ETF Guide, ETF Dummies Guide

By: EconomyWatch   Date: 4 August 2009

About The Author

EconomyWatch

The core Content Team our economy, industry, investing and personal finance reference articles.

EconomyWatch, Content Team

 

  • Dot Div
  •      

Exchange Traded Funds (ETFs) are baskets of securities consisting of a combination of stocks, bonds, commodities or currencies. These ETFs track a market, sector or industry index and trade on major stock exchanges like a stock. Referring to an ETF Guide is sure to help investors make the right choice.

 

ETF Dummies Guide: Benefits of Investing in ETF
 

An ETF

  • Can be bought and sold like a stock during market hours

  • Has lower expense ratio than that of most mutual funds

  • Is structured for tax efficiency

  • Can be sold short or long

 

ETF Guide: Difference between ETFs and ETNs

 

ETNs (exchange traded notes) are structured investment products issued by a provider or a major bank as senior debt notes. Meanwhile, ETFs comprise a group of:

  • actual securities

  • commodities or

  • currency derivative such as futures or options.

Other differences are:

  • When investors buy an ETN, they purchase a debt product similar to a bond. They buy an asset like a stock or index when they buy an ETF.

  • ETNs are highly secured products as they are backed by a bank with a high credit rating.

 

ETF Guide: What Are Actively Managed ETFs?

 

A normal ETF emulates an index or an underlying investment such as a commodity or precious metal. The proportion of the underlying assets in an ETF does not change except when assets in the correlating index change. Actively managed ETFs, on the contrary, bring one of the best advantages of mutual funds, active management, to ETFs. They are actively managed on a daily basis to deliver higher returns than that of the market.

 

ETF Guide: Companies that Issue ETFs

 

There are more than twenty companies offering ETFs. Some of them are:

  • Barclays Global Investors

  • State Street Global Advisors

  • Vanguard

  • ProFunds Group

  • Van Eck Global

  • Wisdom Tree

  • Claymore  

ETF Guide: Some Popular ETFs
 

The top five ETFs as of June 2009 are:

  • US Natural Gas ETF

  • iShares Barclays TIPS

  • Vanguard Emerging Markets

  • SPDR Retail

  • iShares S&P 500

Before investing in any ETFs, traders must definitely go through an ETF guide and gather in-depth knowledge and tips on suitable investment vehicles.


  • Dot Div
  •      

Most Popular in Exchange Traded Funds

Related Links
blog comments powered by Disqus