ETF's vs Mutual Funds
Exchange Traded Funds (EFTs) are gaining more prominence in investor's portfolios. Mutual funds are expensive to own or to trade when compared to an EFT since average mutual funds have a 1.5% management fee attached.
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.
Professional traders keep the market price of ETFs in line with the value of the underlying stocks by arbitrage of any price disparities. Unlike mutual funds where their price may get distorted in regard to the underlying value, ETFs give a fair deal.
ETFs are liquid in that you can buy and sell them at any time. You can place stop-loss and limit order as protection. You can see the latest quote in real-time.
The management fees for EFTs dwarf those of mutual funds. SPY, for instance, SPY has an annualized net expense of 0.09 percent.
Unlike a mutual fund, with an ETF you know exactly what that index is composed of. There is no mystery.
Mutual fund manager's results vary and it's imperative that any investor does due diligence research. Often, an ETF in the same area of focus outperforms the fund. - 23222
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.
Professional traders keep the market price of ETFs in line with the value of the underlying stocks by arbitrage of any price disparities. Unlike mutual funds where their price may get distorted in regard to the underlying value, ETFs give a fair deal.
ETFs are liquid in that you can buy and sell them at any time. You can place stop-loss and limit order as protection. You can see the latest quote in real-time.
The management fees for EFTs dwarf those of mutual funds. SPY, for instance, SPY has an annualized net expense of 0.09 percent.
Unlike a mutual fund, with an ETF you know exactly what that index is composed of. There is no mystery.
Mutual fund manager's results vary and it's imperative that any investor does due diligence research. Often, an ETF in the same area of focus outperforms the fund. - 23222
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posted by X - Men @ 11:46 AM
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