Gary Gordon is the President of Pacific Park Financial, Inc. a Registered Investment Adviser.¬† The opinions expressed in this blog are solely the opinions of Mr. Gordon. This site has been designed for entertainment and informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any product or service which may be referenced. However, several links to the Pacific Park Financial, Inc. website are found on this site and Pacific Park Financial, Inc. provides investment management services.
Mr. Gordon does not intend to provide investment advice through this site and does not represent that the securities or services discussed are suitable for any investor. Investors are advised not to rely on any information contained in the site in the process of making a fully informed investment decision.¬† Mr. Gordon is not qualified to render any legal advice or file tax returns.¬† Some information found on this site was gathered from sources that are believed to be reliable but Mr. Gordon has not validated all of the content.
ETFs are the primary topic of this blog. ETFs are funds that track and index but can be trade like a traditional stock. For comparative purpose Mr. Gordon may reference various indices, an index serves as a barometer for a given market or industry and acts as a benchmark against which financial or economic performance is measured.
Things that you should know about ETFs
Advantages of Exchange Traded Funds
- ETFs can be bought and sold throughout the trading day, allowing for intraday trading.
- Investors can short or buy ETFs on margin.
- ETF investors can employ hedging techniques and speculate using options.
- ETFs typically offer lower annual expenses than comparable mutual funds.
- Mutual funds must pay distributions at the end of the year and may be subject to capital gains while ETFs are subject to capital gains when they are sold which allows for more timing regarding the distribution.
- Trading cost when spread across large lump sum investments may be negligible when viewed as a percentage of the investment.¬† ETFs may be favored for these types of investments.
Disadvantages of ETFs
- Investors may be charged fees when they buy or sell ETFs.
- ETFs may not trade at their net asset value.¬† An ETF may trade above or below the value of its underlying portfolios.
- Similar to stocks, there is a bid-ask spread, meaning you may buy the ETF for one price while it is concurrently selling at a lower price.¬† This is basically a hidden charge.
- ETFs can be cost prohibitive due to account charges when employing dollar cost averaging investment strategies (automatically investing small amounts on a scheduled basis).
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