What is an Exchange Traded Fund (ETF)?
Exchange Traded Funds (ETFs) are funds that trade like shares on an Exchange. They mimic stock market indexes and are passively managed just like an index fund. ETFs have low annual expenses, but you must pay commissions to trade them. ETFs’ market prices usually closely track their NAVs. Most ETFs are index funds.
ETF stands for “Exchange Traded Fund”. Exchange Traded Funds are Collective Investment schemes. Collective investment schemes are ways of investing money with other people in order to participate in a wider range of investments. Collective investments schemes are usually referred to as Mutual Funds, Managed Funds or simply Funds. These funds account for a large portion of the trading on most stock exchanges. While the structure of ETF’s vary around the world, major common features include: An exchange listing and ability to trade continually. They are often index linked instead of being actively managed. These qualities give ETF’s some advantages over Mutual Funds in the US. ETF’s allow for a diversified portfolio at a low cost. They can be used in both long term buy and hold and for selling short and hedging strategies. Typically ETF’s replicate a stock market index, such as Standard and Poor’s 500, or the Hang Seng index. They may also contain stocks from a specific market sector suc
