Expert: Paul Henneman - 4/11/2007

Question
Hey Paul
I am a beginner to the field of investing and have heard lot of good things about investing in ETF's. I will like to have your view on how good is to invest in ETF's. Also if that is way to go, what all things i need to consider to put my money in an ETF. Any advise is greatly appreciated.

Thanks,
Manish

Answer
Manish,
  Thank you for your question! ETF is the abbreviation for "Exchange Traded Funds". Essentially this is a basket of stocks or other investments that trades under a single ticker symbol. The great advantage is that you can diversify your investments with an ETF, because through the purchase of a single ETF, you are actually buying some sort of portfolio of stocks. Here is a good definition I found on the Yahoo Finance website: "ETFs are securities certificates that state legal right of ownership over part of a basket of individual stock certificates. "
  However, like every investment, not all ETF's are good. In general it is an efficient way to invest, but the performance of the ETF that you purchase can vary dramatically. So the problem becomes what the focus and basket of stocks being held by the ETF is. Like all investments this will take some time and research for you to look into.
   There is a great resource for free on Yahoo finance:

http://finance.yahoo.com/etf

This page has various links and explanations regarding the exact nature of what an ETF is.  There are also many links to research and search for ETF's based on things like performance. This site has a wealth of information that should do a great job at getting you started.

I hope this helps, please do not hesitate to follow up with me if I can be of any additional service!

Sincerely,
Paul Henneman
President
ValuEngine Inc
www.ValuEngine.com