| Exchange traded funds refers to a type of | | | | asset value on that day. This is different from |
| investment that is common in the stock | | | | other types of funds, which in most cases trade |
| exchange market. The funds trade in stocks and | | | | at prices which may be more or less than the net |
| bonds just like most investments that can be | | | | asset value. ETFs and close-end funds are in |
| found in the stock market. They are popular with | | | | many cases thought to be one and the same |
| many investors because, they come with benefits | | | | thing but they are not. |
| like low cost of management, tax efficiency and | | | | They offer investors a wide pool of securities and |
| features that make them easy to track and | | | | are more similar to mutual funds, the only |
| manage. | | | | difference being that, they are traded on a daily |
| Exchange traded funds are more suited for large | | | | basis as investors may wish. |
| corporations and institutional investors. This is | | | | Some of the key characteristics to note about |
| because, once they have been bought, they are | | | | the ETFs include the fact that the investment |
| then exchanged with the stocks of their | | | | manager issues or redeems the units in exchange |
| underlying securities. This is to say that while the | | | | of the current value of the smaller units, which |
| ETF is bought as a unit, it may be exchanged for | | | | are disseminated on a per share basis. An |
| the smaller specific units that comprise the larger | | | | investment manager in charge of it must identify |
| unit. | | | | himself as such in any sales literature and must |
| The ETFs work in such a way that, it is possible | | | | only issue those shares that have been approved |
| to trade them on each and every day at the net | | | | for trading on the stock exchange market. |