Exchange Trade Funds - A Better Alternative to Mutual Funds?

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This article will spotlight the numerous advantages of investing in ETFs or Exchange trade funds and how it can in reality bolster your investment finances. Exchange trade funds are reasonably new investment tools that work like mutual funds but can be traded much like stocks. Exchange Trade Funds, are investment units based on a certain index such as S&P 500. As an investor, you can buy or sell shares of a whole portfolio of stocks in a single trade.

These funds may be bought on margin, subject to the same terms that are applied to common stocks.
Exchange trade funds are very efficient ways to add diversification to your portfolio.

Quick Facts about Exchange Traded Funds

  • They go through monetary value changes throughout the day as they are purchased and sold.
  • "Creation Units" allude to large blocks of Exchange traded funds shares created by institutions and big investors
  • Investors can trade in shares of an fund that represents a particular group of securities
  • If you are looking for a long-term investment These types of investment vehicles have proven to be a thrifty choice.
  • They have been purchasable in the America since 1993 and in Europe since 1999.
  • Exchange-traded funds are an attractive investment choice because of their thrifty price and simpleness of trading.
  • By purchasing these fund shares, you can own a portion of diverse stock portfolio.

Investing in Index Funds

Finding a good ETF to invest in involves a bit of research. Investors select sector-based ETFs when they think a certain sector or industry is going to perform better over a period of time than some others.

Exchange trade funds are easy to liquidate by trading on the exchange. Investors can use ETFs as a core investment for their stock portfolio. Investors should cautiously look at the investment targets, risks, charges and costs of the Funds before investing. With any foreign ETF, there is the possible risk of loss through a variation in currency or unpredictability due to economic or governmental instability. And with any investment in exchange trade funds there is constantly the danger that you may lose the principal.

ETFs are growing in popularity as a vehicle of investing, allowing the chance for investors to diversify their portfolios while preserving flexibility in trading that is akin to stocks.

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Courtney J Blackwell has 1 articles online

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Exchange Trade Funds - A Better Alternative to Mutual Funds?

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This article was published on 2010/03/29