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Article:
Exchange Traded Funds by: Al Thomas They call '˜em ETFs. There are hundreds of them. The mutual funds don't want you to find out about them. Why? Because they beat the socks off mutual funds in so many categories. The expense ratios of most mutual funds runs about 1.5% and many are much higher. To buy a mutual fund you must wait until the end of the day to find out what price you paid. Many mutual funds have instituted redemption charges should you decide to sell out early. Early is whatever definition they want to apply and could be a year out, maybe more. The fee at this time is about 2% for many funds. Fund managers tell you it is to discourage overnight trading that adds to their expenses and therefore penalizes shareholders, but that is not true. The two most popular ETFs are SPY and QQQ. SPY is composed of the stocks in the SP500 Index with 500 stocks and it is priced every few minutes. It can be bought and sold any time during the day. The mutual funds who tell you it is too expensive to price their funds more than once a day are either lying or stupid. ETFs prove that. And that same logic goes for short term trading. The investor buys and sells ETFs the same as any stock. The big brokerage companies charge high commission whereas investors who place buy and sell orders with discount brokers will find commissions around $7.00 to $15.00 to buy or sell. That charge is for one ticket and not per 100 shares. The commission is the same for 100 shares or '1
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