Exchange-Traded Funds (ETF)

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Exchange-Traded Funds (ETF)

  1. 1. Exchange-Traded Funds (ETFs)
  2. 2. What is an ETF? Defined by Investopedia.com <ul><li>Exchange-Traded Fund (ETF): A security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange, thus experiencing price changes throughout the day as it is bought and sold. </li></ul>
  3. 3. Pros and Cons of ETFs <ul><li>Pros: </li></ul><ul><ul><li>Diversification </li></ul></ul><ul><ul><li>Trades like a stock </li></ul></ul><ul><ul><li>Buy on margin or sell short </li></ul></ul><ul><ul><li>Low cost </li></ul></ul><ul><ul><li>Tax efficient </li></ul></ul><ul><li>Cons: </li></ul><ul><ul><li>Brokerage commissions </li></ul></ul><ul><ul><li>Too much flexibility </li></ul></ul>
  4. 4. Who should invest in ETFs? <ul><li>Someone who is well educated on ETFs and who plans on investing large sums of money (possibly rollovers from 401ks or IRAs) </li></ul><ul><li>Not small weekly or monthly amounts because of brokerage fees </li></ul><ul><li>Must realize risk in trying to generate short-term gains </li></ul>
  5. 5. Popular ETFs <ul><li>SPDR Trust. Ticker: SPY </li></ul><ul><li>iShares Lehman US Aggregate Bond Fund. Ticker: AGG </li></ul><ul><li>PowerShares QQQ Trust. Ticker: QQQQ </li></ul><ul><li>DIAMONDS Trust. Ticker: DIA </li></ul><ul><li>iShares Russell 1000 Growth Index Fund. Ticker: IWF </li></ul>
  6. 6. Additional Information <ul><li>It is very important to be educated before making an investment decisions </li></ul><ul><li>For further information on ETFs please visit the websites listed below </li></ul>

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