4 Reasons To Invest In ETFs
while there are many investments to choose from, an investor still needs a lot of capital to construct a diversified portfolio using individual stocks, bonds and so on. exchange traded funds, etfs, have a number of features that make them ideal investments for this purpose. the most attractive feature is diversity. the range of available etfs includes almost every asset class, stocks, bonds, real estates, commodities, currencies, international investments and so on. the wide range of etfs allows you to construct a diversified portfolio using fewer investments, and therefore less capital. most etfs are also very liquid and can be traded ? day. this is an advantage of an index mutual funds which are priced only at the end of the business day. this liquidity means that investors can engage in intraday trading, similar to stocks. by using etfs, investors can manage their investments in any style they choose, passively, actively or somewhere in between. passive management simply means investing in one or more market indexes but active management involves the selection of specific stocks or sectors in order to beat the market. active investors can use sector etfs to take bullish or bearish positions in specific sectors, or they can implement advanced portfolio management through inverse and leveraged etfs. new etfs are constantly opening up fresh markets for investors. the creation of new etf is driven by what investors want to buy. for example, the number of commodity etfs exploded during the commodity boom of 2003 to 2007. some of these etfs ? commodity baskets while ? specific commodity such as crude oil and gold. the diversity, liquidity, flexibility and innovation of etfs make them attractive to investors trying to achieve all those things with a limited amount of capital.
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