What Is an Exchange-Traded Product (ETP)? (Simple Guide 2025)

Investing can often feel full of complex terms, and “exchange-traded product” is one that confuses many beginners. Yet ETPs are actually designed to make investing easier, not harder.

In simple terms, an exchange-traded product, or ETP, is a type of investment that you can buy and sell on the stock exchange, just like a company share. It gives you access to a wide range of assets such as stocks, bonds, commodities or even currencies, all within one product.

ETPs are a simple way to diversify your portfolio and start investing without needing to pick individual shares or manage multiple investments separately.

How ETPs work

When you buy an ETP, you are purchasing a unit that represents a share of an investment basket. The ETP tracks the value of an underlying index, asset or market. Its price rises and falls throughout the day as the market changes.

For example, if you buy an ETP that follows the Swiss Market Index (SMI), its value will move in line with the performance of the biggest Swiss companies. This allows you to benefit from market growth without having to buy each share individually.

Because ETPs are traded on an exchange, they offer liquidity, meaning you can easily buy or sell them during market hours at transparent prices.

The main types of ETPs

While all ETPs are traded in a similar way, there are several different categories.

Exchange-Traded Funds (ETFs)

ETFs are the most common type of ETP. They track the performance of a specific index such as the SMI or MSCI World. ETFs are popular because they provide broad diversification at relatively low cost.

Exchange-Traded Notes (ETNs)

ETNs are similar to bonds issued by a financial institution. They track the value of an index or asset but do not directly hold it. Instead, the issuing bank promises to pay the return of that asset at maturity. ETNs carry a slightly higher risk because their value depends on the issuer’s creditworthiness.

Exchange-Traded Commodities (ETCs)

ETCs give investors exposure to commodities like gold, silver or oil. They are a convenient way to invest in these markets without holding the physical assets.

Why ETPs are popular with modern investors

ETPs have grown rapidly in popularity because they combine flexibility, simplicity and accessibility. Here are some reasons why investors in 2025 increasingly use them:

• They are easy to trade on the stock exchange.
• They offer instant diversification, spreading risk across many assets.
• They have lower costs than many traditional investment funds.
• They are transparent, so you can always see what assets they hold.
• They fit well with long-term strategies such as retirement investing.

For beginners in Switzerland and across Europe, ETPs have become a practical entry point to the investment world. They are suitable for building portfolios through pension savings, regular investment plans or self-managed accounts.

The risks to keep in mind

Although ETPs are straightforward and accessible, they still carry market risk. Their value can rise or fall depending on the performance of the underlying assets.

It is also important to choose products from reputable providers and understand what each ETP is tracking. For example, an ETP focused on a narrow sector or a single commodity can be more volatile than a broad market ETF.

Finally, while fees are usually low, they still exist and can vary. Always check the total expense ratio (TER) before investing.

ETPs and financial literacy in Switzerland

In Switzerland, ETPs have become an increasingly common part of personal finance discussions. Many pension platforms and digital investment tools now include them as standard options.

Understanding how ETPs work helps Swiss investors make informed choices when building long-term savings or investing through Pillar 3a accounts. As more people turn to self-directed investing, financial literacy around ETPs is becoming an important skill for managing wealth confidently.

Final thoughts

An exchange-traded product is one of the simplest and most flexible ways to invest in today’s markets. It allows anyone to access diversified portfolios, track specific markets and invest efficiently over time.

For Swiss investors, ETPs are a bridge between traditional finance and modern, accessible investing. Learning how they work is a small step that can make a big difference to your long-term financial success.

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