by 
The Curious Bag
-
Exchange traded funds or ETFs have become popular securities for both long-term investors and short-term traders. ETFs provide investors an easy way to take positions in a wide range of assets from stocks and bonds to precious metals and foreign currencies.
Function
ETFs are investment companies similar to mutual funds. Investors hold shares of a portfolio of securities managed by an investment company. ETFs typically have low expenses compared to mutual funds.
Limitations
Exchange traded funds hold securities or assets to mirror an index like the S&P 500 or track a commodity price like gold or oil. ETFs are not actively managed to attempt to beat the market.
Features
Shares of an exchange traded fund can only be purchased and sold on stock exchanges like shares of stock. Exchange trading allows investors to move in and out of ETFs throughout the trading day.
History
The first ETF was SPY, the SPDR S&P 500 launched in 1993. The first international stock ETF came in 2000. The number of available ETFs grew from 150 in 2004 to almost 800 in 2009.
Potential
The many ETFs allow investors to focus on broad market funds or very focused sectors like biotechnology. There are also ETFs for foreign stocks, gold and oil. Inverse ETFs allow shareholders to profit when the tracked sector declines, and leveraged ETFs multiply the daily change of the underlying assets.
Source:
RELATED QUESTIONS
Copyright 2023, Wired Ivy, LLC