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Why has ETF become so popular?


Jovan

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Hello, I have noted that until recently, ETF has not been so popular. Nowadays, I hear about ETF everywhere. ETF has become so popular all over the world. I have been wondering what's behind this popularity. Explain to me, please.
 

Edited by Jovan
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Hello Jovan, 
Exchange-Traded Funds is a disposition of investments such as stocks and bonds. ETFs mostly trace a basic asset, and same as individual stocks, they are traded in a stock exchange market.
ETFs facilitate fast buying of assets that ensure assortment with no need to purchase all the individual securities.
One reason why ETFs are so popular is because of their additional flexibility. They can be dealt with in a stock market rather than being held up until the markets close.
Also, the costs incurred while running an ETF are fairly low compared to those of mutual funds. This typically includes fees that are paid to the manager and other personnel running this platform.
ETFs also allow the investors to access and deal in ETFs that have a submission to a particular asset that most probably would have been inaccessible. 
ETFs allow an investor to reach a certain objective.
 

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Hi Jovan,

ETFs are a group of securities backed by a primary index. The fact that they allow the purchase of a diverse collection of instruments simultaneously gives them an edge over individual stocks. Though mutual funds also support a variety of assets, ETFs have several advantages.

First off, they’re tradable in the stock market, unlike mutual funds that are held beyond market close. Additionally, ETFs are cheaper to manage than mutual funds. This is because the asset manager doesn’t run the ETF as actively as they would a mutual fund, hence, lower charges. The reduced costs also extend to the tax advantages.

Since ETF shares can be exchanged for their individual assets, the share prices don’t stray from the asset values. You can choose ETFs focusing on a particular industry or leading stocks in a specific country. Even so, niche ETFs offer limited diversification as opposed to those following broader indexes.

 

Edited by Caroline
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