Anyone into exchange traded funds?

[celiboy]

I'm looking at investing in some ETF's...mainly due to the fact of the high mgmt ratios in traditional mutual funds. Does anyone have any experience with these, or recommendations as to whom/what to invest in?


For those who don't know these are traded on the stock market but are basically like a mutual fund that invests in certain indexes. For example you can get ones that track the S&P 500, transportation, biotech indexes, etc....Normally the fees on these ETF's are less than .5% versus the 2+% on a traditional fund (at least in Canada it's that high)

[THAY3R]

I'm new to this particular forum, but from what I've seen, most think ETF's are very good ideas.

[slambert]

ETFs are generally good if you dont really know how to perform sound analysis for stock picking.

[GeorgeF]

If expenses are the issue, vanguard.com is probably cheaper. On the otherhand there are many more themes available to the ETFs.

[tremain]

[ QUOTE ]
I'm looking at investing in some ETF's...mainly due to the fact of the high mgmt ratios in traditional mutual funds. Does anyone have any experience with these, or recommendations as to whom/what to invest in?


For those who don't know these are traded on the stock market but are basically like a mutual fund that invests in certain indexes. For example you can get ones that track the S&P 500, transportation, biotech indexes, etc....Normally the fees on these ETF's are less than .5% versus the 2+% on a traditional fund (at least in Canada it's that high)

[/ QUOTE ]

Yes, I use ETFs as part of my overall portfolio. I use them for a few specific reasons:

1) Low expenses. I incur a trading fee for purchasing & selling them, but minimal ongoing fees.

2) Tax efficiency. Dividends distributed by underlying shares held by the ETFs do pass on to me, but since I use index ETFs, I do not have capital gains tax to pay since the ETF trades very little (compared to a mutual fund, which may turn over quite considerably). However, stock index funds do share the advantage of tax efficiency.

3) Liquidity. Shares can be traded intra-day, unlike index funds.

ETFs are a very hot trend right now. Lots of companies are coming up with new ones that track indexes, sectors, etc. Be very careful because not all ETFs are all alike. Some are very thinly traded and therefore the spread between buy and sell price can make buying them more expensive and selling them not gain enough relative to the securities they represent.

SPDRs, etc, are very widely traded.