset and replicates its price movements. An ETF can replicate various financial instruments such as shares, indices, bonds and more. The operating principle is that the fund purchases the chosen underlying asset and issues its own shares. These shares can then be bought by investors on the stock exchange.
An ETF is very similar to an index fund. Some sources even claim that an ETF and an index fund are essentially identical. In any case, they share the same goal of providing investors with a return according to the reference (index) value.
However, the difference between an actively managed mutual fund and an ETF fund lies in trading. ETF shares are traded on a stock exchange and can be purchased at trading time. When investing in an ETF, you usually only pay a fee to buy or sell a share. Stock purchases are automatically managed and the ETF fund index almost perfectly replicates the price movements and composition of the index.
Investing in ETFs has its own peculiarities and requires certain tools for trading and analysis. The online trader performs all transactions through an online trading platform. Therefore, the choice of such a platform is an important issue if you are interested in the ETF financial market.
The topic of the current article is the best ETF trading platform in New Zealand.
How to invest in ETFs? Which ETF trading platform should I choose?
To invest in ETFs in New Zealand, you will need to do the following:
- Choose a broker. You can only invest in ETFs in New Zealand through an online broker. So, the first step is to choose a reliable broker. At this stage, research the market for brokerage offerings in New Zealand. Your broker should be licensed to conduct brokerage activities and should have good references and business reputation. Consider the commission costs and transaction limits - these should be acceptable to you.
- Register with the online trading platform offered by the broker. After choosing a broker, you should register with an online trading platform to be able to make transactions. The process of registering on the platform should be easy and quick, funding of your account should be convenient and you should have suitable transaction limits.
- Choose an ETF fund. Decide which ETF you want to invest in. Focus on the type of business or industry positioned by a particular ETF type that is close to your heart. For example, if you're a physician, it would be easy for you to track the ETFMG Alternative HarvestMJ fund, as this fund reflects the performance of a group of companies involved in the legal production and distribution of medical and recreational drugs and cannabis-based products. Opt for a platform that has the ETF fund of your choice among its ativities.
- Explore the platform and trading techniques using a demo account. Choose platforms that allow you to practice on a demo account before you start live trading.
- Fund a live account. Check the deposit methods - are they convenient? What is the minimum deposit amount? These are important questions when you start trading.
- Invest in ETFs.
The platform we have chosen meets all of the above points and we will look at them in more detail below.
Easy registration on the platform
Registering on the trading platform takes minimal time and is hassle-free. To register, follow these steps:
- Visit the website of the brokerage company of your choice;
- Find and click on the "register" option;
- Fill in the registration form which opens, filling in your username and email;
- Make up a strong password;
- Confirm your registration on the platform by clicking on the confirmation link which will be automatically sent to the email address you provided during registration.
You can also use the option of automatic registration on the platform using social networks - below the registration form there are corresponding icons "register using social networks".
Demo account available
The platform has a demo account, which you can use to study in practice how the platform works. On the demo account the system automatically sets the amount of dummy funds in the amount of $10000 - of course, you will not be able to withdraw these funds, as they are virtual, but with their help you can conduct test operations and check the work of the platform and your skills. Try different methods and approaches, look at the results, and analyse them. This will help you learn the ins and outs of working on the platform and develop your own trading strategy over time.
Easy top-up, low transaction limits
Another advantage of the platform is the ease and convenience of funding a live account. Right on the dashboard, select the "deposit" function and you will see the options for transferring funds. You can do it with a bank card or using one of the payment systems. The money is credited instantly. Low transaction limits are nice: the minimum deposit amount is $10, the minimum withdrawal amount is only $2.
Investing in ETFs: types of funds
Exchange-traded funds (ETFs) trade directly on a stock exchange in the same way as conventional stocks.
An ETF tracks the performance of an underlying asset, such as an underlying index, commodity, currency or basket of assets.
Because ETFs are listed on an exchange, you can trade them several times a day, unlike conventional funds, which trade at most once a day or less. One advantage of ETFs is that they are cheaper than, for example, actively managed funds or mutual funds.
The main types of ETFs are as follows:
- Index ETFs. An index ETF follows the price evolution of a stock index. This type of fund has in its portfolio the same stocks that make up the chosen stock index. Investors pay most attention to US stock markets. This is why US index funds are more popular.
- Sector ETFs. Sector ETFs replicate the performance of stocks of companies from a particular sector. It operates on a similar principle to an index fund (it has shares of companies from the chosen sector in its portfolio). Investors are most interested in the finance, healthcare, biotechnology, energy and technology sectors.
- Commodity ETFs. Commodity ETFs are similar to sector funds in that they focus on a specific market sector. However, when you buy a commodity ETF containing gold, silver or energy, you are really buying that commodity. Rather, these funds consist of financial derivatives (futures contracts) which replicate the development of the commodity price. There are only a few commodity ETFs that actually buy a commodity.
- Currency ETFs. Currency ETFs are exchange-traded funds that replicate the price development of a currency or multi-currency package.
- Bond ETFs. Exchange-traded bonds can contain government and corporate bonds. Bond ETFs have the difficult task of building a portfolio because they replicate investment products with low liquidity.
- Reverse ETFs. The price of inverse ETFs moves in the opposite direction of the underlying asset. Most investors buy these ETFs if they believe the price of the instrument will fall in the future. For example, a stock index or stock from a certain sector.
- Leveraged ETFs. Leveraged funds ETFs replicate the price evolution of the underlying asset with much greater sensitivity. These funds consist of equities and financial derivatives (more often futures contracts) with leverage.
- Dividend ETFs. Dividend ETFs have shares of dividend-paying firms in their portfolios. Most of these funds buy shares in a specific country (e.g. a stake in companies from the US or Europe).
What types of ETFs does our chosen platform offer?
On the platform we have selected, you will find all of the above ETF types. The platform has a total of 23 ETF options, of which the following are successful:
- ETFMG Alternative Harvest ETF MJ - The Foundation tracks the performance of the Prime Alternative Harvest Index, which in turn reflects the performance of a group of companies involved in the legal production and distribution of medical and recreational drugs and cannabis-based products. The fund owns about 30 companies involved in the production and distribution of medical and recreational drugs and cannabis-based products, as well as several companies involved in tobacco products. As a result, the performance of the fund is influenced by factors and events affecting these stocks. These include the demand for medical and recreational cannabis, relevant regulations and production permits, as well as key company parameters such as revenue and earnings growth, currency volatility, wage levels and investor sentiment.
- SPDR S&P Metals & Mining ETF XME - The fund seeks to replicate the performance of the S&P Metals & Mining Select Industry Index as closely as possible. The fund invests in mining companies based in the US, so its performance is dependent on fluctuations in commodity prices, including coal. While there are metals and other commodities, the fund is also highly dependent on coal prices because of its investments. Any news and events that affect metal, commodity and energy prices will have an impact on the fund's performance.
- ProShares UltraShort S&P500 SDS - is US-listed and seeks daily investment performance that matches the 200% inverse (opposite) daily performance of the S&P 500 Index. The fund offers inverse double returns based on the daily performance of the S&P 500 and offers an excellent tactical trading tool for short-term traders who seek higher returns and want to take positions that offer higher returns compared to the daily performance. of the S&P 500 Index. Fund returns are influenced by news and events that affect the S&P 500 index, but in reverse order and to a greater extent.
- iShares 20+ Year Treasury Bond ETF TLT - The fund invests in long-term US bonds with a term of 20 years or more. This makes the fund's performance very sensitive to long-term changes in interest rates. As a result, fundamental events such as US GDP, interest rate expectations and inflation expectations are the most important factors that can affect ETF performance. Rising interest rates and inflation reduce the value of the fund's bonds, while falling interest rates and inflation increase their value.
You will also find many other ETF options on this platform.
The wide range of ETF fund types is a definite plus when choosing an ETF trading platform.
Tools for trading
In addition to a wide range of ETFs, the platform offers trading tools that make the trader's job much easier.
Stop orders are particularly popular - the function of automatically closing positions when the trader reaches the transaction limit specified by the trader.
In other words, you can set the price at which you want to close the position. As soon as the price movement chart for the asset reaches a specified level, your position will be automatically closed. You can specify a lower limit for the value of the asset (stop loss function) or an upper limit (take profit function). These functions are useful if you are unable to keep track of the market all the time and are afraid of missing the right moment.
A good trader is a good analyst. Traders use both fundamental analysis and technical analysis in their work.
The fundamental analysis is based on the company's history, its management decisions, its chosen course of development and so on. Here it is important to follow the market news and keep abreast of the current changes. The developers of the platform have taken this fact into account and added a "news" section to the platform, where you will find links to all relevant economic, political, environmental, global production, development and innovation events, taken from verified reliable sources of information. You can customise the visibility of the news feed to your liking, by displaying it as a current line on the platform's main desktop, or "hiding" it in a separate section.
Technical analysis involves the use of technical indicators, which give a clear and concise picture of the behaviour of an asset's value chart. On our platform there are almost all indicators, which are well-known and popular among traders. You will be able to use one of them, or several indicators at the same time, depending on your convenience and preferences.
Other benefits of the platform
The platform is very easy to use, the intuitive interface makes it possible to use the platform even for beginners who have never traded before.
Besides easy registration, easy and convenient deposits and withdrawals, availability of demo account, wide range of financial instruments, availability of tools for trading, news section, the platform also has a tutorial section. This section contains all the information you need, from tutorials for beginners to tips on how to use complex trading tools. The tutorials are recorded as videos, with clear demonstrations on the chart and easy to follow explanations.
A chat room is available for exchanging information with other traders, and customer support is offered in 17 languages and is available 24 hours a day, 7 days a week.
The platform's flexible settings will allow you to easily customise the appearance of the displayed chart, by selecting the number of windows, their position, colour scheme and the type of chart displayed (candlestick, bar, line or Heikin-Ashi chart).
With this in mind, we believe that IQ Option is the best platform to trade ETFs in New Zealand. Open a demo account today and experience firsthand all the benefits of the best platform.