The Individual Investor's Guide to Exchange-Traded Funds 2010
Exchange-traded funds (ETFs) continue to grow in popularity. There are now approximately 330 ETFs that each manage more than $200 million in assets. To put this number into perspective, five years ago, many of these funds didn’t even exist.
It’s easy to understand why ETFs have grown so rapidly. Exchange-traded funds trade like stocks. This means they can be bought and sold throughout the day and their prices are constantly updated. ETFs are also popular because of their low expenses. Since they track an index, ETFs tend to be more tax efficient than most mutual funds and have lower expense ratios. Finally, information on their holdings is updated frequently, which provides greater transparency.
In this article
- How to Use This Guide
- Which Funds Were Included
- A Key to Terms and Statistics
- ETF & ETN Contact Information
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Like any investment, exchange-traded funds are not without their risks. Similar-sounding funds can have very different compositions. The top holdings for some funds can account for a very large proportion of total holdings, lowering the diversification benefits. Volatile market conditions can cause large fluctuations in prices. Dividends, when paid, are taxable. Thus, it is important to read the prospectus and stay abreast of the how the fund is managed.
It is also important to remember that exchange-traded funds, like any investment vehicle, work best when held in a diversified portfolio. This is why we’re proud to say AAII’s 2010 Guide to Exchange-Traded Funds covers a record number of ETFs. You will find nearly 330 funds in the following pages and over 1,000 funds in an expanded spreadsheet on AAII.com.
Exchange-traded funds presented here are grouped by category and listed alphabetically within each category; the ticker symbol is indicated after each fund’s name. The listings provide information on a variety of return and risk data, portfolio composition and expenses.
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