Frequently Asked Question
Do ETFs have a board of directors?
Yes. An exchange-traded fund (ETF) is a type of security that tracks a basket of assets or an index (such as an index fund), but trades like a stock.
Just like any open-end mutual fund, an ETF falls under the supervision and control of the Securities & Exchange Commission (SEC). A fund company must get the SEC's approval for incorporating and registering an ETF. Mirroring the structure of a regular mutual fund, an ETF has a board of directors, officers, and an investment advisor and uses third-party providers to handle organizational functions such as accounting, legal, tax and custodial services.
In addition, an ETF uses the same type of fund documentation – prospectus, statement of additional information, and annual, semi-annual or quarterly reports – for shareholders. A review of these documents will clearly show that an exchange-traded fund and an open-end mutual are not exactly the equivalent of identical twins but would most certainly qualify as the fraternal variety.
Details concerning an ETF's board of directors – composition, credentials, compensation and fund ownership positions – can be found in the fund's statement of additional information (SAI).
To learn more, see Introduction To Exchange-Traded Funds.
This question was answered by Richard Loth.
Just like any open-end mutual fund, an ETF falls under the supervision and control of the Securities & Exchange Commission (SEC). A fund company must get the SEC's approval for incorporating and registering an ETF. Mirroring the structure of a regular mutual fund, an ETF has a board of directors, officers, and an investment advisor and uses third-party providers to handle organizational functions such as accounting, legal, tax and custodial services.
In addition, an ETF uses the same type of fund documentation – prospectus, statement of additional information, and annual, semi-annual or quarterly reports – for shareholders. A review of these documents will clearly show that an exchange-traded fund and an open-end mutual are not exactly the equivalent of identical twins but would most certainly qualify as the fraternal variety.
Details concerning an ETF's board of directors – composition, credentials, compensation and fund ownership positions – can be found in the fund's statement of additional information (SAI).
To learn more, see Introduction To Exchange-Traded Funds.
This question was answered by Richard Loth.
by
Richard Loth
Richard Loth has more than three decades of international experience in banking (Citibank, Industrial National Bank, and Bank of Montreal), corporate financial consulting, and non-profit development assistance programs. During the past 12 years, he has been a registered investment adviser and a published author of books and publications on investing. Currently, he devotes his professional activities to educational endeavors, writing and lecturing, aimed at helping individual investors improve their investing know-how (see www.lothinvest.com)
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