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01 June 2002 |
Consideration of ETF’s
By John Martin
Tired of trying to choose that one best stock or mutual fund for your equity portfolio? If so, consider Spiders, Diamonds, and Cubes as alternatives. These nicknames are for three of the more popular exchange traded funds (ETF) listed and traded on the American Stock Exchange. Similar to individual stocks, ETFs are index funds or trusts that can be bought and sold continuously during the day, purchased on margin, sold short, and traded using stop and limit orders.
For example, an investor can purchase or sell shares of an ETF that is structured to track a broad-market index such as the S & P 500 (Spiders), Dow Jones Industrial Average (Diamonds), or NASDAQ 100 (Cubes). Also available are specific industry sectors such as healthcare, energy, and technology and even specific international indexes tracking Japan and Europe. In all, there are 100 different ETFs available that can be utilized to address growth, blend, or value investment strategies in regular and IRA accounts. Benefits and uses include lower annual costs, tax efficiency, diversification, hedging, and in some situations, tax loss strategies. Like all equity type investments, ETFs do fluctuate in price and involve risk to principal.
To learn more, go to the American Stock Exchange website at www.AMEX.com. For any of your investment needs or for a review of your current portfolio, please call me at 434-316-6144.
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Last Updated ( 05 June 2007 )
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