exchange traded funds
2007-06-08 06:14:26 · 5 answers · asked by realventures2003 1 in Business & Finance ➔ Investing
Because they are in high demand, they are in high demand because the fees are lower (almost non-existent) whereas in mutual funds there are fees you get charged on a monthly basis, and possibly load fees.
They also trade like stocks, so you can watch the price movement all day. Large money mananger will also use them to structure a portfolio if they don't want to have cash. They can do this because they act like stocks, and if they were mutual funds you could not do this (get in and out quickly and efficiently).
Ease of trading is another reason, you cannot get in and out of mutual funds quickly, it is looked down upon, whereas is an ETF you can day trade, and get in and out when you want to.
Bottom line is they are easier and have alot of worth and use to the investment community, not only for individuals but for institutions as well.
2007-06-08 08:19:54 · answer #1 · answered by Steve 3 · 0⤊ 0⤋
ETFs are created by mutual fund companies to attract new customers.
Only 20% of the traditional mutual funds beat the SP 500 and many mutual funds just track the SP 500, but charge more than a SP 500 index or SPY, the ETF that tracks the SP 500. You can also short an ETF and buy and sell at anytime. There are also internal taxs in mutual funds (you pay hidden taxes when others in the mutual fund sell their shares). All these advantages are having people get out of traditional mutual funds and ETFs. In order to get and even keep customers, they need to offer either better performances on theri traditional mutual funds or they have to offer ETFs.
2007-06-08 13:27:58 · answer #2 · answered by gregory_dittman 7 · 0⤊ 0⤋
Because there are so many "niche" investors out there that demand certain types of ETFs. Also, it is a safer play to go with an ETF rather than one stock for security and diversification reasons. Many ETFs also outperform the sectors they represent.
2007-06-08 15:26:59 · answer #3 · answered by sabennet1 2 · 0⤊ 0⤋
It's a product line, like wine or beeny babies. When a company comes up with a hot product like ETFs, they try to diversify that line as much as possible to sell to the broadest possible market.
2007-06-08 14:25:22 · answer #4 · answered by Gretch 3 · 0⤊ 0⤋
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2007-06-09 19:55:52 · answer #5 · answered by Anonymous · 0⤊ 0⤋