Benefits of Exchange Trade Fund InvestmentExchange Trade Funds are an investment tool which is becoming more widely used by financial institutions and private traders alike. But what makes ETF trading so popular? What are the benefits you can derive from investing in Exchange Trade Funds? The first benefit is ease of use. There are thousands upon thousands of stocks traded in every country and sector. Picking the right ones can be an arduous and complicated thing. This is something which not many regular people, with jobs and family obligations, can find the time to do well. An ETF is much easier to analyze and monitor. The second benefit Exchange Trade Funds provide are in relations to traditional funds and is in terms of management fees which can take a substantial bite out of your profits. ETFs usually charge a mere fraction of the fee which regular funds require. The third benefit is in terms of ROI. Many studies found the managed funds often don't beat the index or sector in which they specialize. This means that you pay management fees but don't really benefit from the supposed specialty of the fund manager. An Exchange Trade Fund replaces the need for that manager as it follows the index or sector blindly. They often beat managed funds despite the "expertise" of fund managers. The fourth benefit of investing in ETFs is the fact that you can trade them flexibly, much more than a fund. You can buy and sell ETFs at all trading hours, just like a stock, meaning that this is a fluid investment and an easy one to manage. The 5th benefit of trading Exchange Trade funds lie in the fact that they allow you to invest in an entire sector through a single position. This means that you can invest in the oil market, for example, but don't have to pick and choose specific stocks. This means that you're less exposed to the risk of one single company taking a bad turn, which can happen at anytime due to many reasons which may not influence the rest of the companies in that financial segment. Overall, investing in Exchange Trade Funds can be a massively beneficial course of action for you to take. |
