INVE$TING FOR THE FUTURE
There are two objectives to this computer exercise. The first is for you to become more
ETFs (Exchange Traded Funds)
. The second is for you to use the various
investing tools you have learned about and used in previous computer exercises.
The following is an excerpt of an article which is a good introduction to ETFs.
6.2 SPLASH AROUND WITH EXCHANGE TRADED FUNDS
By Toni Turner
If ever there were a newcomer on "The Street" who quickly gained wide-spread popularity for
being attractive, efficient and versatile, it's the exchange traded fund (ETF). Indeed, ETFs
have won the hearts - and assets - of nearly everyone on Wall Street, from private traders
and investors to professional money managers and institutional hedge funds. ETFs now
number approximately 400, with more appearing on the market each month. Fund assets
have grown from $25 billion in 1998 to nearly $419 billion as of February 2007.
WHAT IS AN ETF?
An exchange traded fund is a basket of stocks, or an investment fund, that tracks an
assigned index and trades as a single equity. The stocks held by the fund focus on a single
theme and are created around every conceivable index. That theme might be a market index,
such as the Dow Jones Industrials, the S&P 500, the NASDAQ 100 or the Russell 2000
index. Or the theme could focus on a market sector, such as basic materials, information
technology or health care. Themes also include style, such as value or growth, or target
corporate bonds, Treasury bonds, real estate indexes or commodity indexes. Specialty ETFs
zero in on unique market niches, including nanotechnology, water resources or clean energy.
For those who want to go global, international funds represent the icons of industry in
countries that span the globe, from Asia to Austria and Europe to emerging markets. To take
the global approach a step further, you can select a sector, such as energy, and purchase a
global energy fund.