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Exchange traded fund |
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Exchange traded fundETFs are a new kind of collective investment fund competing with investment trusts and unit trusts for investors' money.In some ways they are a conventional tracker fund, pooling the cash of a large number of investors and investing it in a basket of shares in companies that make up an index (e.g. members of the FTSE A All-Share).Like unit trusts, ETFs are open ended, which means that new units can be issued in response to demand. The advantage of this is that they trade at a price which is close to the net asset value of the fund (i.e. the value of its investments) - something that cannot be said of investment trusts which are closed funds.But unlike unit trusts, ETFs do not usually have initial charges and their annual management charges are much lower (averaging 0.35%). You will have to pay broking commission, but some ETFs are exempt from Stamp Duty.Another feature of ETFs is that their prices are updated continuously during the trading day to reflect the indexes they track. This is an improvement over unit trusts where prices are only recalculated every 24 hours. So if you buy shares in an ETF at 2 o'clock on Monday the price you pay will be directly related to the NAV at that time.ETFs pay a dividend to their shareholders, which is the sum of all the dividends received from the ETF's investments minus an annual management fee. Typical annual fees are under 0.5% of the fund's value.The UK's first ETF was launched by Barclays Global Investors in 2000 and took 80,000 trades in its first week. It can be held in both PEPs and ISAs and does not attract Stamp Duty.You can buy ETFs through most stockbrokers.Similar MatchesSurveillance department of exchangesSurveillance department of exchangesA department that monitors trading activity on an exchange in order to identify any unusual activity that may indicate illegal practices. Bilateral exchange rateBilateral exchange rateThe exchange rate between two countries' currencies, defined as the number of units of either currency needed to purchase one unit of the other. Exchange membersExchange membersSee: Member firm; seat Securities and Exchange Commission RulesSecurities and Exchange Commission RulesRules enacted by the SEC to assist in the regulation of US financial SEC. London Commodity Exchange (LCE)London Commodity Exchange (LCE)Merged with the London International Financial Futures and Options Exchange in 1996. Further SuggestionsNew York Mercantile ExchangeLondon Commodity Exchange European Options Exchange (EOE) National Stock Exchange (NSE) Exchange controls Sao Paulo Stock Exchange Swiss Options and Financial Futures Exchange (SOFFEX) Exchange market London International Financial Futures and Options Exchange (LIFFE) Forward foreign exchange rate Chicago Board Options Exchange (CBOE) Copenhagen Stock Exchange Historical exchange rate Arizona Stock Exchange New York Futures Exchange (NYFE) stock exchange Wiener Borse (Austrian Stock Exchange) Foreign exchange broker Ration foreign exchange Bill of exchange International Stock Exchange of the UK and the Republic of Ireland (ISE) Exchange equalization fund Stock Exchange Daily Official List code Moscow Interbank Currency Exchange (MICEX) Kuala Lumpur Options and Financial Futures Exchange (KLOFFE) |
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