Hello YouTube, Todd Ault here, and Welcome to Wall Street Words! Today's Wall Street term is "Stock Exchange Traded Fund" or ETF's.
Now ETFs have become a behemoth. I mean, a mammoth in terms of size. Twenty-something years ago, when I started as a broker, there wasn't that many ETFs. There were mainly mutual funds. These stock exchange-traded funds or ETFs traded on the exchange, and they own a portfolio of specific stocks that can be sector funds, they can be generic, like the S&P 500 Spider Funds, they're an important part of the financial economy now, and people use them to invest, financial planners, if they want to be in real estate funds if they want to be invested in health care. It's a gigantic investment class. Now, these funds raise capital and trade on the ETFs, value - the value of the underlying portfolio and they trade very liquid. Now, as a side note, I was an investor in what they called the " Triple Q's" many years ago, I think 20 years ago, I don't know the time frame, but they've become very popular as they were tracking the Nasdaq 100, and the Triple Qs traded millions and millions and billions of dollars of shares a day. And today it's a behemoth in terms of investments. "ETFs" have become such an important part of the economy and the way we invest that some people are concerned they're getting too big. Today's word is "Stock Exchange-Traded Fund" or "ETF."
ETF's are an asset or entity that tracks a particular set of equities, similar to an index. It trades just as a normal stock would on an exchange, but unlike a mutual fund, prices adjust throughout the day rather than at market close. These ETFs can track stocks in a single industry, such as energy, or an entire index of equities like the S&P 500. By investing in an ETF, investors can gain exposure to a basket of equities and limited company-specific risk associated with single stocks. This instant diversification comes in a simple, low cost, and tax efficient tool that can be accessed through most online brokerages. Owning diversified assets limits some unsystematic risk associated with company stocks. The original purpose of investing in an ETF was to meet long-term goals, but today they are traded like any other stock, in that investors can short or buy on margin.
In today's world, knowledge is powerful and I'm here to share my 30+ years of Wall Street experience with you. Wall Street can definitely be intimidating for a lot of people, so I'm super excited to announce our launching of "Wall Street Words."
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Todd Ault and his Wall Street Words content is for informational purposes and is not intended to substitute for the advice of a licensed or certified attorney, accountant, financial advisor, or other certified financial professionals. Todd Ault and his Wall Street Words does not provide any investment, financial, accounting or other professional advice. The information provided is not intended to be an offer, solicitation or recommendation to buy or sell any investment instruments or enter into any other type of transaction."
#wallstreet #stockmarket stockexchangetradedfund #ETF
