Exchange Traded Funds
An Exchange Traded Fund is a security that holds a basket of stocks, bonds, commodities or other assets. They are called exchange traded because similar to common shares of stock they can be bought or sold on a market exchange.
ETFs differ from mutual funds in that shares in open-end mutual funds are bought from or sold to the issuing mutual fund at net asset value (NAV) calculated at the end of the trading day. Shares in exchange-traded funds (ETFs) are bought and sold through a brokerage firm at the current market price anytime the exchange is open.
Although similar to mutual funds, there are many differences between mutual funds and ETFs. Some ETFs may track a certain market index such as the Dow Jones Industrial Average, while others may follow certain market segments or certain industries.
There are both advantages and disadvantages in including ETFs in your investment portfolio. A First National Wealth Management Wealth Advisor can help you determine if ETFs are an effective alternative in pursuing your financial goals. Schedule an appointment today.
*An investment in Exchange Traded Funds (ETF), structured as a mutual fund or unit investment trust, involves the risk of losing money and should be considered as part of an overall program, not a complete investment program. An investment in ETFs involves additional risks such as not diversified, price volatility, competitive industry pressure, international political and economic developments, possible trading halts, and index tracking errors.