What are the benefits to ETFs trading as stocks?
• buy and sell at any time during the trading day • instantly get exposure to a portfolio of stocks of your choice • ability to buy on margin (see below for details) • no sales loads, although brokerage commissions will apply • no high management and sponsor fees • tax efficiencies Are there any tax benefits trading Index Shares? There may be tax advantages as well — ETFs can’t be forced to sell profitable stock positions if too many shareholders cash out at once like index funds can. That has always been one of the disadvantages of index funds. No one likes an unexpected capital gain. Besides having to pay the taxes on it, there’s the hassle of reporting it. Can ETFs be sold short? Yes. All ETFs may be sold short, representing the sale of “borrowed” shares in anticipation of lower prices when the borrowed shares must be replaced. Certain ETF products are also exempt from the rule that requires shares to be sold short only on an “up tick” (i.e., a last sale price higher than that of a
