Reasons to Choose Exchange Traded Funds


Exchange Traded Funds, ETF hold assets like stocks, bonds or trades at almost the same price as the net value asset of its underlying asset over the course of the trading day. An Exchange Traded Fund is a combination of the valuation feature of the mutual fund or unit investment trust. This is because ETF can be bought or sold at any time of a particular trading day or at There is nothing like, it has to be done at the end of the trading day. They have made there presence in United States of America since 1993 and in United Kingdom since 1999.There is many reasons that make these funds attractive for people. A person can own Exchange Traded Fund and this would mean a small stake in many companies. These funds include many related stocks.

So, if a trader has got one ETF, it means variety of stakes. Now, even without owning different equities and without the hassle of keeping there track, a person can enjoy small stake in many companies by owning only one Exchange Traded Fund. A trader can buy or sell the ETFs at any time of the trading day. One can also be assured to find a real quote for the buying or selling of these Funds at any time on the trading day. It depends on trader whether he wants to do the transaction at the available quote or not. They are better than traditional mutual funds, as in case of mutual funds, the transaction can only be done once at the end of the trading day.

These Funds generally generate low capital gains as compared to other investments done by traders. This is because Exchange Traded Funds have low turnover of portfolio securities. Another way in which they are tax effective is that in case of an ETF, it is not required to sell securities to meet investor redemption. Operating expenses are never paid by investors. In Fact, investors never see operating expenses getting billed as well. However, portfolio manager deducts the fee from the pool of portfolio they are handling.


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