Look before you leap when investing in ETFs by Kathy Lakritz, investment manager with the Milwaukee office of Schenck Investment Solutions LLC.
Exchange traded funds (ETFs) offer investors a basket of securities and other assets similar in many ways to a mutual fund, except that shares in an ETF can be bought and sold throughout the day like a stock. Financial institutions purchase and redeem ETF “creation units” (shares), which can trade at a discount or premium of net asset value directly from ETF providers.
While generally providing easy diversification, low expense ratios, and tax efficiency, ETFs maintain all the features of ordinary stock, such as limit orders, short selling, and options.
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