Exchange Traded Fund ETF
Definition of 'Exchange Traded Fund ETF'
Another feature that distinguishes ETFs from mutual funds is that because its stock price fluctuates daily, it does not have a net asset value (NAV).
The advantages of ETFs over mutual funds are:
- You get the diversification of an index with the ability to
- sell short
- buy on margin
- buy as little as one share.
- The expense ratio is usually lower than those of the comparable mutual fund.
- Commissions are the same as any regular order.
One of the most widely known ETFs is called the SPDR (Spiders), which tracks the S&P 500 index and trades under the symbol SPY. Others are the Diamonds (DIA) which tracks the DJIA, and the NASDAQ-100 Index Tracking Stock (QQQQ).
Do you have a trading or investing definition for our dictionary? Click the Create Definition link to add your own definition. You will earn 150 bonus reputation points for each definition that is accepted.
Is this definition wrong? Let us know by posting to the forum and we will correct it.