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Welcome to the ETF Wiki

The wiki aims to consolidating Exchange-Traded Funds around the world.  Contributors are Welcome!

What is ETF?

An exchange-traded fund (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. When buying and selling ETFs, you have to pay the same commission to your broker that you'd pay on any regular order.

Advantages:

  • Lower trading costs
  • Flexible buying and selling
  • Ability to sell short and buy on margin
  • Achieve market exposure and diversification
  • Transparency in trading portfolios

Risks:

  • Regulatory risk (especially for Synthetic ETFs)
  • Counterparty risk of dubious-quality collateral

About This Wiki

This wiki is established on 1 October 2013.  It is aimed to be written in plain English.

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