ETFs Vs Index Funds: Quantifying The Differences
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ETFs Vs Index Funds : Quantifying The Differences
http://www.investopedia.com/articles/mutualfu...z1aOxs4e2h
-Introduction to Exchange-Traded Funds
http://www.investopedia.com/articles/01/08290...z1aOxs4e2h
-The Lowdown On Index Funds
http://www.investopedia.com/articles/basics/0...z1aOxs4e2h
- Advantages Of ETF's, The Benefits of Trading Like a Stock
http://www.investopedia.com/articles/mutualfu...z1aOxs4e2h
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The ETF's stock-like quality allows the active investor to do more than simply trade intraday. Unlike mutual funds, ETFs can also be used for speculative trading strategies, such as short selling and trading on margin. In short, the ETF allows investors to trade the entire market as though it were one single stock.
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Comparing the Advantages
Because ETFs are flexible investment vehicles, they appeal to a broad segment of the investing public. Passive investors and active traders alike find the features of ETFs attractive.
Passive institutional investors love ETFs for their flexibility. Many see them as a great alternative to futures. For example, ETFs can be purchased in smaller sizes. They also don't require special documentation, special accounts, rollover costs or margin. Furthermore, some ETFs cover benchmarks where there are no futures contracts.
Active traders, including hedge funds, love ETFs for their convenience, because they can be traded as easily as stocks. This means they have margin and trading flexibility that is unmatched by index funds. Ironically, ETFs are exempt from the short sale uptick rule that plagues regular stocks (the short sale uptick rule prevents short sellers from shorting a stock unless the last trade resulted in a price increase).
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