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 ?
Carpenter likes the fact that an exchange-traded fund levels the playing field in full fee disclosure.
Simply put, exchange-traded funds are open-ended mutual funds that are listed and traded on a stock exchange.
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The Claymore-advised exchange-traded funds listed below (the "ETFs") are pleased to announce that the proposals applicable to each of the ETFs listed below received necessary shareholder approval at the reconvened Joint Special Meeting of Shareholders held on March 12, 2010.
Claymore Exchange-Traded Fund Trust, on behalf of UBD, entered into a new investment advisory agreement with Claymore and Claymore, on behalf of UBD, entered into a new investment sub-advisory agreement with Mellon Capital.
Stock investors, too, can learn and benefit by developing strategies based on exchange-traded fund market and sector trends.
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.
7 February 2014 -- California-based 401(k) retirement service provider Schwab Retirement Plan Services Inc said has become the first major firm to launch a full-service 401(k) program based on exchange-traded funds.
The research provides an overview and market forecast of exchange-traded funds, index mutual funds and indexed separate accounts.
Subsequent sections contain analyses of all exchange-traded funds and other closed-end mutual funds, with graphs and charts, in the areas of investment rating, major ratings factors, fund family and type, inception date, and ticker symbol; the top and bottom funds; the best and worst funds based on performance; and top rated funds by type.