Frequently Asked Questions about ETFs
Q: Are ETFs guaranteed or insured?
The government agency, The Depository Trust Clearing Corporation, which ensures stock certificates are delivered to the person who bought them also, makes sure all ETF certificates in a trade are assigned correctly. Furthermore the SEC examines all applications to create an ETF. Risk of abuse is very low.
Q: Are ETFs only for stocks?
No, they are very innovative and versatile. In fact, any liquid asset with a published index can be an ETF. There are ETFs for Bonds, Commodities, Emerging Market, Japanese Futures, Latin Top 50, Precious Metals, Basic Materials, Real Estate and a long list of others.
Q: Do other countries also have ETFs?
Of course there are. Countries in Europe and across the Pacific Rim have funds including most developed countries. As other countries gain political and economic stability they will surely adopt ETFs.
Q: Do any ETFs try to beat the market?
A fund that currently beat the market by 2 or 3xs is an actively managed fund. These funds operationally are much more difficult to manage. However it is much simpler when all players in building an ETF know the details of stock investments. Actively managed funds are traditionally more secretive, mainly to shield themselves from eager parasitical resellers.
Q: Do ETFs exist for the Dow Jones Industrials or S&P 500?
Of course, there are several different funds that track these indexes. It's important to keep in mind the S&P and Dow Jones stay in tact as their own indexes, and more than one fund can track an index through that fund groups license. Pick the fund, open up an account with a broker and start trading.
Q: Could ETFs possibly be a fly-by-the-night trend or fad?
That is highly doubtful. Assets of ETFs totaled $656.91 billion by the end of 2009. During the past several years there has been a steady growth in ETFs with no decline. Traditional mutual funds haven't seen near the same growth. - 23162
The government agency, The Depository Trust Clearing Corporation, which ensures stock certificates are delivered to the person who bought them also, makes sure all ETF certificates in a trade are assigned correctly. Furthermore the SEC examines all applications to create an ETF. Risk of abuse is very low.
Q: Are ETFs only for stocks?
No, they are very innovative and versatile. In fact, any liquid asset with a published index can be an ETF. There are ETFs for Bonds, Commodities, Emerging Market, Japanese Futures, Latin Top 50, Precious Metals, Basic Materials, Real Estate and a long list of others.
Q: Do other countries also have ETFs?
Of course there are. Countries in Europe and across the Pacific Rim have funds including most developed countries. As other countries gain political and economic stability they will surely adopt ETFs.
Q: Do any ETFs try to beat the market?
A fund that currently beat the market by 2 or 3xs is an actively managed fund. These funds operationally are much more difficult to manage. However it is much simpler when all players in building an ETF know the details of stock investments. Actively managed funds are traditionally more secretive, mainly to shield themselves from eager parasitical resellers.
Q: Do ETFs exist for the Dow Jones Industrials or S&P 500?
Of course, there are several different funds that track these indexes. It's important to keep in mind the S&P and Dow Jones stay in tact as their own indexes, and more than one fund can track an index through that fund groups license. Pick the fund, open up an account with a broker and start trading.
Q: Could ETFs possibly be a fly-by-the-night trend or fad?
That is highly doubtful. Assets of ETFs totaled $656.91 billion by the end of 2009. During the past several years there has been a steady growth in ETFs with no decline. Traditional mutual funds haven't seen near the same growth. - 23162
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posted by X - Men @ 6:25 AM
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