exchange-traded fund

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exchange-traded fund

(ETF), in finance, an investment company that in exchange for the deposit of a portfolio of stocks, bonds, commodities, or other assets issues securities that represent those assets and may be traded like shares of stock. Shares in an ETF may only be issued to the fund's authorized participants, typically large financial institutions, and usually in a large block of 10,000 to 50,000 shares, known as creation units. Shares in an ETF must also be redeemed in creation units. ETF shares may be purchased and traded by most individual investors using a brokerage account.

Most ETFs are similar to index funds (see mutual fundmutual fund,
in finance, investment company or trust that has a very fluid capital stock. It is unique in that at any time it can sell or redeem any of its outstanding shares at net asset value (i.e.
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) in that they represent a portfolio that is designed to track an index of a financial market, such as the S&P500. ETFs, however, track a greater range of indexes and thus offer more options and more specifically targeted choices for an investor. Unlike shares in a mutual fund, which may be redeemed only at the end of the business day when the net asset value is determined, ETF shares may be bought or sold at any time on an exchange and also may be sold short and purchased on margin, which is useful for traders. In general, compared to mutual funds, ETFs are more useful to the active trader with larger financial resources than to the long-term small investor. The first ETF was created in 1993 in the United States; the number of ETFs and amount of money invested in them grew significantly in the early 21st cent.

References in periodicals archive ?
The number of firms offering exchange traded funds will double to 26 by 2017.
We are honored to have the NEXT FUNDS NASDAQ-100 EXCHANGE TRADED FUND, linked to one of the world's largest growth indexes, to be listed on OSE's market," said Michio Yoneda, President and CEO of OSE.
Sharif Sami, Chairman of the Egyptian Financial Supervisory Authority (EFSA), said in a phone interview with Reuters: "I don't think it will take more than two or three weeks to activate exchange traded funds on the Egyptian market; however our stated goal is to do so during the fourth quarter of the current fiscal year, if no unforeseen events prevent us from doing so.
The bank said that the value of Canadian exchange traded funds has increased to more than CAD40bn in less than 20 years, but only a few Canadian investors were familiar with them.
Exchange Traded Funds (and iShares) are actually index funds that trade like individual stocks.
NEW YORK -- ProShare Advisors has selected JPMorgan to provide fund administration services for the launch of 12 new ProShares Exchange Traded Funds (ETFs), which will begin trading on the American Stock Exchange today.
The ESI Illuminations fee-based Asset Management Program currently consists of: Mutual Funds, Exchange Traded Funds (ETFs), Index Funds, and Separate Accounts.