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Mar 14 2012

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What is an ETF?

What is an ETF?

An exchange traded fund (ETF) is an investment vehicle that combines key features of traditional mutual funds and individual stocks.

Exchange Traded Fund (ETF)

Like index mutual funds, ETFs represent diversified portfolios of securities that track specific indexes. Like stocks,they can be bought and sold on an exchange throughout the trading day. In addition to trading flexibility, key benefits include instant diversification, tax efficiency and transparency of cost and holdings.

Index ETFs

They hold the same mix of investments as a stock or bond market index. In this way, they mirror, or passively track, the performance of the index.  If the index or sector that the index ETF tracks does well, so does the ETF.

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