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Exchange-traded fund or commonly know as ETF is a venture fund very similar to stocks that is also exchanged in a stock market. It is somewhat a new type of venture fund that starts since 1993 in the US and European countries in 1999. Most improved countries have exchange-traded fund in their stock market. You can purchase or sell it via an equity agent very similar as you will purchase stocks. However, in some improving nations, exchange-traded fund is not already available might be due to the small figures of shares being traded. Because ETF is combination of many stocks, there must be a sufficient quantity of securities in an equity market so that ETF can be made. Outline of Exchange-traded fund Exchange-traded fund has the combined characteristics of equities and shared funds or UITF. It can be traded at the time of the dealing hours of the stock market or you can purchased it at the end of the trading day just like associated funds. Exchange-traded fund is like a collection of equities in a particular index. For instance, QQQQ is an index ETF that tries to replicate the performance of NASDAQ-100. It is not the objective of ETF to out perform the index of a particular stock exchange but simply to duplicate its accomplishment so people would have an easy way to invest in a big aggregation of equities. Characteristics of ETF In the beginning, ETF was formed to track the performance of an index of an equity market. It is the goal index ETF is the top popular types of ETF and the largest type of ETF in the globe. There are many persons now are moving to ETF because of the good features it offers such as the simple diversification of the portfolio, flexibility it provides, tax capability and less expenses. Types of Exchange-Traded Fund Today, there are several types of ETF in the equity exchange. These are the most common kinds of ETF: index, commodity, currency, bond, leveraged and actively managed exchange-traded fund. When you want a diversification of your investments in the stock market, ETF is the best choice. It has less expense ratio, lower tax, valuation features of stocks and mutual funds and easy variation characteristic. Caleb Mateo is a money blogger who loves writing about ETF, gold investment and precious metals. To get helpful information about ETF, you may visit gold ETF blog for more related facts.
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