Exchange Traded Funds Vie For Mutual Fund Territory
Owning mutual funds can be expensive when you consider the 1.5% average charge for advisory fees that go to the broker or financial planner that helps you select the funds. Exchange traded funds (ETF) can be your answer to greater flexibility at a lower cost.
Bi-yearly, mutual funds are required to inform investors of their holdings. For the most part, mutual fund purchasers are not aware of what they own.
The history of Exchange Traded Funds goes back to the first such instrument created, the S&P Depository Receipt known as SPDR. The shorthand symbol is SPY and is composed of the 500 companies that make up the S&P 500.
What makes ETFs unique is that they stay very close to their net asset value. The price of the ETF stock cannot drift too far above or below its actual value because professional traders will push it back in line quickly if they see disparity.
Just like a stock, one can place loss protection in the form of stop-loss and limit order. You are able to see quotes on a real-time basis.
The management fees for EFTs dwarf those of mutual funds. SPY, for instance, SPY has an annualized net expense of 0.09 percent.
When you own an ETF you know exactly what you have invested in. There is no surprise in regards to anything mysterious. There is complete transparency.
Many feel that EFT's beat mutual funds by a large margin. Mutual funds have shortcomings that glare into the face of any serious investor. Unless one has complete faith in the fund manager for this type of "hands-off" negotiation one may get in trouble. - 23196
Bi-yearly, mutual funds are required to inform investors of their holdings. For the most part, mutual fund purchasers are not aware of what they own.
The history of Exchange Traded Funds goes back to the first such instrument created, the S&P Depository Receipt known as SPDR. The shorthand symbol is SPY and is composed of the 500 companies that make up the S&P 500.
What makes ETFs unique is that they stay very close to their net asset value. The price of the ETF stock cannot drift too far above or below its actual value because professional traders will push it back in line quickly if they see disparity.
Just like a stock, one can place loss protection in the form of stop-loss and limit order. You are able to see quotes on a real-time basis.
The management fees for EFTs dwarf those of mutual funds. SPY, for instance, SPY has an annualized net expense of 0.09 percent.
When you own an ETF you know exactly what you have invested in. There is no surprise in regards to anything mysterious. There is complete transparency.
Many feel that EFT's beat mutual funds by a large margin. Mutual funds have shortcomings that glare into the face of any serious investor. Unless one has complete faith in the fund manager for this type of "hands-off" negotiation one may get in trouble. - 23196
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