NASDAQ EXCHANGE TRADED FUNDS
Pros and Cons of Exchange Traded Funds:
The NASDAQ Exchange Traded Funds have the following advantages:
- These funds can be purchased or sold any time during the trading day.
- The traders have the option to buy or short the ETFs depending on the margin.
- They have very low annual expenses.
- Tax efficiency is a very good factor with ETFs.
Cons of exchange traded funds:
- Commissions such as stocks and the trading of ETFs are costly.
- Only wealthy entities and investors can deal in ETFs.
- The ETFs can trade at any level above or below the value of the concerned portfolio.
- There are hidden charges in ETFs.
Conclusion:
After going through the pros and cons of using the exchange traded funds, it is concluded that they are not better than the mutual funds. The commissions that are present in the exchange traded funds make it a very unattractive proposition. In a tax deferred portfolio investment, direct investment in the mutual funds is always beneficial. The commissions make the ETFs look bad even in the taxable account portfolio. Investing in a mutual fund company instead of an exchange traded fund has the following general profits:
- They are beneficial in non tax paying accounts.
- If the investor invests a small amount of money each month in an investment plan, the exchange traded funds tend to kill the investment.
- An active trader will find the going better in mutual funds than in the exchange traded funds due to commissions.
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