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DON’T LET MUTUAL FUND NAMES FOOL YOU OUT OF YOUR RETIREMENT!
Mutual fund managers use fake fund names to part you from your money such that you cannot judge what a fund does by its name. Many funds have names that are outright misleading or even deceptive. In the late 1990’s, for instance, during the...
How to save money by spending wisely
Why is it that the older and richer people become, the more conservative they are with their money? Have you ever done or know someone who has made an investment that promised a 10% interest or profit per month? Everyone wants to make above average...
Investor Guide to Financial Health
Step 1: Spend less than you earn Perhaps the simplest financial concept is the toughest for us to conquer- spend less than you earn. After paying your living expenses (bills, loan and mortgage payments, cost of food, charitable contributions, taxes,...
Mutual Fund Versus Stocks
If you have money to invest, you might contemplate investing in
mutual fund. What is mutual fund? Mutual fund is simply a
collection of stocks that are bought using money pooled from
various individual investors. Historically, average mutual...
What Is One Of The Worst Stock Market Investments You Can Make?
Investing in the stock market is probably one of the riskiest
ventures you can delve into with your money you really need to
know how to trade stock.
It is also one of the most profitable undertakings you may make
at the same time.
So...
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Exchange Traded Funds Primer
Exchange Traded Funds (ETFs) are a group of passive index funds that trade on an exchange like an individual stock. At the time of writing there are 162 ETFs with $220 billion in assets under management trading on U.S. exchanges.
ETFs hold a basket of securities that mimic the results of various indices including broad stock and bond market, industry sectors, and international securities. New niche funds are being created regularly. Recent introductions include gold and China funds, and there are rumors that a silver ETF will soon be available.
The most popular ETF is the NASDAQ 100 Tracking Stock (QQQQ) trading 50 million shares a day on the NASDAQ Stock Market. The volume leaders on the American Stock Exchange are the SPDRS (SPY) tracking the S&P 500 trading 25 million shares per day, the Energy SPDR (XLE), Japan iShares (EWJ), Russell 2000 iShares (IWM), and the Financial SPDR (XLF).
ETFs are widely used by institutional and individual investors as a tool for diversification, risk reduction, hedging, and an efficient way to acquire a basket of securities providing partial ownership in all holdings with only a single commission and small administration fees. ETFs are also transparent, meaning that investors know at all times what securities they are invested in.
There are now also options and futures contracts trading on of ETFs. The Chicago
Associated Websites
Board Options Exchange (CBOE) lists 43 options on ETFs, while the Chicago Mercantile Exchange (CME) offers futures contracts on the S&P 500 Depository Receipts, NASDAQ 100 Tracking Stock, and Russell 2000 Index Fund. And One Chicago, a joint venture between the CBOE, CME, and Chicago Board of Trade (CBOT), offers an electronically traded futures contract on the DIAMONDS Dow Jones Industrial Average ETF.
There are also a number of web sites offering information on Exchange Traded Funds. Check out Amex.com, Yahoo! Finance’s ETF Center, ETFConnect, or ETFera.com. Meanwhile, investment research firm Morningstar compares the fair value estimates to market prices of exchange traded funds holdings to determine whether a fund is over or undervalued.
Exchange Traded Fund’s low costs, liquidity, and diversification make them an excellent alternative to mutual funds, broad based index investments, and individual stocks in niche sectors.
About the Author
Mark Mahorney is a freelance financial writer. Mark inks The Market Speculator newsletter. You can also read his scrawls, scribbles, rambles, and rants on the markets and whatever other ilk gets his ire at BlogginWallStreet.com and Marketblog.com.
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