28 Mar 2011, 16:21
Question:I would like someone to very simply state what is an ETF and how do they really work?
There has been a lot of talk about them lately but nobody has been able to tell me exactly what risks they have and how they operate.
Is this something new that the people who learn about them aren't clear aand aren't able to explain as yet or are they trying to give it a secretive aurea around it?
29 Jul 2011, 10:03
Dr. David Costa's reply:Dear Sydnie,
thank you for your question. I am sure that you can find the basic definition online but here is a simple guide
Essentially ETFs are funds tracking an index that can be traded throughout the day as stocks. ETFs offer high transparency and lower fees than traditional mutual funds. This is due to the fact that ETFs track an index passively (without the involvement of an active manager) and obviously this reduces costs drastically.