Complete Guide To Investment Companies, Funds And REITs

AAA

Mutual Funds Versus ETFs - Other Considerations

ETFs continue their innovation, offering active management and funds of funds (an ETF pursuing a strategy by investing in other ETFs). Some go further out along the risk continuum with the advent of synthetic ETFs, for which return comes from a swap rather than an index, ETNs (exchange traded notes), which hold fixed income, and ETVs (exchange traded vehicle), which are similar to ETNs but issued through a special purpose vehicle to gain access to more opaque markets; here counterparty risk exists. Finally, there are leveraged ETFs and inverse ETFs that track the opposite performance of an index, effectively making a directional bet. The aforementioned suite of products is best reserved for the more sophisticated risk-aware investor.

Related Reading:

Shortcomings


Related Articles
  1. Mutual Funds & ETFs

    Common ETFs

    Common ETFs
  2. Mutual Funds & ETFs

    Exchange-Traded Funds: Introduction

    Exchange-traded funds (ETFs) can be a valuable component for any investor's portfolio, from the most sophisticated institutional money managers to a novice investor who is just getting started. ...
  3. Investing Basics

    The Advantages of ETFs Compared to Index Funds

    With the ongoing ETF boom, ETFs gain more variety and increased competition in the market leads to further investors' advantages compared to index funds.
  4. Mutual Funds & ETFs

    Exchange-Traded Funds: ETF Alternative Investments

    Although fixed income and equity investments are the core of a diversified portfolio, the use of alternative asset classes can provide additional diversification. These alternative investments ...
  5. Mutual Funds & ETFs

    What to Watch Out for When Investing with ETFs

    ETFs have become a popular vehicle for various investment objectives, but that doesn't mean they're totally free of drawbacks.
  6. Top ETFs and What They Track: Introduction to ETFs

    Investopedia explains: An Exchange-Traded Fund (ETF) is an investment fund that tracks an index, specific asset or basket of assets to which it is pegged.
  7. Mutual Funds & ETFs

    A Look At the Growth Of the ETF Industry

    Explore the phenomenal growth rate of the ETF industry, and learn some of the principal reasons why ETFs are projected to continue to grow at a rapid pace.
  8. Mutual Funds & ETFs

    Building An All-ETF Portfolio

    Balance is the key when selecting an all-ETF portfolio that will hedge against market volatility.
  9. Financial Advisors

    Why You Should Avoid Some ETFs

    Despite the popularity of ETFs, not every one is a solid bet, and not every ETF is built to last. Here's what an investor should consider.
  10. Mutual Funds & ETFs

    How To Avoid Expensive ETFs

    Discover four tips for avoiding expensive ETFs. Learn why expense ratios should be low and how to prevent your investment from costing you come tax time.
RELATED TERMS
  1. ETF Of ETFs

    An exchange-traded fund (ETF) that tracks other ETFs rather than ...
  2. Synthetic ETF

    An investment that mimics the behavior of an exchange-traded ...
  3. Exchange-Traded Fund (ETF)

    A security that tracks an index, a commodity or a basket of assets ...
  4. Inverse ETF

    An exchange-traded fund (ETF) that is constructed by using various ...
  5. Stock ETF

    A security that tracks a particular set of equities, similar ...
  6. Index ETF

    Exchange-traded funds that follow a specific benchmark index ...
RELATED FAQS
  1. Should I invest in ETFs or index funds?

    Learn advantages to investing in exchange-traded funds, or ETFs, and index funds, and decide whether to include them in your ... Read Answer >>
  2. What types of fees are incurred by purchasing ETFs?

    Understand all the various costs, both explicit and hidden, involved in trading exchange-traded funds, or ETFs, and see how ... Read Answer >>
  3. Do ETFs pay capital gains?

    Learn about exchange-traded funds (ETFs), which can generate capital gains for their shareholders due to occasional and substantial ... Read Answer >>
  4. Are there ETFs that track the drugs sector?

    Find out whether pharmaceutical exchange traded funds (ETFs) are available for investment. Learn more about how ETFs track ... Read Answer >>
  5. Are ETFs required to pay out a percentage of income as dividends?

    The exchange-traded fund (ETF) is a relatively new investment vehicle, hitting the market in 1993. A fund company can create ... Read Answer >>
  6. Besides stocks, what other asset classes can I invest in through ETFs?

    Discover the extremely far-reaching range of investment asset classes that are available to investors through exchange-traded ... Read Answer >>

You May Also Like

Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center