Exchange Traded Funds-Advantages and Disadvantages

33 Pages Posted: 29 Jun 2011 Last revised: 1 Jul 2011

Date Written: June 28, 2011


Exchange Traded Funds (ETFs) are simply a basket of securities, usually stocks, that is designed to track a market benchmark. It may follow a broad-based index such as the Standard & Poor’s 500, or a more specialized area, such as health care companies or Chinese stock. As it has “Exchange” in its name, ETFs are traded on a stock market or an organized market where it is registered, so they can be bought and sold just like regular shares of stock.

Exchange Trade Funds are securities that provide the diversification of a mutual fund but trades on a securities Exchange like a stock. With ETF sponsors aggressively seeking to create novel kinds of ETFs and to include ETFs in retirement financial plans, these funds are projected to continue growing at a pace far faster than hedge funds and mutual funds in the coming years. ETFs have grown as a result of difficulties in the Mutual Funds industry. With this phenomenal growth it is worth investigating the reasons behind the growth. This research Project intends to explore the History of ETFs, Structure, Advantages, Disadvantages and Legal Environment.

Suggested Citation

Baiden, John E., Exchange Traded Funds-Advantages and Disadvantages (June 28, 2011). Available at SSRN: or

John E. Baiden (Contact Author)

Central University College ( email )

P.O. Box DS 2310

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