Thursday, October 04, 2007

About ETF's

"Exchange Traded Funds" more commonly known as ETF's could be the successors of mutual funds. With 100's to choose, they offer a chance to buy into an industry, indices, country or commodity without the cost, management skills and paper work required to purchase individual stocks.
Generally, ETF's have fewer managers, lower costs and cover as many sectors as mutual funds.
iShares, SPDR and ProShares are some of the more popular families of funds, each offering a variety of categories.
Here are a few basic factors to consider when investing in ETF's:
  • Liquidity is important, high trading volume is desireable.
  • Low expense ratio.
  • The family of funds should be run by a reputable firm.

In choosing an individual ETF, think of it as a stock and opt for the sector that you expect will do well in the future.

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