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Exchange traded funds are the investment world's equivalent of a nectarine--part mutual fund, part stock, but a delectable improvement over both. An ETF is less risky than an individual stock and cheaper and more tax efficient than a mutual fund.
An ETF usually represents a basket or portfolio of stocks that tracks the performance of a specific index. There's no shortage of financial indices and subindices, and as you might expect, ETFs show a similar and related proliferation. ETFs are available on broad domestic and international market indexes such as the TSE 300, S&P 500 and MSCI Provisional EAFE, as well as on specific sectors such as technology and gold. Some ETFs are pegged to indexes representing countries or specific geographical regions, while others are based on investment style or market capitalization indices. Bond ETFs, currently only available in Canada,...