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Exchange Traded Funds (ETFs) are a grouping of inactive index finances that trade on an exchange like an individual stock. At the clip of authorship there are 162 ETFs with $220 billion in assets under management trading on U.S. exchanges.

ETFs clasp a handbasket of securities that mime the consequences of assorted indices including wide stock and chemical bond market, industry sectors, and international securities. New niche finances are being created regularly. Recent introductions include gold and People'S Republic Of China funds, and there are rumours that a Ag ETF will soon be available.

The most popular ETF is the NASDAQ 100 Trailing Stock (QQQQ) trading 50 million shares a twenty-four hours on the NASDAQ Stock Market. The volume leaders on the American Stock Exchange are the SPDRS (SPY) trailing the S&P Five Hundred trading 25 million shares per day, the Energy SPDR (XLE), Japanese Islands iShares (EWJ), Charles Taze Russell 2000 iShares (IWM), and the Financial SPDR (XLF).

ETFs are widely used by institutional and individual investors as a tool for diversification, hazard reduction, hedging, and an efficient manner to get a handbasket of securities providing partial ownership in all retentions with lone a single committee and small disposal fees. ETFs are also transparent, meaning that investors cognize at all modern times what securities they are invested in.

There are now also options and hereafters contracts trading on of ETFs. The Chicago Board Options Exchange (CBOE) listings 43 options on ETFs, while the Chicago Mercantile Exchange (CME) offers hereafters contracts on the S&P Five Hundred Depository Receipts, NASDAQ 100 Trailing Stock, and Charles Taze Russell 2000 Index Fund. And One Chicago, a joint venture between the CBOE, CME, and Chicago Board of Trade (CBOT), offers an electronically traded hereafters contract on the diamonds Dow Mother Jones Industrial Average ETF.

There are also a number of web land sites offering information on Exchange Traded Funds. Check out Amex.com, Yahoo! Finance’s ETF Center, ETFConnect, or ETFera.com. Meanwhile, investing research firm Morningstar compares the just value estimations to market terms of exchange traded finances retentions to determine whether a monetary fund is over or undervalued.

Exchange Traded Fund’s low costs, liquidity, and variegation do them an first-class option to common funds, wide based index investments, and individual pillory in niche sectors.