Exchange traded funds or ETFs seem like the darling of the investment world right now, as these Wall Street newcomers account for nearly one third of daily trading volume in the U.S.
In this installment of Investing 101, we're taking a closer look at an asset class that now consists of more than 1,400 different offerings with an estimated $1.2 trillion in total assets. While that is still only about 1/10th the size of the traditional mutual fund market, the growth and the influence cannot be overstated.
If you are thinking about adding ETFs to your portfolio, we have compiled a list of 5 things you need to know before buying.
1) What Exactly Is An ETF?
Unlike a mutual fund that only calculates what all its various investments are worth at the end of each trading day and then sells at that price, an ETF prices its holdings all day and trades whenever the stock market is open. Because of this live pricing and trading feature, the majority of ETFs tend to mimic price action of a particular index or asset.Read More »from 5 Things to Know About ETFs Before Buying One