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Consider Exchange Traded Funds

Radio Transcript, 60 seconds, for use during week of Dec. 10.

This is an Invest Wisely minute brought to you by Iowa State University Extension.

You may want to consider ETFs... or Exchange Traded Funds... as an investment. They are the fastest growing segment of the fund industry.

They are similar to mutual funds in that they hold a basket of securities such as stocks, bonds, currencies and commodities.  However, unlike mutual funds, you can trade ETFs throughout the day like stocks. 

The expenses of ETFs are on average even lower than that of index mutual funds.  They also are tax efficient.

The biggest drawback is the brokerage commission you pay each time you buy or sell an exchange traded fund.  Thus, they are less appropriate for the investor who dollar cost averages by regularly putting a smaller amount into an investment.

Invest Wisely comes from Iowa State University Extension through a grant from the Investor Protection Trust providing investor education on the web at investorprotection.org.

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Updated December 3, 2007