In the last four years or so, there has been explosion of newly created exchange traded funds (ETFs) in the financial marketplace. What are these investment products, and how are they different from the more familiar mutual funds?
Figure 1 shows the growth in both the number of exchange traded funds available and the amount of money invested in them. Although the ETF world is still dwarfed by the $11 trillion mutual fund industry, ETFs have clearly taken off on a growth spurt. Exchange traded funds were originally introduced to provide an investment vehicle with certain advantages over mutual funds.…Read More