WHAT IS AN ETF?
  Some independent definitions and comparisons
 
 
   
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DEFINITIONS

The Globe and Mail explains
...that Exchange-Traded Funds (ETFs) are a bit like a stock and a bit like a mutual fund. Like a stock, you buy ETFs on a stock exchange through any stockbroker or online brokerage account. You can place an order anytime during the trading day. Like a mutual fund, ETFs let you invest in a group of stocks or other investments.

Investopedia.com explains
...that an ETF is a security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange. ETFs experience price changes throughout the day as they are bought and sold.

Because it trades like a stock, an ETF does not have its net asset value (NAV) calculated every day like a mutual fund does.

By owning an ETF, you get the diversification of an index fund as well as the ability to sell short, buy on margin and purchase as little as one share. Another advantage is that the expense ratios for most ETFs are lower than those of the average mutual fund.

One of the most widely known ETFs is called the Spider (SPDR), which tracks the S&P 500 index and trades under the symbol SPY.

ETF vs Mutual Funds: with an ETF, you get the diversification of holding many stocks, without the negative impacts of large unit holder activity within your mutual fund.
a) With ETFs held within client named accounts, you are NOT taxed on gains that are not realized within your own portfolio; b) there are no taxable distributions from rebalancing within the ETF and c) there are NO embedded tax liabilities within ETFs - to name a few advantages of the efficiency of the structure.

HOW RISKY IS AN ETF?
Since Exchange-Traded Funds (ETFs) help investors diversify with a mix of investments, they
reduce the volatility and risk often associated with individual stock selection. And in most cases, you will only do as well as the underlying market.  The ETF gives you exactly what it is designed to do - the market!

If you want to better manage portfolio risk and your returns within your portfolio, you require professional global advice and active management appropriate to your life stage requirements and investment mandate. Investment risk is then managed by positioning ETFs within your portfolio considering country, region, sector, style and currency.  The ETF itself is a stable "tool" and is a trillion dollar industry embraced by institutional and private investors alike from around the globe.

ACTIVE MANAGEMENT using ETFs?
By design, the ETF will deliver the market's return with less volatility relative to individual stock selection, and without the expense of a mutual fund.  Adding expert advice optimizes your exposure or allocation between the many markets.  Using multiple ETFs within your portfolio the manager's expertise is to deliver true diversification, with less volatility, less cost and better returns.

ETFS ARE NOT NEW - ACCESS TO THEM IS.
Why continue to take unnecessary risk?

It is time to learn more about ETFs and the many benefits of actively managed ETF Portfolios. 
By reducing risk, you can increase returns. 

Take a moment today to
request more information about our "Top of the Hill" approach to Private Client Wealth Services,
or call toll free (877) 769-3769

BRAEHEID MANAGEMENT - bringing you the next phase of Private Client Wealth Services.


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