| If you are looking for flexible investment vehicles | | | | operate in different countries and it can be said |
| that you manipulate within your portfolio such as | | | | that the amount of ETF's its equivalent to the |
| stocks, bonds, futures you should pay close | | | | number of industries that are being traded in the |
| attention to ETF's. By definition ETF stands for | | | | stock exchange. |
| exchange traded fund, an ETF holds assets such | | | | Benefits of ETFs |
| as bonds and stocks and its net worth is | | | | One of the most obvious benefits when it comes |
| equivalent to that of the negotiable instrument it | | | | to ETF's is their low operating costs; let's illustrate |
| holds; an ETF can also be thought of as an | | | | this point, the Vanguard total Stock market |
| investment portfolio that holds stocks and bonds | | | | VIPER which is an ETF that tracks the index for |
| or other negotiable instruments that are traded | | | | the entire US stock market carries an annual |
| on a stock exchange which is very similar to the | | | | operating cost of 0.07% of the total assets, that |
| way that stocks are traded. | | | | is equivalent of saying that a $10,000 investment |
| The main difference between stocks and ETF's | | | | would have an annual operating fee of seven |
| (besides that an ETF is a portfolio of bonds or | | | | dollars. |
| stocks) is that an exchange traded fund tracks | | | | Another great benefit of dealing with an ETF is |
| and index hence the reason why they're called | | | | that such trading vehicle is structured for tax |
| index funds. There are many indexes that can be | | | | efficiency this is because an ETF itself doesn't |
| tracked through ETF's, an investor may choose | | | | have to buy or sell securities so this means that |
| to track and index for it to Dow Jones, NASDAQ, | | | | there are not any taxable gains to be passed on. |
| a specific industry such as the manufacturing | | | | And ETF can generate taxable gains but, an |
| industry where they may choose to track and | | | | exchange traded fund is often sold as a stock will |
| index of an emerging market, these markets can | | | | be sold in the stock market, they are not |
| be in different countries so much like stocks and | | | | redeemed by the holders so in order for an |
| investor can also buy an ETF which tracks a | | | | investor to realize capital gains he would have to |
| particular index of an industry which thrives in | | | | sell the shares or trade the ETF in order to |
| different countries across the world. | | | | reflect changes in the underlying index. |
| The whole ETF concept has been around for | | | | Last (but not least) ETFs are very flexible when |
| about 15 years and the first to hit the market did | | | | they are compared against other investment |
| it in 1993 and was better known as "spiders" -- | | | | instrument such as mutual funds, in other words a |
| ETF symbol was SPDRs, this ETF in particular | | | | mutual fund is often priced once and this usually |
| tracked the Standard and Poor's 500 index of | | | | happens at the end of the trading day, ETFs on |
| large-company stocks. During the early 1990s | | | | the other hand can be bought or sold exactly as |
| when there is investment vehicle was introduced | | | | you would with stocks and similarly to stocks you |
| to the market the most popular type of ETF's | | | | could also buy on margin (using other people's |
| were those which track the index of the | | | | money) and you can also sell short when the |
| technology sector because of obvious reasons, | | | | market conditions are appropriate. |
| today there is a huge variety of ETF's that | | | | |