Low-Volume ETFs That Fly Under The Radar

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April 18, 2009 11:30am ETF BASIC NEWS

stealthETFs offer transparency, tax-efficiency, low-cost diversification and “trade-ability.” These factors give investors an incredible edge on controlling costs and risks.

Yet not all ETFs are equally tradeable; that is, while they may indeed trade throughout the day like individual stocks, limited investor interest may lead to an undesirable bid-ask spread.

It follows that investors may find themselves buying at an intra-day price that may be anywhere from .5% to 1% more as well as selling at an intra-day price that could be .5% or 1% less than hoped for. And this is most common in low volume ETFs that trade few shares throughout the day.

In my own endeavors, I typically steer far away from the low volume ETFs out there. Not only does there tend to be a greater risk of the fund being folded by the provider, but for those of us who use stop-loss protection, low-volume ETFs can execute at really poor prices.

Full Story:  http://www.etfexpert.com/etf_expert/2009/04/etf-expert-lowvolume-etfs-that-fly-under-the-radar.html



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