Tell me about ETFs

[PatInTheHat]

I have a friend that swears by investing in only ETFs. Anyone mind explaining to me what exactly and ETF is and thoughts on investing?

[scott1]

This is a question for Wiki/Google.

http://en.wikipedia.org/wiki/Exchange_Traded_Funds

[PatInTheHat]

Good read thanks.

Still curious what peoples thoughts are on investing in them?

[Jeff W]

They're great for me--they are like index funds with lower costs. ETFs are just a vehicle for investing in various asset classes.

ETFs for Dummies is usually highly recommended.

[f97tosc]

For most investors, there are no significant differences between ETFs and mutual funds.

The ETFs enable you to buy and sell quicker, and to do stuff like short selling etc, but if you hold for the long term and don't want to do anything fancy, this doesn't really matter.

Other than that, the fee structure is a bit different. Typically the ETFs have a lower management fee than the corresponding mutual fund, but on the other hand, you usually have to pay a transaction fee when you buy and sell the ETF. This may mean higher or lower total fees depending on exactly how you are investing. At least for Vanguard's funds/ETFs the difference is quite small for typical investments.

[mtgordon]

Here's one

Another One

Especially see gull's post toward the end of this one

[PatInTheHat]

Thanks guys. I think that covered it.

[IRuleYouHard]

When wiki says anytime during the day does it mean "day" not "night" or can I trade those at 1am also?

[yellowbastard]

Do actively managed ETF's not avoid the structural problems actively managed mutual funds do? (since ETF's are closed-ended as opposed to open-ended)

[Jeff W]

[ QUOTE ]
Do actively managed ETF's not avoid the structural problems actively managed mutual funds do? (since ETF's are closed-ended as opposed to open-ended)

[/ QUOTE ]

The only actively managed ETF I know of is the proposed Vanguard TIPS ETF, which is under review by the SEC.