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Investment Strategy - Why Exchange Traded Funds Are Hot

You know something is hot when the Wall Street Journal stands up and pays attention. In fact they full page ads for ETFs. So are you wondering why exchange traded funds are hot and what role they can play in your investment strategy? Although Exchange Traded Funds or ETF’s are not technically mutual funds they do offer some of the same types of advantages but they trade like stocks. They certainly should be part of your investment strategy because they are the best investment vehicle to come along since mutual funds and that’s why exchange traded funds are hot. This basket of securities is traded on the exchange and because of its stock like features combined with its index mutual fund similarity it has become a hotly traded commodity and just one reason why exchange traded funds are hot. There are plenty of advantages that tag along with the exchange traded funds.

Because they are traded on the stock market they have a lot more flexibility than a traditional mutual fund. They can be bought and sold any time you want during the trading day just like any stock. Mutual funds don’t allow that kind of trading. We’ve been wanting for something new and exciting for awhile now and that’s why exchange traded funds are hot. You can even buy exchange traded funds on margin which isn’t an option with mutual fund.

And when it comes to taxes thanks to SEC regulations ETF’s will actually beat the mutual funds. There’s plenty of reasons why exchange traded funds are hot plus they’ll compete nicely against even the cheapest mutual on the market. Now nothing is perfect and exchange traded funds are no different so there are a few drawbacks. They have the same types of commissions attached to them as stocks and unless you are wealthy or a large corporation you will have to buy them through a broker. Do your homework. You can see why exchange traded funds are hot and why they are likely to remain as such for many years to come. Something this good doesn’t come along very often. Now all that said you can see where they are an excellent choice and why exchange traded funds are hot. The only question that remains is whether exchange traded funds are the right investment strategy for you and whether you fully understand why exchange traded funds are hot. Copyright © 2007 Joel Teo.

All rights reserved. (You may publish this article in its entirety with the following author's information with live links only.


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