What is an index ETF?
Like a traditional mutual fund, an index ETF is a investment structure that pools the assets of its investors and uses professional managers to invest the money to meet clearly identified objectives, such as current income or capital appreciation. Unlike a mutual fund, an index ETF is created when an institutional investor deposits securities into the fund in return for creation units. In return for the deposit, the institutional investor receives a fixed amount of shares, some or all of which may be traded and priced throughout the day on a stock exchange such as the American Stock Exchange (AMEX). Retail investors who wish to buy or sell fund shares do not purchase or redeem directly from the fund – rather, they buy or sell fund shares on the stock exchange in a process identical to the purchase or sale of any other listed stock.
Like a traditional mutual fund, an index ETF is a investment structure that pools the assets of its investors and uses professional managers to invest the money to meet clearly identified objectives, such as current income or capital appreciation. Unlike a mutual fund, an index ETF is created when an institutional investor deposits securities into the fund in return for creation units. In return for the deposit, the institutional investor receives a fixed amount of shares, some or all of which may be traded and priced throughout the day on a stock exchange such as the American Stock Exchange (AMEX). Retail investors who wish to buy or sell fund shares do not purchase or redeem directly from the fund – rather, they buy or sell fund shares on the stock exchange in a process identical to the purchase or sale of any other listed stock. All the strategies associated with stocks, such as market orders, limit orders, stop orders, short sales, and margin buying can be used in the purchase and
