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Exchange-traded Funds
 
  

 
The universe of exchange-traded funds encompasses both newer, passively managed index-linked funds and the more traditional, actively managed closed-end funds (CEFs). Through both types of ETFs, investors can gain exposure to almost every asset class (stocks, bonds, real estate), geographic region (U.S., international), investment style (growth or value, small cap or large), and industry sector (technology, health care, financials and more).
 
Index-linked ETFs are designed to track a specific established or proprietary index or "basket" of securities. They are an efficient means to implement long-term asset allocation strategies. Some of the most popular brand names include iShares, Spiders, Qubes, Vipers, streetTRACKS and Diamonds.
 
 
 
Advantages of ETF Investing
 
Liquidity
Diversification
Intraday Trading
Short Selling on a Downtick
Tax Efficiency
 
Quarterly Dividends
Portfolio Transparency
Limited Premiums/Discounts
Margin Eligibility
No Investment Style Drift
 
An investment in an exchange-traded fund involves risks similar to those of investing in a broadly based portfolio of equity securities traded on exchange in the relevant securities market, such as market fluctuations caused by such factors as economic and political developments, changes in interest rates and perceived trends in stock prices. Investing in an international ETF also involves certain risks and considerations typically associated with investing in a fund that invests in the securities of U.S. issues. (For specifics and a greater explanation of possible risks with ETFs, please consult a copy of the prospectus.) The investment return and principal value of ETF investments will fluctuate, so that an investor's ETF shares (creation units), if or when sold, may be worth more or less than the original cost. The prospectus contains more complete information including risks, expenses, taxes and other related matters. Be sure to read the prospectus carefully before investing or sending money.
 
 
 
 
 
 
 
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