ETF Stock, ETF Stocks, ETF Shares

By: EconomyWatch   Date: 3 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 investing vehicles that hold dozens, hundreds, or even thousands of companies under one umbrella, unified by a particular investing theme. They can be traded during the trading hours on major stock exchanges, just like regular stocks. Like any other publicly traded company, ETFs have ticker symbols. An ETF stock has equities of companies as the underlying asset.

 

ETF Shares: How Are They Traded?

ETF shares are not sold individually to investors. They are issued in blocks of 50,000 shares, known as "Creation Units" to institutions in lieu of a basket of securities mirroring the ETF’s portfolio. After purchasing a Creation Unit, institutions often sell individual ETF shares on a stock exchange, such as the NYSE or the ASE.

 

Investors wanting to sell their ETF shares have the following options:

  • Sell the shares to other investors in a bourse

  • Sell the Creation Units back to the ETF issuer

 

Popular ETF Stocks

An ETF can of two types:

  • Common stock ETF

  • Preferred stock ETF

 

Preferred stock ETFs offer investors:

  • inexpensive access to a preferred share market

  • diversification

  • increased liquidity

 

Some of the popular preferred stock ETFs are:

  • PowerShares Financial Preferred Portfolio (PGF): Tracks the Wachovia Hybrid & Preferred Securities Financial Index. The PowerShares Financial Preferred Portfolio contains roughly 30 holdings and focuses entirely on the preferred stocks issued by financial institutions. Although the ETF had hit a low in March 2009, it rose by more than 170% by the end of June, driven by improvements in the banking sector.

  • iShares S&P US Preferred Stock Index ETF (PFF): Dominated by holdings in financial companies, this ETF is the largest, with a market capitalization of $1.9 billion.

  • PowerShares Preferred Portfolio (PGX): Tracks the Merrill Lynch Fixed Rate Preferred Securities Index and maintains more than 65 holdings.

 

 

 


  • Dot Div
  •      

Most Popular in Exchange Traded Funds

Related Links
blog comments powered by Disqus