- Mar 19, 2017
What is an ETF or Exchange Traded Fund. Why do I care? TedLovesTLC
The innovation of Exchange Traded Funds (ETFs) over the past 20 plus years has revolutionized how many investors access markets, but the benefits are still unclear to many people. With that in mind, the below acronym TED Loves TLC is meant to simply summarize what people should be looking for in a fun way. Readers should not take this as an investment recommendation at all, but read the commentary for educational purposes. A more detailed report will follow.
TED stands for:
- Transparency = Most ETFs are fully transparent including Intraday pricing (INAV) & holdings.
- Ease of Use = ETFs Trade like a stocks and are listed on a major exchange; NYSE, Nasdaq & BATS.
- Diversification = Most ETFs are diversified so the risk is about the sector, asset class or a group’s trend.
TLC stands for:
- Tax Efficiency = Internal capital gains are generally not passed along to investors.
- Liquidity = Trading volume of the underlying securities is the best metrics of an ETF liquidity.
- Cost = Fees are mostly set as a percentage of assets under management (AUM) and are generally low
For further information please see attached link: TED Loves TLC