Exchange traded fund (ETF)

Exchange traded funds are similar to closed end funds in that they are mutual funds that are continuously traded on the exchanges. However, because the fund manager can create or redeem units at net asset value these funds tend to trade without a premium or a discount. Many of these funds have been created to track specific market indices or sectors.

ETFs have the following benefits:

• Continuous pricing
• Tax efficiency
• Low expense ratio
• Ability to track indices or sectors
• Ability to short