Exchange Traded FundsIn this workshop, participants will learn the brief history, dynamic future, and specialized uses of one of the newest and most actively traded financial instruments around: Exchange Traded Funds (ETFs). The first ETF traded in Toronto in 1989, and today nearly 200 different ETFs in the U.S. alone present a viable alternative investment option to traditional open-ended mutual funds, especially open-ended index funds. There are many available ETFs that attempt to track all kind of indexes (such as large-cap, mid-cap, small-cap, etc), specialties (such as value and growth), industries, countries, and even commodities (while commodity funds like Gold Shares are technically not ETFs, they trade like ETFs). More are always being developed. There are discussions of ETFs for other indices and commodities, as well as actively managed ETFs. ETFs are attractive to investors because they offer the diversification of mutual funds with the features of a stock and also offer investors and institutions unique opportunities as a hedging instrument. The original ETFs were set up as competitors to open-ended index funds, and subsequent ETFs have usually followed in their footsteps: they typically have very low expense ratios compared to actively managed mutual funds. They also have a lower turnover ratio, which tends to be more tax-favorable. |
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