Exchange Traded Funds and Their Big Advantage
Exchange Traded Funds (ETFs) quickly became very popular because of their many advantages. As of the end of November, 2009, they saw a net inflow of $32B.
1. Lower Costs-ETFs are known for having no fees. Some however, do have some minimal but much lower marketing, distribution and accounting fees. Most of them traditionally have lower costs than other investment products. They generally are not actively managed which excludes them from paying fees associated with buying and selling securities to accommodate purchases and redemption.
1. Lower costs: Most have have no fees. Others have substantially lower distribution, marketing and accounting fees. Because most ETFs are not actively managed and are protected from the costs of having to buy and sell securities in order to accommodate shareholder purchases and redemptions, they typically will have lower costs than other investment products.
2. Flexibility to buy and sell: Unlike mutual funds, which can only be traded at the end of the trading day, ETFs can be bought and sold at current market prices at any time during the trading day. Their shares can be purchased on margin and sold short, as publicly traded securities, which enables the use of hedging strategies. Being a publicly traded security also allows them to be traded using stop orders and limit order, which allow investors to specify the price at which they are willing to trade.
3. Tax efficiency: ETFs generally have low capital gains taxes because they have such low turnover of their portfolio securities. Another huge tax advantage is not being required to sell securities to meet investor redemptions. Their tax benefits tend to be much stronger than those of other investment products.
4. Market exposure and diversification: ETFs add a more economical way to rebalance portfolio allocations and "equitize" cash by being able to invest it quickly. Investors are able to diversify across an entire index inherently though an index Exchange Traded Fund. Including broad-based indexes, broad-based international and country-specific indexes, industry sector-specific indexes, bond indexes, and commodities, ETFs offer exposure to a very diverse variety of markets.
Exchange Traded Funds (ETFs) many advantages skyrocketed their popularity very quickly. By the end of November, 2009, net inflows were at $32B. They continue to be among the great investment methods. - 23200
1. Lower Costs-ETFs are known for having no fees. Some however, do have some minimal but much lower marketing, distribution and accounting fees. Most of them traditionally have lower costs than other investment products. They generally are not actively managed which excludes them from paying fees associated with buying and selling securities to accommodate purchases and redemption.
1. Lower costs: Most have have no fees. Others have substantially lower distribution, marketing and accounting fees. Because most ETFs are not actively managed and are protected from the costs of having to buy and sell securities in order to accommodate shareholder purchases and redemptions, they typically will have lower costs than other investment products.
2. Flexibility to buy and sell: Unlike mutual funds, which can only be traded at the end of the trading day, ETFs can be bought and sold at current market prices at any time during the trading day. Their shares can be purchased on margin and sold short, as publicly traded securities, which enables the use of hedging strategies. Being a publicly traded security also allows them to be traded using stop orders and limit order, which allow investors to specify the price at which they are willing to trade.
3. Tax efficiency: ETFs generally have low capital gains taxes because they have such low turnover of their portfolio securities. Another huge tax advantage is not being required to sell securities to meet investor redemptions. Their tax benefits tend to be much stronger than those of other investment products.
4. Market exposure and diversification: ETFs add a more economical way to rebalance portfolio allocations and "equitize" cash by being able to invest it quickly. Investors are able to diversify across an entire index inherently though an index Exchange Traded Fund. Including broad-based indexes, broad-based international and country-specific indexes, industry sector-specific indexes, bond indexes, and commodities, ETFs offer exposure to a very diverse variety of markets.
Exchange Traded Funds (ETFs) many advantages skyrocketed their popularity very quickly. By the end of November, 2009, net inflows were at $32B. They continue to be among the great investment methods. - 23200
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posted by X - Men @ 2:51 AM
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