Mutual Funds vs ETF's
Owning mutual funds can be expensive when you consider the 1.5% average charge for advisory fees that go to the broker or financial planner that helps you select the funds. Exchange traded funds (ETF) can be your answer to greater flexibility at a lower cost.
Mutual funds are only required to declare their investment holding twice a year. Investors in funds are in the blind and not sure what they own until it is disclosed.
The history of Exchange Traded Funds goes back to the first such instrument created, the S&P Depository Receipt known as SPDR. The shorthand symbol is SPY and is composed of the 500 companies that make up the S&P 500.
ETF's stay very close to their inherent net asset value. If values drift too far, professional arbitrage traders will soon bring values into line. It is entirely self-policed by these mechanics.
ETFs behave just like a stock. You can enact stops, limit order and view everything in real-time if you choose.
The expenses to own an ETF is negligible. For instance, fees for SPY (S&P 500 index ETF) are pegged at 0.09 percent.
When you own an ETF you know exactly what you have invested in. There is no surprise in regards to anything mysterious. There is complete transparency.
If there is a choice between mutual funds or ETFs, one should be aware of fund management past history and direction. How do they do in a bear market? How do they perform in a bull market? Do the beat the ETF for the same investment area? - 23217
Mutual funds are only required to declare their investment holding twice a year. Investors in funds are in the blind and not sure what they own until it is disclosed.
The history of Exchange Traded Funds goes back to the first such instrument created, the S&P Depository Receipt known as SPDR. The shorthand symbol is SPY and is composed of the 500 companies that make up the S&P 500.
ETF's stay very close to their inherent net asset value. If values drift too far, professional arbitrage traders will soon bring values into line. It is entirely self-policed by these mechanics.
ETFs behave just like a stock. You can enact stops, limit order and view everything in real-time if you choose.
The expenses to own an ETF is negligible. For instance, fees for SPY (S&P 500 index ETF) are pegged at 0.09 percent.
When you own an ETF you know exactly what you have invested in. There is no surprise in regards to anything mysterious. There is complete transparency.
If there is a choice between mutual funds or ETFs, one should be aware of fund management past history and direction. How do they do in a bear market? How do they perform in a bull market? Do the beat the ETF for the same investment area? - 23217
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posted by X - Men @ 3:06 AM
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