exchange-traded fund


Also found in: Dictionary, Thesaurus, Medical, Financial, Acronyms, Wikipedia.

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.
..... Click the link for more information.
) 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 ?
Many exchange-traded funds pay out quarterly dividends, which may, in turn, be reinvested.
Claymore currently offers closed-end funds, unit investment trusts and exchange-traded funds.
PowerShares Dynamic Small Cap Growth Portfolio is an exchange-traded fund incorporated in the USA.
com Beta Web site has been launched to help investors make more informed investing choices when investing with exchange-traded funds by providing innovative one-screen views of popular exchange traded fund lists, ETF101 quick references, daily technical multi-charts, performance and relative-market ratings, forums - as well as the Web site's Top 10 ETF funds list.
I believe the market in Europe will grow rapidly in the coming months," commented Ed Williams, a director of Merrill Lynch International, which has acted as technical adviser to the European Exchange-Traded Fund Company plc.
The Firms currently have assets under management or supervision of over $28 billion through closed-end funds, unit investment trusts, mutual funds, separate managed accounts and exchange-traded funds.
A new batch of exchange-traded funds are focusing on companies involved with the fight against cancer.
Emerging Global Advisors LLC is an independent investment advisory firm and the advisor to the EGShares family of exchange-traded funds (ETFs).
19, 2014 /PRNewswire/ -- Global X Funds, the New York-based exchange-traded funds, today announced the scheduled liquidation of the following two funds ("Funds"):
CHICAGO, April 27 /PRNewswire/ -- The shareholders of the Nuveen family of tax free open-end and exchange-traded funds have approved adjustments to the management fees of 15 of the 57 Nuveen funds.