| Exchange Traded Funds represent the shares of | | | | margin, and invest as much or as little money |
| ownership in either fund, unit investment | | | | as they wish, as there is no rule of minimum |
| trusts, or depository receipts that hold the | | | | investment requirement. |
| portfolios of common stocks that closely | | | | |
| track the performance and the dividend yields | | | | Many Exchange Funds have the capability for |
| of specific indexes, either broad market, | | | | options to be written against them whereas |
| sector or international. | | | | Mutual funds do not offer such features. |
| | | | |
| Exchange Funds give the investors the | | | | As a working example, an investor in an |
| opportunity to buy or sell an entire | | | | open-ended fund can only purchase or sell at |
| selection of stocks in a single security, as | | | | the end of the day at the mutual fund's |
| easily as buying or selling a share of stock. | | | | closing price. This makes stop-loss orders |
| Exchange Funds offer a wide range of | | | | much less useful for open-ended funds. |
| investment opportunities. | | | | |
| | | | That is, if your broker even allows them. An |
| Exchange Traded Funds also called, as the | | | | Exchange Traded Funds is continually priced |
| ETFs can also be understood as open-ended | | | | throughout the day and therefore is not |
| collective investment schemes, traded as | | | | subject to this disadvantage, allowing the |
| shares on most of the global stock exchanges. | | | | user to react to undesirable or beneficial |
| They try to replicate a stock market index | | | | market condition on an intraday basis. |
| for instance the S&P 500 or Hang Seng Index, | | | | |
| a market sector for instance energy or | | | | Another advantage is that Exchange Funds like |
| technology, or a commodity as an example gold | | | | the closed-ended funds are immune from some |
| or petroleum. | | | | market timing problems that have plagued |
| | | | open-ended mutual funds. In these timing |
| Understanding the Exchange Traded Funds | | | | attacks, large investors trade in and out of |
| | | | an open-ended fund swiftly, exploiting minor |
| While it may seem to be similar to an index | | | | differences in price in order to profit at |
| mutual fund, Exchange Funds differ from | | | | the expense of the long-term unit holders. |
| mutual funds in many significant ways. Unlike | | | | |
| Index mutual funds, Exchange Funds are priced | | | | Thus, with an Exchange Funds or say a |
| and can be bought and sold all the way | | | | closed-ended fund such an operation is not |
| through the trading day. Furthermore, | | | | possible--the underlying assets of the fund |
| Exchange Funds can be sold short and bought | | | | are not affected by its trading on the |
| on margin too. | | | | magnificent market. |
| | | | |
| Well! Now, single securities, known as | | | | Exchange Traded Funds like any other kind of |
| Exchange Traded Funds (ETF), can track the | | | | Investment Company will have a prospectus. |
| performance of an increasing number of | | | | All investors that purchase Creation Units |
| diverse index funds such as the NSE Nifty. | | | | get a prospectus. |
| Most Exchange Funds represent a portfolio of | | | | |
| stocks that are very well designed to track | | | | Some Exchange Funds also deliver a prospectus |
| one specific catalog. | | | | to secondary market purchasers and the ones |
| | | | that do not deliver a prospectus are required |
| Exchange Funds can be bought and sold exactly | | | | to give investors a document known as a |
| like a stock of an individual company during | | | | Product Description, which summarizes all the |
| the entire trading day. In addition, they can | | | | key information about the ETF and explains |
| be bought on margin, sold short or bought at | | | | how to get a prospectus. |
| specific limit prices. Exchange Funds can | | | | |
| help investors build a diversified portfolio | | | | All Exchange Traded Funds will deliver a |
| that is easy to track. | | | | prospectus when asked for, as they do not use |
| | | | profiles. Exchange Funds are legally |
| Exchange Funds trade like shares while | | | | structured as open-end companies and must |
| providing the diversification of managed | | | | also have statements of additional |
| funds. Their presentation closely tracks the | | | | information. |
| investment returns of the shares making up | | | | |
| for the index. | | | | Open-end Exchange Traded Funds must be able |
| | | | to provide shareholders with annual and |
| Well! Exchange Traded Funds can be the cheap | | | | semi-annual reports before buying shares; you |
| and the most fairly valued ones. Perhaps the | | | | could carefully read all of Exchange Funds |
| most important, although subtle, benefit of | | | | available information, including its |
| an ETF is the stock-like features that are | | | | prospectus. |
| offered. | | | | |
| | | | The website of the American Stock Exchange |
| Since Exchange Funds trade on the exceptional | | | | provides more information about numerous |
| market, investors can carry out the same | | | | styles of Exchange Traded Funds and how they |
| types of trades that they can with a stock. | | | | work. You can easily Uncover detailed |
| For example, investors can sell short, use a | | | | information about Exchange Funds resting on |
| limit order, use a stop-loss order, buy on | | | | the website of The NASDAQ Stock market too. |