Exchange Trade Fund

Exchange Trade Fund

Exchange Traded Funds, which are also called ETF’s, are a type of fund that will track with the indexes of the NASDAQ-100, S&P 500 and the Dow Jones. An ETF helps you to buy shares of a portfolio that keeps track of the yield and return of an original index. An ETF doesn’t try to outdo its corresponding index and beat the market, it tries to repeat the performance of the index and to be the market of the indexes. An ETF was created to integrate the low costs of index mutual funds and the flexibility of individual stocks. An ETF is traded on the exchanges that way you can buy and sell anytime the market is open. Even though, an ETF combines some features of a mutual fund, an ETF is not categorized as a mutual fund. An ETF doesn’t sell individual shares directly to retail investors. Instead, an ETF is put into a contractual relationship with a few other financial establishments, which are usually known as large broker dealers. These large broker dealers are allowed to acquire and buy shares directly from the ETF.


There are two types of ETFs, which are Index-Based ETFs and Actively Managed ETFs. An index-based ETF is traded in the marketplace to track a securities index and to invest mainly in the securities of an index. An actively managed ETF is not based on an index. This actively managed ETF tries to reach an objective by investing in a portfolio of stocks, bonds and other assets. Before you decide to invest in a ETF, you should gather all of the information from the summary prospectus and a full prospectus, which should provide full details on the objectives, strategies, risks, costs, and past performances of an ETF. You should consult the advice of United Retirement Advisors Group to help you decide what is best for your investment needs.