ETF Wrap

Filed Under:
Dictionary Says

Definition of 'ETF Wrap'


A type of special investment portfolio in which an investor, with or without the aid of an investment advisor, invests solely in exchange traded funds (ETFs). The composition of each ETF class is initially based on a preselected asset allocation model, and will periodically need to be rebalanced in response to changes in market values.

Investopedia Says

Investopedia explains 'ETF Wrap'


Common asset allocation models are 100% equity, 100% fixed income or a balanced model, which contains both fixed income and equity. The choice of model depends on an investor's age, tolerance to risk, income, goals and other personal factors. Investors can choose to manage an ETF wrap themselves in a non-discretionary account, or elect to have a professional do so on their behalf in a discretionary account.

ETF wraps are beneficial due to their low expense ratios when compared to other mutual fund wraps. In addition, they offer investors intraday trading, tax efficiency and more. One general problem with these wraps is the cost of trading ETFs. The sale and purchase of ETFs is no different than purchasing normal stock in that commission fees are charged for every transaction; unless the investor is with a discount brokerage, performing frequent trades will be costly.

comments powered by Disqus
Hot Definitions
  1. Legal Monopoly

    A company that is operating as a monopoly under a government mandate. A legal monopoly offers a specific product or service at a regulated price and can either be independently run and government regulated, or government run and regulated.
  2. Closed-End Fund

    A closed-end fund is a publicly traded investment company that raises a fixed amount of capital through an initial public offering (IPO). The fund is then structured, listed and traded like a stock on a stock exchange.
  3. Payday Loan

    A type of short-term borrowing where an individual borrows a small amount at a very high rate of interest. The borrower typically writes a post-dated personal check in the amount they wish to borrow plus a fee in exchange for cash.
  4. Securitization

    The process through which an issuer creates a financial instrument by combining other financial assets and then marketing different tiers of the repackaged instruments to investors.
  5. Economic Forecasting

    The process of attempting to predict the future condition of the economy. This involves the use of statistical models utilizing variables sometimes called indicators.
  6. Chicago Mercantile Exchange - CME

    The world's second-largest exchange for futures and options on futures and the largest in the U.S. Trading involves mostly futures on interest rates, currency, equities, stock indices and agricultural products.
Trading Center