ETF ACADEMY: Advantages of ETFs

Several websites do a good job of explaining the benefits of investing with ETFs. A good example is found at the website of the American Stock Exchange.

According to Amex’s FAQs, the benefits of exchange traded funds trading as stocks include:

> buy and sell at any time during the trading day
> instantly get exposure to a portfolio of stocks or bonds
> buy on margin
> sell short
> no sales loads, although brokerage commissions will apply
> lower fees
> tax efficiencies

Not surprisingly, you won’t find the same benefit list on the website of the Investment Company Institute which is backed by the mutual fund industry.

For example, according to ICI,

two investors selling ETF shares at different times on the same day may receive different prices for their shares

while mutual fund investors have the privilege of “receiving” a price determined at the end of the day which is the same for all fund shareholders.

Unfortunately for mutual funds, that privilege simply doesn’t stack up against the benefits of ETFs.

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