- Low expense ratio - As a passive investment, the ETF has lower operating expenses and lower management fees than an actively managed portfolio, resulting in a relatively low annual expense ratio.
- Low operational costs - Since the ETF trades on an exchange and uses a special Creation-Redemption Process it is insulated from the costs of buying and selling securities to accommodate shareholder purchases and redemptions.
- Low trading costs - Active market making at the stock exchange ensures spreads on the ETF are narrower than in illiquid markets, making it inexpensive to buy and sell.
- Low turnover costs - Because it is index-based, the ETF requires fewer portfolio changes, resulting in significantly lower transaction costs than actively managed portfolios.
- Transparency - To facilitate the BUX ETF's unique Creation-Redemption Process, the composition file for the ETF creation unit is published daily. Since the ETF's holdings are designed to reflect the performance of its underlying BUX index, investors will essentially know the securities that are held in the BUX ETF and their weightings.
- Diversification - Because the BUX ETF tracks the Budapest Stock Exchange’s official stock index, it provides diversification across the entire index.
- Market coverage - By purchasing the BUX ETF, the buyer will immediately gain exposure to the Hungarian market. The BUX index represents 94% of the total market capitalisation and 99 % of market turnover of the Budapest Stock Exchange.
- Buying and selling flexibility - Because it is exchange traded, the BUX ETF can be bought and sold at intraday market prices, purchased on margin, sold short, and - even on a downtick - traded using stop orders and limit orders.
- Continuous liquidity - Trading of the BUX ETF is supported by continuous market making. The narrow spreads provided by the market maker ensure holders the opportunity to buy or sell the instrument at any time at low implicit trading costs.
- All day tracking and trading - Investors can track the BUX ETF price throughout the trading day and adjust portfolio holdings to capitalise on changes in the market.
Wide array of investment strategies
- Equitising cash - Institutions with temporary idle cash can put it to work in the BUX ETF while determining where to invest for the longer term. Investors can maintain allocations or establish new allocation targets to a benchmark, investing and liquidating as needed to fulfil redemption requests. This can minimize cash drag or trading risk.
- Managing cash flows - Investment managers can take advantage of the ETFs' liquidity during periods of cash inflows and outflows.
- Country exposure - With BUX ETF fund managers can achieve an exposure to the Hungarian market with one single transaction.