Because they are not actively managed and have very little portfolio turnover, ETFs carry some nice tax advantages over mutual funds because they distribute relatively few capital gains.
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So exchange traded funds offer most of the advantages of mutual funds -- instant diversification and many to choose from -- without the major disadvantages.
it represents with the issuing institution for a small fee. It means that ETFs will not trade at significant discounts or premiums to the value of the underlying assets of the fund. This is not true with closed-end mutual funds.
The primary disadvantage of an ETF is that if you are making small transactions on a regular basis, you will pay a commission on each transaction -- just like you would by buying and selling a stock.
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But, all in all, the advantages of an exchange traded fund far outweigh any disadvantages. I suggest that you use ETFs as an important part of your investment strategy.
Most ETFs have very low management fees,
belstaff jackets uk, especially compared to mutual funds. And the lower the expenses, the more money goes into the investor's pocket.