investing in ETFs
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Investing in ETFs: Check Out These Three for 2012
Since exchange-traded funds (ETFs) made their U.S. debut in 1993, they have grown to a market of more than $1 trillion.
Those investing in ETFs enjoy it because ETFs provide diversification to portfolios, are tax-efficient, come at a low cost, and are readily available.
ETFs are also appealing because you can find them at any time: they're bought and sold from brokerage firms and they trade on exchanges similar to stocks.
Another attractive aspect to ETF investors is when they exit the product, the shares are sold to an investor; the fund doesn't have to sell assets.
One investment adviser and decade-long ETF user, Mark Armbruster, told The Wall Street Journal, "From my perspective, it is the most compelling reason to use ETFs. If they're managed appropriately, there should never be capital-gains distributions."
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Investing In ETFs: How Exchange-Traded Funds Can Save You Money
High commissions and management fees, along with taxes, can really cut into your returns.
That's where exchange-traded funds, or ETFs, come in. In today's investment world, ETFs are cheaper and more tax-friendly than mutual funds.
The average expense ratio for U.S.-listed ETFs is 0.4%, compared with 1.42% for diversified U.S. stock funds.They also give you exposure to an entire industry or market with the click of a mouse.
It's one of the reasons why exchange-traded funds are quickly becoming the investment of choice for investors seeking broad market exposure.
In fact, the number of ETFs has surged over 10-fold in the last decade.
The total number of ETFs in the market grew to 1,114 by October 2011, with assets over $1 trillion, according to the Investment Company Institute.
And the ETF market will expand to roughly $3.1 trillion by 2016, according to projections from the Financial Research Corp. in Boston.
So if you're looking to diversify your portfolio and save money doing it, ETFs may be the way to go.
Here's a primer on how ETFs can work for you.
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