ETFs - What Are They and What Should I Know

There are many investment opportunities in the market today, and investors are encouraged to learn about ETF investments and how the use of those funds may affect investments and opportunities.

ETFs (Exchange Traded Funds) are very different from Mutual Funds in that they typically invest in a smaller basket of stocks and usually bear a more targeted approach to sector advising than do Mutual Funds or other tools.  These parameters may create less diversity, but may offer larger gains (and risks), by investing in a smaller array of securities.

For example, most Mutual Funds invest in perhaps up to one hundred plus stock issues whereas ETFs typically have 10 to 15 issues in their basket.  An individual may invest in a mutual fund which represents investments in the electronics industry, but in the alternative the individual could select an ETF investing in cloud computing securities.  Such a selection would contain fewer issues and provide a greater concentration of issues in that specific area.

The following list represents some advantages to owning ETFs rather than a mutual fund:

1. ETS can be bought or sold at any time during market hours. Mutual Funds are usually purchased and sold at one price based on closing values for its components.
2. Management charges for ETFs are considerably lower than those for most mutual funds.  ETFs can be purchased or sold with or without regular commissions.
3. There are no minimums for investment, whereas Mutual Funds generally have minimum required investment amounts.
4. There are no restrictions or fees on ETFs related to holding periods.

If you are interested in learning more about ETFs, please contact Richard Erkes at sectorsurferuniversity@gmail.com or browse to http://sectorsurferadvisor.com.