Exchange Traded Funds: An ETF is an investment vehicle that combines key
features of traditional mutual funds and individual stocks. Most ETFs Are open-ended
funds which like index mutual funds represent portfolios of securities that track
specific indexes. A distinct difference is that ETFs trade like stocks and can be bought
and sold (long or short) on an exchange and can employ the same trading
strategies used with stocks.
The unique structure of ETFs provides investors with a number of benefits:
ETFs are a lower-cost alternative to traditional mutual funds, with expense ratios that are typically well below those of both
active, and index mutual funds. For example, most ETFs Funds expense ratios from 9 to 75 basis points which are
substantially lower than the average active mutual fund which typically can carry expense ratios over 100 basis points.
While ETF transactions will most likely generate brokerage commissions, their lower expenses can offset those transaction
costs for long-term investors.
Since most ETFs track indexes which are comprised of a basket of securities, they inherently provide instant diversification
and are expected to minimize capital gains distributions through lower portfolio turnover than actively managed funds.
Unlike traditional mutual funds where shareholder activity can contribute to capital gains distributions, an ETF's creation and
redemption structure eliminates the impact of shareholder activity on capital gains distributions thereby making them more
ETFs have become increasingly popular and are favored over Mutual Funds by many advisors. There are hundreds of ETFs in
specific industries, tracking global or domestic indexes and they can provide instant diversification. Contact your financial
advisor to discuss what ETFs are right for your portfolio.
|Atlantic Wealth Management offers Securities through International Assets Advisory LLC an Independent Registered Broker/Dealer Member FINRA/SIPC. Investment Advisory Services offered through International
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