What is an ETF? |
Posted: June 29, 2018 |
An ETF, or Exchange Traded Fund is an investment fund that can be traded at an exchange from one private investor directly to another private investor without the need of an institution or 3rd party which determinates a price for the fund. The price is negotiated between buyers and sellers and by demand and supply of the market. Exchange Traded Funds can track basically everything. For example they can track an index (such as DAX, FTSE 100, MSCI World or S&P 500), commodities (such as Gold, Iron, Oil, Corn, Cattle), countries, regions, bonds, real estate, even bitcoins or basically anything which has a value. ETFs are similar to Mutual Funds, but the difference is, it can be traded on a Stock Exchange similar to a common stock. While Mutual Funds are mainly traded with the fund company (and the buy in price is given by the mutual fund company) the price of ETFs changes throughout the day, as they are bought or sold in the market. ETFs allows investors to gain broad exposure of the entire stock market or anything with an ease, consistently at lower cost, than many other forms of investing. Check out the full article on ETF
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