If you’re among the many investors who have become disillusioned with the lack of transparency in the financial world, you’d do well to consider exchange traded fund (ETFs).
Alan Rosenfield of Harmony Asset Management remarks that “with ETFs, you don’t get hit by surprises, where the manager invests in things you didn’t know about,” writes Russ Wiles for AZ Central.
Additionally, ETFs are cheap, tax-efficient, easy to trade and may be traded throughout the day, like individual stocks. Strategies that were once reserved for institutional investors are now available to the average investor through ETFs. [Report: Most Investors Don’t Know ETFs.]
You can utilize ETFs to gain exposure to large indexes, bonds, commodities, foreign currencies, foreign countries and sectors. ETFs also cover sub-sector groups within larger industries or within other countries.
Furthermore, more sophisticated ETF options allow for specialized investment strategies, such as equal weighting, short/leverage bets and even market volatility.
ETFs aren’t perfect, of course. There are risks to be aware of, costs you should understand and differences between funds that can impact your portfolio’s performance.
Once you get past all that, however, you’ll find the transparency and ease of using ETFs a refreshing shift from the norm. [5 Lessons from Harvard’s ETF Playbook.]
For more information on ETFs, visit our ETF 101 category.
Max Chen contributed to this article.