Exchange traded funds (ETFs) are all the rage, but how can you tell when an ETF is not a true ETF? As providers branch out into non-traditional investments such as currencies and commodities, they launch some products that may not be funds, rather they are notes or other legal structures. Shefali Anand for The Wall Street Journal clarifies that for the most part, these new investment tools behave in the market like an ETF, but they are set up under different laws and rules than ETFs and mutual funds. The differences can be important. For one, tax implications aren’t totally clear. The IRS has yet to issue a ruling as to how these new ETF tools should be handled. There is discussion on whether these latest investment tools should be re-named to exchange traded vehicles (ETVs) to make the distinction clear.
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