Basics

Exchange Traded Funds (ETF) are mutual funds that trade like stocks on the exchanges (see Stock Markets & Securities Exchanges).  These accounts are also called: Exchange Listed Portfolios, Exchange Index Securities, Exchange Listed Shares and Listed Index Securities….wouldn’t it be nice if they could settle on just one name.  They are primarily traded on the American Stock Exchange, which has been purchased by the NYSE Euronext
http://www.nyse.com/attachment/amex_landing.htm.  EFD’s always track an index Indexes, which could be a market segment, industry sector, a foreign country or region, or a group of stocks with similar characteristics.  ETF’s are relatively new since they were only introduced in 1993, although there are now over 200 and growing!

NEWS Flash: New Type of ETF:  On October 1, 2009 a group of ETF’s were launched that will be managed funds vs. the traditional ETFs based on indexes.  The concept being that investors will be attracted to manage ETF’s which can be traded anytime while the market is open; where as traditional Mutual Funds Mutual Funds can only be traded after the market closes.  The early success of managed ETF's have  mutual fund companies getting onboard with ETF's.  The number is January 2010 ETF  was 15 actively managed ETF's on the market, expected to rise to 40 and probably more.  Providers could double from seven to 15. History has shown us that within a few years of launching ETF’s many investors switch to this new type of securities over traditional Index Funds Index Funds.  This pattern could also hold true for actviely managed ETF's.