| Many investors still don't know about Exchange | | | | ETFs have gained such widespread acceptance |
| Traded Funds (or ETFs) and their advantages | | | | and popularity because they provide significant |
| over traditional mutual funds. In this article, we'll | | | | advantages over mutual funds. The advantages |
| examine Exchange Traded Funds, their history, | | | | of ETFs include: |
| performance and advantages and why you should | | | | --Continuous pricing throughout the day compared |
| never buy a mutual fund again. | | | | to end-of-day pricing for mutual funds |
| ETF 101 | | | | --Can be sold short like a stock which |
| Exchange Traded Funds can most accurately be | | | | isn¡¦t possible with mutual funds |
| described as the happy marriage of a stock with | | | | --Can be bought on margin |
| a mutual fund. | | | | --Can use limit and stop orders so you can exit or |
| Like mutual funds, when an investor buys an ETF, | | | | enter during the trading day |
| he is buying a pool of securities at one time. For | | | | --Have lower expenses than mutual funds and no |
| instance, an ETF known as DIA, or "Diamonds." | | | | management fees |
| allows the investor to take a position in the Dow | | | | Adding it all up, it's easy to see why Exchange |
| Jones Industrial Average. | | | | Traded Funds have been growing at a rate of |
| Like a stock, an ETF can be purchased through a | | | | nearly 50% per year since 1993. |
| brokerage account, can be traded throughout the | | | | Conclusion: |
| day, can be bought on margin and offers | | | | It's easy to see why Exchange Traded Funds |
| stock-like trading features such as limit orders, | | | | have steadily grown in popularity over the last |
| stop orders and short selling | | | | twelve years. By combining the benefits of a |
| ETFs come in many different flavors. They track | | | | mutual fund with the benefits of a stock, they |
| all the major indexes like the Dow, S&P 500, | | | | really do offer investors an optimum combination |
| NASDAQ 100, Russell 2000 and others. They're | | | | of flexibility and potential profit. |
| also available for investors who want to trade | | | | Of course, the large mutual fund companies don't |
| sectors like energy, technology, precious metals, | | | | like ETFs but have had to adjust to their new |
| financial, health care, emerging markets, interest | | | | popularity and so many fund families have |
| rates and many more. | | | | introduced ETFs of their own in recent years. |
| Introduced over 12 years ago, ETFs were initially | | | | For investors, ETFs offer considerable advantages |
| mostly used by professional traders, but in recent | | | | of flexibility, cost and diversity, and therefore, you |
| years, have experienced rapid growth as a | | | | should never buy a mutual fund again. |
| popular investment vehicle with public investors. | | | | Copyright 2006 Equitrend, Inc. |