Exchange Traded Fund
Exchange Traded Funds (ETF) ETFs are just what their name implies: baskets of securities (Indices) that are traded, like individual stocks, on an exchange. Unlike regular open-end mutual funds, ETFs can be bought and sold throughout the trading day like any stock. ETFs have lower cost of transactions and annual changes compared to index funds. ETFs are considered a safer product for risk averse and first-time investors who want market linked returns. Advantages of ETFs While many investors have similar outlooks, no two are exactly alike. Due to the unique structure of ETFs, all types of investors, whether retail or institutional, long-term or short-term, can use it to their advantage. They allow long-term investors to diversify their portfolio at one shot at low cost and insulate them from short-term trading activity due to the unique "in-kind" creation/redemption process. As initial investment is low, retail investors find it simple and convenient to buy/sell. They facilit...