subject: Looking to Buy and Sell ETFs? [print this page] Looking to Buy and Sell ETFs? Looking to Buy and Sell ETFs?
ETFs, or exchange-traded funds, aren't all too much different than stocks, as they are easily bought and sold, most often, through an investment or brokerage account. Unlike common stocks, however, ETFs hold assets in stocks, commodities, or bonds, and trade at approximately the same price as the NAV, or net asset value, of its underlying assets over the course of the trading session. This differs from mutual funds, however, as an ETF does not have its NAV calculated every day like a mutual fund does.
While ETFs, and all stock market investments, are subject to certain types of risks, investors might be surprised that they can employ traditional stock trading strategies, such as limit orders, stop orders, margin purchases, and short sales, when getting involved with an ETF investment. Of course, brokerage commissions and fees are applicable, but this will vary on your brokerage house or service.
ETFs can typically fluctuate up and down in value, with the value of the particular index they follow. For example, one of the most popular ETFs is known as the Spider (SPDR), which trades under the symbol SPY. This particular ETF tracks the S&P 500 index and will tend to follow its value movements. Other popular ETFs include the Nasdaq-100 Index Tracking Stock (AMEX: QQQ), DIAMONDS Trust (AMEX: DIA), iShares S&P 500 (AMEX: IVV), and iShares Russell 2000 (AMEX: IVM).
Some investors may see this as somewhat of a downside, owning an ETF gives individuals the diversification of an index fund, and the ability to purchase as little as one share, sell short, and buy on margin. Like any stock, ETFs carry investment risk, and fluctuate in value as shares are bought and sold. Overall, ETFs have become a popular way to get broad market exposure and make money in the stock market.
