What are Exchange Traded Funds (ETFs)?

Question

Are there any Exchange Traded Funds in India. If so what are they.
What are the underlying securities in which ETFs invest.

Answer 1

Exchange-traded funds (or ETFs) are open-ended collective investment schemes, traded as shares on most global stock exchanges. Typically, ETFs try to replicate a stock market index such as the S&P 500 or Hang Seng Index, a market sector such as energy or technology, or a commodity such as gold or petroleum.

The legal structure and makeup varies around the world, however the major common features include:

An exchange listing and ability to trade continually
Typically they are index-linked rather than actively managed, although this is becoming increasingly less of a characteristic
The ability to handle contribution and redemptions on an in-kind basis (typically in large blocks of shares only)
Their 'value' (but not necessarily the price at which they trade— they can trade at a 'premium' or 'discount' to the 'underlying' assets' value) derives from the value of the 'underlying' assets comprising the fund.
These qualities provide ETFs with some significant advantages compared to traditional open-ended collective investments. The ETF’s structure allows for a diversified, low cost, low turnover index investment. This appeals to both institutional and retail investors to use as a long term hold and for selling short and hedging strategies.

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Answer 2

Mutual funds fall into 2 main categories: Open and closed-ended.

Closed-end or ETF as they're sometimes called are only traded (bought and sold) on the financial exchanges. In other words, they work just like stocks, you buy in the open market at the current price.

By contrast, open-end funds don't trade on exchanges and can be bought and sold directly through the mutual fund companies themselves.

Answer 3

Think of them as mutual fund indexs that trade like stocks

www.ishares.com is one of the big players in the ETF game. Visit their site to see how they work.The cover so many areas, medical to nanotech to energy to specific international areas as well as the traditional growth vs value, different caps and more

powershares is another and Vanguard is getting into the game.

I think these will really catch on and be the big investment vehicle

Answer 4

they are like mutual funds but you can trade it on exchange

Answer 5

funds that trade like stocks