Mutual Funds vs ETF's
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%.
Bi-yearly, mutual funds are required to inform investors of their holdings. For the most part, mutual fund purchasers are not aware of what they own.
The history of Exchange Traded Funds goes back to the first such instrument created, the S&P Depository Receipt known as SPDR. The shorthand symbol is SPY and is composed of the 500 companies that make up the S&P 500.
What makes ETFs unique is that they stay very close to their net asset value. The price of the ETF stock cannot drift too far above or below its actual value because professional traders will push it back in line quickly if they see disparity.
Just like a stock, one can place loss protection in the form of stop-loss and limit order. You are able to see quotes on a real-time basis.
Also, ETF's are inexpensive to own. The fees are less than 1% a year. For instance the SPY has an annualized net expense of 0.09 percent.
Unlike a mutual fund, with an ETF you know exactly what that index is composed of. There is no mystery.
Mutual fund manager's results vary and it's imperative that any investor does due diligence research. Often, an ETF in the same area of focus outperforms the fund. - 23159
Bi-yearly, mutual funds are required to inform investors of their holdings. For the most part, mutual fund purchasers are not aware of what they own.
The history of Exchange Traded Funds goes back to the first such instrument created, the S&P Depository Receipt known as SPDR. The shorthand symbol is SPY and is composed of the 500 companies that make up the S&P 500.
What makes ETFs unique is that they stay very close to their net asset value. The price of the ETF stock cannot drift too far above or below its actual value because professional traders will push it back in line quickly if they see disparity.
Just like a stock, one can place loss protection in the form of stop-loss and limit order. You are able to see quotes on a real-time basis.
Also, ETF's are inexpensive to own. The fees are less than 1% a year. For instance the SPY has an annualized net expense of 0.09 percent.
Unlike a mutual fund, with an ETF you know exactly what that index is composed of. There is no mystery.
Mutual fund manager's results vary and it's imperative that any investor does due diligence research. Often, an ETF in the same area of focus outperforms the fund. - 23159
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posted by X - Men @ 9:07 AM
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