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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.

ETF Downloads
Expanded ETF Listings Spreadsheet
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Field Definitions
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All ETFs (PDF)
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Download Guide (PDF)
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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.

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.

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Discussion

William from Alabama posted over 3 years ago:

I am looking for a fund that covers REES
What do you have?


David from Florida posted over 3 years ago:

Timing is everything!

Been poring over various resources to design an all ETF portfolio. The downloadable 2010 listing of ETF's in the October issue is invaluable since it now allows Excel features to be applied to the table for sorting according to my preferences. It certainly makes the screening easier before building the portfolio in a site like Fidelity, Morningstar or SmartMoney.

This issue more than justifies the modest annual fee for membership in AAII


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