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Exchange Traded Funds

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Exchange Traded Funds

An Exchange Traded Funds is a stock fund that trades similar to a stock. Basically the ETF is a Fund that holds a bunch of companies maybe a few dozen in the fund. That fund is then given a stock symbol and is traded just like an individual stock. One important characteristic of this fund is that it’s usually a basket of stocks in one particular industry such as Oil (Exxon, Shell and Mobil) or Tech (Microsoft, Dell and Cisco). You may have heard of some of these ETF’s on TV, but you have no idea of what they are. Some of the more common names are; Spiders, Diamonds and Cubes among many others.

There are plenty of Exchange Traded Funds available. If you’re interested in investing is places like Europe, Asia and other countries there are ETF’s for foreign countries. ETF’s represents every aspect of the investing realm. If you’re partial to a particular industry or country, I’m sure there is an Exchange Traded Fund out there that can serve your investment need.

If you’re interested in exchange traded funds, please do your research and then invest according to your risk tolerance. Visit your online broker and buy the exchange traded funds by simply entering the stock symbol of that particular ETF. Please keep your cost down and don’t day trade. An ETF offers an excellent way of investing in basket of stocks in a similar business or industry. Sometimes we buy a stock, but we also want another stock that is similar in the in the same industry. An ETF’s is the answer since you can research the stocks held in that particular Exchange Traded Fund before you make an investing commitment.

Remember that exchange traded funds are similar to a stock mutual fund, but mutual funds are not traded daily on the Stock Market. A mutual fund company and it’s manager will buy one stock and then buy another stock to add to it’s fund family. However, you can’t easily trade that fund because of rules that are in place by the Security and Exchange Commission. An Exchange Traded Fund gives the investor more control over their investing style and preference.

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