| An ETF, or Exchange Trade Fund, tracks an index | | | | Timing: Mutual prices can change from the time |
| and trades on the stock market. An ETF is a | | | | you choose to buy to the time the price is |
| combination of many types of securities like | | | | calculated at the end of the day. This is not true |
| stocks and bonds, among others. They allow for | | | | with ETFs. When you see a price, it is the current |
| a more diversified portfolio than just one singular | | | | market price. |
| stock would. | | | | Trading Flexibility: With ETFs you have many |
| ETFs have many similarities to stocks: | | | | choices on how to invest. You can buy long or |
| - They are an investment | | | | sale short, buy or sell ETF options, buy on margin |
| - Bought and sold on a stock exchange | | | | or even consider arbitrage options. |
| - Can be traded during trading hours | | | | Performance: Some ETFs will pay out regularly |
| - Their prices can change throughout the day | | | | which helps to increase your overall earnings. On |
| - Are bought through brokerage accounts on and | | | | top of this, ETFs usually perform better over an |
| offline They also have many differences from | | | | extended period of time than mutual funds. |
| stocks: | | | | Transparency: Mutual Funds only disclose how |
| - They have a basis in securities | | | | much they are really worth quarterly or even |
| - Already offer diversification to a portfolio | | | | semi-annually. ETFs are, in effect, transparent. |
| - You can buy a whole portfolio in just one ETF | | | | They show you everything about the underlying |
| - Most often have less volatility | | | | index on a daily basis. |
| ETFs: The Alternative to Mutual Funds | | | | |