|Investors > ETFs > ETF Basics|
Exchange Traded Funds (ETFs), also called Index Shares, are investments that represent a diversified group of companies (just like mutual funds) but trade like stocks. You can think of ETFs as a cross between mutual funds and stocks. They’ve been around since about 1993, which is a short time for an investment product. There are over 120 stock-based ETFs in the market and just a handful of bond-based ETFs. The table below gives a list of the websites for ETF educational information.
Another ETF advantage is that like stocks, the price of ETFs change continuously during the day. This is in contrast to mutual funds where the NAV of funds is typically set after 4 p.m. on th eday you want to buy or sell the mutual fund.
Like mutual funds ETFs charge investors some expenses but these expenses are much lower than mutual fund expenses. For example, the most cost-effective mutual funds (from an expense ratio point of view) charge between .18% and .40% per year. ETFs, however, charge between .09% and .25% per year.