3 ETFs to Buy Instead of Popular Mutual Funds
There’s nothing particularly wrong with mutual funds. The investing structure has been a tried-and-true portfolio element for decades and has allowed plenty of individual investors to grow their … Continue reading at finance.yahoo.com
Mutual Funds That Rank High on Sustainability Are Outperforming the Market
Barron's fourth annual ranking of big-cap equity mutual funds that received an "above average" or "high" sustainability rating from Morningstar shows that they outperformed comparable funds with lower … Continue reading at barrons.com
Still Investing In Mutual Funds? Think Again
The first modern mutual fund became available to investors in 1928. The first exchange-traded fund or ETF launched 65 years later in 1993. Perhaps you are familiar with mutual funds, but less … Continue reading at forbes.com
Mutual Funds Investing
Loving these underloved stocks can add value to your portfolio -- plus other top investing tips
Don't miss these top money and investing features: Money and investing stories hitting home with MarketWatch readers this past week include an insiders' look at how value stocks are ready for their … Continue reading at marketwatch.com
December U.S. mutual fund, ETF flows hit 12-month high
Morningstar estimates December U.S. mutual fund and exchange-traded fund long-term flows of $ 67.5B, a 12-month high. Brings 2019 long-term flows to $ 414.6B, more than double 2018’s $ 168.3B. Most of … Continue reading at seekingalpha.com
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Mutual Funds Investing
Mutual Fund Helpline: How to prepare your mutual funds portfolio for 2020?
Know the best performing mutual funds and investments to earn the profit. Watch this segment of Mutual Fund Helpline. Continue reading at zeebiz.com
Patience is overlooked virtue for mutual fund holders
When it comes to performance, mutual funds do better than the investors who buy them. It's a problem born of mechanics, emotion and timing, but investors generally make the discrepancy wider by … Continue reading at seattletimes.com
How to get socially conscious funds into your 401(k)
So first, a bit about how things work. Someone (or a committee of people) at your employer either picks or approves the lineup of mutual funds for your retirement plan. Ask a human resources person -- … Continue reading at chicagotribune.com
Mistakes to Avoid When Selecting a Large-Growth Fund
Let's say you're fed up with a large-growth mutual fund you've held for umpteen years. You're sick of watching it trail its peers during a fantastic market for growth stocks, and you've finally … Continue reading at morningstar.com
* An ETF is a basket of securities that you can buy or sell through a brokerage firm on a stock exchange. ETFs are offered on virtually every conceivable asset class from traditional investments to so-called alternative assets like commodities or currencies. In addition, innovative ETF structures allow investors to short markets, to gain leverage, and to avoid short-term capital gains taxes.
Types of ETFs:
* Market ETFs: Designed to track a particular index like the S&P 500 or NASDAQ
* Bond ETFs: Designed to provide exposure to virtually every type of bond available; U.S. Treasury, corporate, municipal, international, high-yield and several more
* Sector and industry ETFs: Designed to provide exposure to a particular industry, such as oil, pharmaceuticals, or high technology
* Commodity ETFs: Designed to track the price of a commodity, such as gold, oil, or corn
* Style ETFs: Designed to track an investment style or market capitalization focus, such as large-cap value or small-cap growth
* Foreign market ETFs: Designed to track non-U.S. markets, such as Japan's Nikkei Index or Hong Kong's Hang Seng index
* Inverse ETFs: Designed to profit from a decline in the underlying market or index
* Actively managed ETFs:Designed to outperform an index, unlike most ETFs, which are designed to track an index
* Exchange-traded notes:In essence, debt securities backed by the creditworthiness of the issuing bank; created to provide access to illiquid markets and have the added benefit of generating virtually no short-term capital gains taxes
* Alternative investment ETFs: Innovative structures, such as ETFs that allow investors to trade volatility or gain exposure to a particular investment strategy, such as currency carry or covered call writing.
How ETFs work:
An ETF is bought and sold like a company stock during the day when the stock exchanges are open. Just like a stock, an ETF has a ticker symbol and intraday price data can be easily obtained during the course of the trading day.
Unlike a company stock, the number of shares outstanding of an ETF can change daily because of the continuous creation of new shares and the redemption of existing shares. The ability of an ETF to issue and redeem shares on an ongoing basis keeps the market price of ETFs in line with their underlying securities. Although designed for individual investors, institutional investors play a key role in maintaining the liquidity and tracking integrity of the ETF through the purchase and sale of creation units, which are large blocks of ETF shares that can be exchanged for baskets of the underlying securities. When the price of the ETF deviates from the underlying asset value, institutions utilize the arbitrage mechanism afforded by creation units to bring the ETF price back into line with the underlying asset value.
Advantages of ETFs:
The appeal of ETFs to individual investors is:
* Buy and sell any time of the day: Mutual funds, in contrast, settle after the market close
* Lower fees: There is no sales load, however, brokerage commissions do apply
* More tax efficient: Investors have better control over when they pay capital gains tax
* Trading transactions: Because they are traded like stocks, investors can place a variety of types of orders (limit orders, stop-loss orders, buy on margin) which are not possible with mutual funds
Disadvantages of ETFs:
While superior in many respects, ETFs do have drawbacks, including:
* Trading costs: If you invest small amounts frequently, there may be lower-cost alternatives investing directly with a fund company in a no-load fund
* Illiquidity: Some thinly traded ETFs have wide bid/ask spreads, which means you'll be buying at the high price of the spread and selling at the low price of the spread
* Tracking error: While ETFs generally track their underlying index fairly well, technical issues can create discrepancies
* Settlement dates: ETF sales are not settled for 2 days following a transaction; that means as the seller, your funds from an ETF sale are not technically available to reinvest for 2 days.
Once you have determined your investment goals, ETFs can be utilized to gain exposure to virtually any market in the world or any industry sector. You can invest your assets in a conventional fashion using stock index and bond ETFs, and adjust the allocation in accordance with changes in your risk tolerance and goals. You can add alternative assets, such as gold, commodities, or emerging stock markets. You can move in and out of markets quickly, hoping to catch shorter term swings, much like a hedge fund. The point is, ETFs give you the flexibility to be any kind of investor that you want to be.
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Mutual Funds Investing