What exactly is a Exchange Traded Fund or a ETF?

Answer 1

It's like a mutual fund in that it owns a portfolio of investments, but ...

+ it is not managed after the initial portfolio is purchased (i.e. nobody is buying and selling investments within the portfolio), the fund owns whatever it owns which may or may not be based on a well-known index.

+ unlike a mutual fund which can be bought or sold at most once per business day, ETFs can be bought and sold from moment to moment much as a share of stock is bought and sold (e.g. you could buy at $10 at 10am, sell at $10.50 at noon, and buy again at $9.75 at 3pm). Like a share of stock the price is determined from one moment to the next by the market.

Tax implications are different than for a traditional mutual fund as well.

Answer 2

First of all, disregard the response from "don". His reply, while well-intentioned, is technically incorrect. He is giving you a definition of an index fund. Not all ETFs are index funds (for example, Powershare funds, while being exchange-traded, are not index), and not all index funds are ETFs (for example, Vanguard 500 fund is index, but it is not exchange-traded).

Shares of a traditional mutual fund are bought and redeemed (i.e., bought back by the management company) at net asset values as of the end of the day. ETFs, by contrast, are bought and SOLD continuously, at intraday prices, like regular stocks. As a result, you can trade ETF intraday, sell them short, and even trade options on ETFs, if they are available.

Answer 3

ETF - innovations are traded on ETFs no longer on MF. you could short promote ETF no longer MF. ETFs are traded on the amex and MF are offered from the fund relations. You attempt this through a broking service oftentimes, yet they don't look to be traded on the open market. ETFs are clear. you realize what's held interior an ETF. you oftentimes in uncomplicated phrases have get admission to to the best 10 holdings interior of a MF, except you contact the corporate quickly and ask for the holdings. they'd be contemporary as of the best of the most contemporary quarter. ETFs commerce at their NAV, b/c of the options and short-promote function, the position as there will be a disconnect between a MF NAV and its underlying cost. those are a number of the alterations yet no longer all.

Answer 4

an unmanaged fund that is comprised of all the stocks in an unmanaged index, like te Dow 30 stocks, or the 500 S&P 500 companies. It is a lower expense fund, and gives instant diversification depending on the index it tracks. usually a very good idea for a long term investor.

Answer 5

See NC , a previous answerer. He has it right.

Answer 6

Check out: www.IShares.com