Exchange Traded Funds vs Mutual Funds
Why buy mutual funds when you can be owning an Exchange Traded Fund (ETF)? Mutual funds have limited liquidity in that you can only buy and sell mutual funds at the end of the day. Plus exorbitant fees charged investors average 1.5%.
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 S&P 500 Index EFT was the first Exchange Traded Fund. With one trade position, one could own the entire 500 companies of the S&P 500 with the street symbol SPY.
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 expenses to own an ETF is negligible. For instance, fees for SPY (S&P 500 index ETF) are pegged at 0.09 percent.
Best of all, ETFs are transparent and you always know what you are getting. You'll know exactly what the market index is composed of. There is now wondering if your ETF owns something that you did not know about.
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? - 23218
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 S&P 500 Index EFT was the first Exchange Traded Fund. With one trade position, one could own the entire 500 companies of the S&P 500 with the street symbol SPY.
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 expenses to own an ETF is negligible. For instance, fees for SPY (S&P 500 index ETF) are pegged at 0.09 percent.
Best of all, ETFs are transparent and you always know what you are getting. You'll know exactly what the market index is composed of. There is now wondering if your ETF owns something that you did not know about.
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? - 23218
About the Author:
Not only Exchange Traded Funds research and screeners, but also seasoned observations on the future direction of the markets that will that will guide your investments. Read the best rated investment paper for 80% off news stand prices delivered right to your front door at Wall Street Subscription
posted by X - Men @ 8:32 AM
0 Comments
0 Comments:
Post a Comment
Subscribe to Post Comments [Atom]
<< Home