ETFs keep flourishing

SmartInMoney.com wrote in the article "ETF Structure and Advantage" that Exchange-traded funds (ETFs) keep flourishing as they recorded their largest month on record in July with US$646-billion in assets, according to Birinyi Associates

Exchange traded funds in their basic form are baskets of securities that are traded, like individual stocks, on an exchange. Funds can track any number of indexes from the large-cap S&P 500, small-cap Russell 2000, or even commodities. Most of ETFs on the market currently are passively managed, tracking a wide variety of broad to narrow market indexes.

As of July, SPDR (SPY) remains the largest ETF at US$69-billion. SPDR Trust is an exchange-traded fund that holds all of the S&P 500 Index stocks

Exchange traded funds have grown rapidly to cover most broad investment purchases and many niche markets. Funds that drill down into specific sectors, industries, regions, countries, and asset classes make up a great percentage of the ETF universe, offering relatively inexpensive access to investments such as currencies, precious metals, or emergent industries that thus far have been the sole province of larger institutional and wealthy investors.

Recently, fund companies have also launched actively managed ETFs. These funds are not tied to a benchmark, but continue to sport the familiar benefits of ETFs.

ETFs attract both investors and traders who do not wish to make individual stock selections but only capture the broad movement of the market. ETFs appeal to different types of do-it-yourself investors. Investors who prefer index funds over actively managed offerings find ETFs appealing because many of them are very cheap. Some day-traders like ETFs because of their stock-like qualities and their focus on individual sectors or markets.

Read full article at smartinmoney.com

Flash orders will be banned

The Securities and Exchange Commission (SEC) is moving toward banning a trading practice, called as “flash orders”, that gives some brokerages a split-second advantage in buying or selling stocks.

Flash orders give certain members of exchanges including Nasdaq, Direct Edge and BATS the ability to buy and sell order information for milliseconds before that information is made public. High-speed computer software can take advantage of that brief period to allow those members to get better prices and profits.