ETFs are exchange traded funds. They allow immediate diversification for smaller investors. Unlike mutual funds they allow diversity with fewer limitations - they, like stocks, can be traded intra-day (mutual funds don't allow this), are often optionable (and can therefore be both traded and hedged using options), and represent groups of underlying instruments with a common "theme" - such as currency, geographic region (Southeast Asia, China), Gold, Oil, Health Services, Financial services, or a particular Index, etc.
An ETF is Index-linked, but is not to be confused with an Index Tracking Stock. An index tracking stock is similar, but tracks a particular index, is fully optional, trades large volumes and has a tight bid/ask spread, and can be used with sell stops and automated orders. Some common index tracking stocks track the S&P 500 (spy), Nasdaq 100 (qqqq), Russell 2000 (iwm), Dow Jones 30 (dia), etc. Some indexes may have more than one tracking stock.
There is an ongoing debate in the world of finance over whether or not a mutual fund manager can outperform an index consistantly (skill in picking or luck in picking?). Furthermore, some argue that mutual fund management fees may offset any additional gains from active management. Mutual funds offer "peace of mind" to those who prefer someone else do all the working and watching, ETFs and Index tracking stocks, because they are not actively managed, may require more oversight from the individual investor.
Many ETFs outperform mutual funds without fees. Many online brokerages have ETF scanners that allow you to look them up by region, industry sector, ranked by return, or by strategy (such as Growth, Income, Speculation, etc).
Note that current ETF Assets (in 2010) total over USD 1 trillion, the number grew from about $30 billion from 1999.
Many Investors Have Questions About Oil ETF Funds.This is not surprising because recent price increases for crude oil products have increased interest in these funds. As a result, here are answers to some common investment questions about oil ETF funds that can help investors learn more details about these investments.What is an Oil ETF fund?An oil ETF fund is an investment that allows investors to purchase shares in groups of oil ETF funds that are traded in commodities, futures or stock markets.What are some examples of oil ETF funds?There are many examples of oil ETF funds available. For example, there are oil ETF funds that focus on American or foreign oil companies. There are also many oil ETF funds that center around companies that develop and maintain oil fields.How is the price of an oil ETF fund determined?The price of an oil ETF fund can be determined using several equally valid benchmarks. For example, the value of some oil ETF funds is determined by the spot price of one barrel of crude oil in the open market. Moreover, the value of other oil ETF funds can be determined by a rolling index of the stock prices of oil companies that are included in the portfolios of some oil ETF funds. As a result, many financial experts suggest that investors read literature about the value of specific oil ETF funds to determine how values for oil ETF funds are determined on an individual basis. Who sells oil ETF funds?Investors can purchase oil ETF funds from several sources. The most common way to purchase oil ETF funds is by purchasing them directly from investment brokers. Moreover, investors can also purchase oil ETF funds by asking their investment adviser to execute purchase orders on their behalf for oil ETF funds.Finally, where can investors obtain a list of oil ETF funds for sale?Investors can obtain free lists of oil ETF funds for sale by contacting a local investment broker for a free copy of the latest list of all actively traded oil ETF funds. Moreover, many websites such as http://etf.stock-encyclopedia.com/category/oil-price-etfs.html also have lists of ETF funds for sale that cover every oil ETF fund traded. As a result, be sure to specify which lists of oil ETF funds you wish to obtain to avoid needless delays processing your request.
ETFs are created when a large institution or investment bank buys a basket of securities to match the underlying investment objective of the fund. For example, a health care ETF would hold a large number of hospital, pharmeceutical , and other health care related stocks. ETFs have what are known as authorized purchasers who are broker dealers that provide liquidity to the ETF by creating and redeming shares to meet market demands of investors purchasing or selling the ETF.
An exchange traded fund (ETF) is a unique financial investment option that combines a number of aspects into a single vehicle that has a reduced cost of ownership and a potentially high amount of liquidity. An ETF is similar to a mutual fund because it is an investment device that involves a group of contributors who all put money into a single investment pool. An ETF is also similar to a mutual fund because it contains a diversified portfolio of different stocks, bonds and other options. ETF trading, however, is unlike a mutual fund because the ETF itself can be purchased and sold like a normal stock. Individuals who participate in ETF trading are actually buying into a complex financial instrument. Shares in an ETF directly translate into partial ownership of all of the assets that the ETF contains. This group of assets is frequently called a basket. The ETF manager usually has some restrictions about the minimum amount that must be invested in order to buy into the fund. Most ETFs offer investors a widely diversified portfolio at a very reasonable price when compared to purchasing the securities individually. ETF trading has become popular because many of the funds trade at a value that is not inflated and that is close to the actual value of the assets that are in the fund. This gives investors confidence because assets that are owned can be liquidated even in the event that there is some external financial incident. This popularity has resulted in a drastic increase in the amount of ETF trading that is being performed. There are now many ETFs that cover nearly every industry and niche market available. ETF trading can be dangerous for uninformed investors. The complex underlying mechanisms of an ETF can be easily replicated through the use of a risky and unsafe instrument known as a derivative. Some derivatives are touted as ETFs despite the illiquidity of the investment. These derivatives can be easily avoided through financial education and the use of a trained broker.
For those investors who are looking for an unorthodox security to put their money into, the uranium ETF is definitely want to consider. A uranium ETF is a special type of investment vehicle that makes it possible for the average investor to speculate on a very rare natural resource. What exactly is a uranium ETF and why would you want to invest in one?Uranium ETF BasicsThe uranium ETF or exchange traded fund is a type of collective investment schemes that is similar to a mutual fund. With an exchange traded fund, a fund manager is in charge of the resources that are pooled together by thousands of different investors. The investors pool their money together and then leave the investment decisions up to the money manager. With the ETF, investors can buy and sell shares on an automated stock exchanges like a share of stock. This makes the ETF share a little more liquid than your average mutual fund share.With every ETF, there are underlying investments that make up the assets of the fund. While some ETF's invest their money into stocks and bonds, the uranium ETF invests in uranium. This can be done by investing directly into the natural resource. It can also be done by putting money into mining companies that mine uranium as their primary purpose.AdvantagesOne of the advantages of investing in a uranium ETF is that it can provide you with a vast opportunity for return on investment. Uranium is a very rare natural resource and has become very valuable in recent years. As the value of uranium continues to increase, mining companies and investors can make big returns from it. If you invest in a uranium ETF, it makes it simple to speculate on the price of uranium without actually trading futures contracts or buying physical assets.Speculative in NatureAlthough investing in a uranium ETF can be beneficial, it also comes with a certain amount of risk. The prices of uranium can fluctuate significantly from one period to the next. You have to be fine with volatile investments if you plan on getting involved with this type of security.
Gold ETFs provided investors a means of participating in the gold bullion market without the necessity of taking physical delivery of gold, and to buy and sell that participation through the trading of a security on stock exchange. Gold ETF would be a passive investment; so, when gold prices move up, the ETF appreciates and when gold prices move down, the ETF loses value.