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Advantages
BMD Securities, Inc. Dow Jones DJIM Turkey ETF has
fundamental advantages compared to regular investment funds. It enables close
tracking of index with low management fee. Furthermore, since changes in
index only occur in special cases such as capital increase by rights issue,
considerably fewer portfolio transactions are required compared to other
funds. Thus commission expenses remain in low levels. Besides, it is much
easier to buy and sell the fund. Investors can buy and sell BMD Securities,
Inc. Dow Jones DJIM Turkey ETF through any bank or brokerage house account
exactly as they practice stock trading. Fund operations can be also carried
out by telephone, internet or ATMs. There is no need for opening another
account, additional applications or agreements.
Income of the fund portfolio itself is tax-free. Income generated by the
investors through the transactions of ETF shares in the stock market is taxed
same as the other stocks, there is a 10% sales tax on profit calculated
according to FIFO costs. Foreign investors are exempt from the sales tax.
There is 10% withdrawal tax for real persons on dividend revenues. Based on
specific agreements between Turkey
and other countries to prevent double taxing, taxing practices may differ for
particular countries.
ETF has also an important advantage regarding transaction simplicity and
investment risk. When an investor buys fund shares, actually he/she has a
certificate representing stocks in his/her portfolio (this number may change
as the number of stocks in the index changes) by only one operation and thus
disperses the risk compared to investing in only one or few stocks. When the
investor wants to sell the shares, again one operation will be enough. In
addition to following the stock exchange price of the fund, the investors
have the opportunity of continuously observing and comparing Net Asset Value
that is always updated and Dow Jones Islamic Market Turkey Index itself. As
it is known, in other investment funds, the price is determined once a day
and even if market conditions change during the day, it is not reflected to
the fund price immediately. On the other hand, in ETF, investor can react to
the changes in the market right away and can sell or buy the fund with its
up-to-the-minute price.
ETF is an investment instrument that is also preferred by professional
investors, institutional investors and asset managers in the world market.
This is due to simple and low cost management of country and sector positions
with only a few transactions plus consistency of an ETF related to price
stability and index tracking. ETF enables investors exchanging their fund
shares with stocks in the fund portfolio through ‘Creation’ or ‘Redemption’
process that is a major part of its structure.
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