Competitive Advantages of Exchange Traded Funds
The following are several of the many advantages of ETFs:
1. Lower Costs-ETFs are known for having no fees. Some however, do have some minimal but much lower marketing, distribution and accounting fees. Most of them traditionally have lower costs than other investment products. They generally are not actively managed which excludes them from paying fees associated with buying and selling securities to accommodate purchases and redemption.
2. Flexibility to buy and sell- They hold a huge advantage over mutual funds in that they can be bought and sold at current market prices during the day while mutual funds can only be traded at the end of the day. They can also be used in hedging strategies being able to be purchased on margin and sold short, as a publicly traded security. Investors can also specify the price at which they are willing to trade by being able to trade ETFs using stop and limit orders.
2. Flexibility to buy and sell: ETFs can be bought and sold at current market prices throughout the day, unlike mutual funds, which can only be traded at the end of the trading day. As a publicly traded security, shares can be purchased on margin and sold short, which allows the use of various hedging strategies. As a publicly traded security, they are also able to be traded using limit and stop orders helping investors to be able to specify prices at which they are willing to make trades.
3. Tax efficiency: ETFs generally have low capital gains taxes because they have such low turnover of their portfolio securities. Another huge tax advantage is not being required to sell securities to meet investor redemptions. Their tax benefits tend to be much stronger than those of other investment products.
5. Transparency- There is little doubt that transparency is one of their greatest benefits. Whether it is index funds or actively managed, ETFs are priced at frequent intervals throughout the day. Traditional investment products typically do not allow the same degree of transparency.
5. Transparency: ETFs are priced at frequent intervals throughout the day, whether index funds or actively managed. Investors also have access to more transparency than that of traditional investment products. Their transparency is no doubt one of their strongest advantages. - 23221
1. Lower Costs-ETFs are known for having no fees. Some however, do have some minimal but much lower marketing, distribution and accounting fees. Most of them traditionally have lower costs than other investment products. They generally are not actively managed which excludes them from paying fees associated with buying and selling securities to accommodate purchases and redemption.
2. Flexibility to buy and sell- They hold a huge advantage over mutual funds in that they can be bought and sold at current market prices during the day while mutual funds can only be traded at the end of the day. They can also be used in hedging strategies being able to be purchased on margin and sold short, as a publicly traded security. Investors can also specify the price at which they are willing to trade by being able to trade ETFs using stop and limit orders.
2. Flexibility to buy and sell: ETFs can be bought and sold at current market prices throughout the day, unlike mutual funds, which can only be traded at the end of the trading day. As a publicly traded security, shares can be purchased on margin and sold short, which allows the use of various hedging strategies. As a publicly traded security, they are also able to be traded using limit and stop orders helping investors to be able to specify prices at which they are willing to make trades.
3. Tax efficiency: ETFs generally have low capital gains taxes because they have such low turnover of their portfolio securities. Another huge tax advantage is not being required to sell securities to meet investor redemptions. Their tax benefits tend to be much stronger than those of other investment products.
5. Transparency- There is little doubt that transparency is one of their greatest benefits. Whether it is index funds or actively managed, ETFs are priced at frequent intervals throughout the day. Traditional investment products typically do not allow the same degree of transparency.
5. Transparency: ETFs are priced at frequent intervals throughout the day, whether index funds or actively managed. Investors also have access to more transparency than that of traditional investment products. Their transparency is no doubt one of their strongest advantages. - 23221
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posted by X - Men @ 2:51 AM
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