November 3
Top Seven ETF Benefits That Can Add Zing to Your Portfolio!
ETFs are Exchange Traded Funds that are often compared with Mutual Funds. It is also often mentioned on how ETFs have an edge over their distant cousins Mutual Funds. So if you are looking to add a security with the help of which you can have much needed diversity, expose your portfolio to a particular sector or hedge your current positions, for all these requirements the answer is Trading Exchange Traded Funds. Following are the Top Seven ETF Features on which you traders can bank upon.
1.) Easy Trading
ETFs’ stock like feature makes it easy for individual investors, institutional investors and hedge funds to buy and sell these instruments. Unlike Mutual Funds one can trade ETFs on the exchange anytime during the trading session.
2.) Hassel Free Management
For some of the Index ETFs the prime goal of their establishment is to track the performance of an Index as opposed to Mutual Funds where they might look at outperforming an Index. Hence the risk associated with ETF is low coupled with low management fees.
3.) Futures and Options
If a trader is looking to use Futures and Options for hedging their current positions they do not need to think about the learning curve or directly get involved in risky F&Os instead one can invest in Derivatives ETF.
4.) Cost Effective
If these funds are compared with other available funds, ETFs have lower expense ratio and lower management fees.
5.) Transparency
All of the holdings of Exchange Traded Funds are broadcasted on daily basis. This feature keeps the investors satisfied as they can find out where their investments are being utilized.
6.) Taxes
When ETFs are compared to Mutual Funds then ETF wins the race for Capital gain taxes which are comparatively low.
7.) Hassel Free Portfolio Investment
If a trader believes that a particular sector is going to be a top gainer in near future he has an option of investing in a particular stock which belongs to that sector and keep a track on the price. This becomes risky since it’s hard to predict which stock will be a winner amongst all and also it’s a hassle to continuously keeping a track on the price. Instead trader can invest in Sector ETF which invests in several companies that belongs to that particular sector and in turn trader can stay out of the hassle.
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