Exchange Traded Funds: Why You Should Never Buy a Mutual Fund Again

Many investors still do not know about Exchange Traded Funds (or ETFs) and their advantages over traditional mutual funds. In this article we will examine Exchange Traded Funds, their history, performance and advantages and why you should never buy a mutual fund again.
ETF 101
Exchange Traded Funds can be most accurately described as the happy marriage of a stock with a mutual fund.
Like mutual funds, when an investor buys an ETF, he is buying a pool of securities at one time. For example, an ETF known as DIA, or "Diamonds." the investor a position in the Dow Jones Industrial Average participate.
Like a stock, an ETF can be purchased through a brokerage account, can be traded throughout the day, can be bought on margin and offers stock-like trading features such as limit orders, stop orders and short selling
ETFs come in many different flavors. They all follow the major indexes such as the Dow, S & P 500, Nasdaq 100, Russell 2000 and others. They are also available for investors who want to trade sectors like energy, technology, precious metals, financial, healthcare, emerging markets, interest rates and much more.
Introduced over 12 years ago, ETFs were initially mostly used by professional traders, but in recent years, have experienced rapid growth as a popular investment vehicle with public investors.
ETFs have gained such widespread acceptance and popularity because they provide significant advantages over mutual funds. The advantages of ETFs include:
- Continuous pricing throughout the day compared to the end of the day pricing for mutual funds
T possible with mutual funds | - Can it isn ¡sold short as a stock
- Can be purchased on margin
- Can use limit and stop orders, so you can leave or enter during the trading
- Have lower expenses than mutual funds and no management
Adding it all, it's easy to see why Exchange Traded Funds are growing at a rate of almost 50% per year since 1993.

Conclusion: It is easy to see why Exchange Traded Funds have steadily grown in popularity over the past twelve years. By combining the benefits of a mutual fund with the advantages of a stock, they really do offer investors an optimum combination of flexibility and the potential profit.
Of course, the big mutual fund companies do not like ETFs, but have to get used to their new popularity and many fund families ETFs of their own in recent years.
For investors, ETFs offer significant advantages of flexibility, cost and diversity, and therefore you should never buy a mutual fund again.
Copyright 2006 Equitrend, Inc.

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