| Exchange Traded Funds (ETFs) are mutual funds | | | | an ETF is the same fee you would pay to trade a |
| that trade like stocks. Each ETF has its own ticker | | | | stock. |
| symbol and expense ratio (assets that are used | | | | You also don't have to worry about calculating |
| pay for operating expenses). They are very easy | | | | how many, "contracts" to buy or contract |
| to trade and understand. | | | | expiration dates as you would with a separate |
| ETFs have transformed from a way to | | | | futures account. The EFT takes care of all of this |
| investment in the major indexes into a wide | | | | for you. |
| range of other financial markets and sectors. | | | | Although ETFs trade differently than your |
| Today, ETFs give you a variety of different | | | | traditional mutual funds, your decision to buy, hold |
| markets and commodities to trade without the | | | | or sell remains the same. |
| hassle of opening up separate brokerage | | | | The decision to use ETFs is up to you. They are |
| accounts. Because ETFs are traded like stock, | | | | ideal for day trading, swing trading and long term, |
| they can be purchased through almost all of your | | | | "buy and hold" investments. Because ETFs trade |
| brokerage accounts. ETF's can even be traded in | | | | like stocks, they minimize trading restrictions |
| most 401K, IRAs, and other retirement accounts. | | | | often imposed by your mutual funds. For |
| For example, let's say you wanted to invest in | | | | example, on some Fidelity Mutual Funds, you |
| Crude Oil (light, sweet crude oil). Crude Oil is | | | | would face a short term holding fee of $75.00 if |
| traded on NYMEX. If you did not have access to | | | | you traded your mutual fund without holding it for |
| NYMEX through your current account, you would | | | | approximately 90 days (Check with your fund |
| have to open up a separate brokerage account | | | | company to confirm their policy.). If you were |
| to get access to this commodity. | | | | attempting to day trade or swing trade this |
| Now, with ETFs, all you would have to do is | | | | mutual fund, you would have to pay $75 dollars |
| invest in ticket symbol: CUSIP. "This ETF will track | | | | every time you violated this holding period. If you |
| the price of West Texas Intermediate (WTI) light, | | | | were to purchase an ETF instead, you would only |
| sweet crude oil delivered to Cushing, Oklahoma, | | | | have to pay your brokerage fees for a stock |
| whose price is the primary benchmark in the U.S. | | | | transaction. |
| for crude oil." | | | | ETFs have grown in popularity and have been |
| It is a much easier transaction to buy the ETF | | | | accepted by the professional and novice investor |
| because it trades like a stock. Like stocks, though, | | | | as a valid investment choice. They have allowed |
| ETFs trade throughout the day and are priced by | | | | many people to invest in markets that were not |
| the market, not necessarily at their net asset | | | | easily available. The only choice for you now is to |
| value (unlike mutual funds that only trade at their | | | | research the wide range of ETF's available to you |
| settled net asset value at the end of the trading | | | | and see which ones fit into your overall |
| day). To your broker, trading an ETF is the same | | | | investment portfolio. |
| as trading a stock. The fee you pay to buy or sell | | | | |