| Exchange traded funds are becoming more | | | | can be traded any time during the trading |
| popular every day. Many of the large investing | | | | sessions of the stock exchanges, so you don't |
| web sites have whole sections dedicated to the | | | | have to wait for the market close to get in or |
| topic of exchange traded funds (or ETFs as they | | | | out of a fund. One disadvantage to this is that |
| are commonly labelled.) Why all the attention to | | | | you get a bid/ ask spread on a trade, that is the |
| this new class of investments. | | | | price to buy or the price to sell are not exactly |
| Some Advantages of ETFs | | | | the same. This is known as slippage, and can have |
| The most widely touted advantage of ETFs is | | | | noticeably negative impact on your returns if you |
| that they generally are not actively managed, and | | | | are trading in and out of the market frequently. |
| so they tend to have extremely low expenses, | | | | Finally, there is a large variety of fund |
| since they don't need to compensate a fund | | | | investments. You can invest in the major indices, |
| manager. For those looking to invest in a fund | | | | or you can pick a smaller, more targeted sector, |
| that primarily tracks on of the major indices, this | | | | like the financial stocks or real estate stocks. You |
| is a great way to get the same returns with no | | | | can target a region of the world, or a specific |
| lost performance from paying fees. | | | | country like Germany or China. For a truly |
| Exchange traded funds are not offered through a | | | | diversified portfolio, you can even allocate some |
| mutual fund company, but instead are traded on | | | | of your funds to commodities like gold or silver, |
| the stock exchanges. This has some advantages | | | | as there are funds that track the prices of these |
| and disadvantages. One advantage is that they | | | | as well. |