ETFs: Exchange Traded Funds

Exchange traded funds, or ETFs, are among the fastest growing areas of the mutual fund industry.

The sheer number of available ETFs provides investors with many investment opportunities, but it can be daunting for investors to choose from among all the possible ETFs, and other challenges may arise when trading these instruments. We aim to help investors determine what ETFs to buy and when to sell them, and offer tips on how to effectively trade them.

Most ETFs are SEC registered 1940 Act mutual funds, but they are listed on exchanges and trade like stocks. Like mutual funds, ETFs are baskets of stocks or bonds. Most are index-based and focus in a particular sector or region, and most ETFs track market indexes and are therefore “passively managed.”

There’s certainly a lot to like about exchange traded funds. ETFs trade throughout the day like stocks and don’t require minimum hold times like many regular mutual funds. ETFs also usually have lower expenses than regular mutual funds providing a relatively low cost way to get exposure to most markets, sectors and regions. Although it’s important to remember that, at the end of the day, the best judge of any investment is the net (after fees and expenses) total return.