Exchange Traded Funds, Pros & Cons --Investor Thread May 12, 2015 

[from IBD: Should ETFs Be In Your Investment Portfolio?]

While ETFs have existed for several decades, their popularity and diversity have exploded in recent years. But many investors are just learning about them.

Those looking for tips on how to invest in ETFs just need some basic information to get started.

In basic terms, ETFs can be thought of as mutual funds that trade like stocks. But their portfolios can contain U.S. and foreign stocks, bonds, futures, physical commodities or currencies.

And ETFs choose the securities for their portfolios with an investment objective in mind. These investment goals include growth of capital through price appreciation and income generation through stock dividends or bond interest.

And ETFs pursue these objectives in a variety of ways. These include exposure to the broad stock market through such ETFs as SPDR S&P 500 (ARCA:SPY) and PowerShares QQQ (NASDAQ:QQQ). Or they can focus on narrow segments of the market, like high-yielding stock funds. That's an area covered by Vanguard High Dividend Yield (ARCA:VYM).

ETFs tend to have lower fees and better tax efficiency compared with mutual funds. They have the flexibility to be traded on a short-term, even intraday basis, but can also be held for the long term as part of an asset allocation plan.

How can you find the best ETFs for your portfolio? "We like to use ETFs to track a broad-based index or sector, and will typically use mutual funds when we feel that an active manager can provide a benefit either from a performance, risk reduction or strategy standpoint over what we expect from the index," says Michael Ball, lead portfolio manager of Weatherstone Capital Management.

With thousands of ETFs to choose from, it can seem overwhelming to pick ones out that are right for you. How to cope? Start with the end in mind. ...

[snip]

 

--and:

Exchange-Traded Funds (ETF) Center - Yahoo Finance

Exchange-Traded Fund (ETF) - Investopedia

Best ETFs (Exchange Traded Funds) | US News Best Funds

--and from our leaders always there to help us:

What is an ETF?...

...Like mutual funds, ETFs offer investors a way to pool their money in a fund that makes investments in stocks, bonds, or other assets and, in return, to receive an interest in that investment pool.  Unlike mutual funds, however, ETF shares are traded on a national stock exchange and at market prices that may or may not be the same as the net asset value (“NAV”) of the shares, that is, the value of the ETF’s assets minus its liabilities divided by the number of shares outstanding.

Things to Consider before Investing in ETFs

ETFs are not mutual funds.  Generally, ETFs combine features of a mutual fund, which can be purchased or redeemed at the end of each trading day at its NAV per share, with the intraday trading feature of a closed-end fund, whose shares trade throughout the trading day at market prices...

[snip]

  That was the pros, here's the con's side:

Should Mutual Funds Be Made Illegal? - Matt Levine, Bloomberg

Why Hillary Clinton is going after hedge funds

ETFs May Be Moving Stocks in Unseen Ways

The Hidden Risks and Costs of ETFs - US News

Exchange-traded funds: Too much of a good thing ...

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This is the thread where folks swap ideas on savings and investment --here's a list of popular investing links that freepers have posted here and tomorrow morning we'll go on with our--

Open invitation continues always for idea-input for the thread, this being a joint effort works well.   Keywords: financial, WallStreet, stockmarket, economy.