An Investment U White Paper Report by Tony Daltorio and the Investment U Research Team
It's one of the fastest-growing areas of the market… bar none.
In 2003, there were just 30 of these investments available to trade. As of the end of 2009, the number had exploded to 820 across the world, according to CNBC. In 2009 alone, a total of 134 new investments hit the market.
Exchange-traded funds – otherwise known as ETFs.
They're best understood as a fusion of mutual funds and stocks… offering the best of both worlds. Basically, ETFs are baskets of assets, bundled together and traded like stocks on the major exchanges. They're designed to mimic the performance of the underlying asset(s) that they represent – be it an index, country, currency, sector, or industry.
For instance, in one transaction and with just one share you can buy the entire S&P 500 index… a batch of U.S. government 20-year + bonds… the whole country of Japan… the biotech sector… the top oil stocks… or the 200 most important small-cap companies.
The list seems endless… and continues to grow.
ETFs represent the fastest growing sector of the fund industry with money flooding into the marketplace at a rapid rate. At the end of 2003, total investors assets in ETFs were $151 billion. But at the end of 2009, that number had swelled to $785 billion.
A top ETF manager recently told Investor's Business Daily: "Of the new money coming into our firm, about two-thirds of the equity investments are going into ETFs."
So why are ETFs so popular? More importantly, how do they work and how can investors profit?
The Benefits of ETF Investing
It's arguably the unique blend of stock and mutual fund characteristics – and the resulting benefits – that make ETFs so popular.
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