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Pastimes : Clown-Free Zone... sorry, no clowns allowed

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To: Knighty Tin who wrote (189469)8/26/2002 6:27:56 PM
From: ild  Read Replies (1) of 436258
 
1:30 PM
EFT TALK: Exchange traded funds began trading a few weeks ago, offering investors an opportunity to trade a basket of bonds in the same way that they trade stocks. The funds seek to approximate the total rate of return on various maturities of Treasuries and corporate bonds. A few of the symbols for these new funds are SHY, IEF, TLT, and LQD. Go to ishares.com for more information. Here are a few aspects of the new funds.

*Expense ratios are expected to be about 0.15% compared to about 0.3% for bond mutual funds. But you must also pay a commision to your broker, thus raising the actual expense.

* EFTs will be liquid, but then again so are many parts of the bond market. For example, $350 billion of treasuries trade daily compared to $42 billion of stocks.

* With an EFT you can buy and sell intra-day and take advantage of intra-day price swings. With mututal funds, yoou buy or sell at the closing price.

* EFTs can be bought and sold in an ordinary brokerage account and they are marginable.

* There are now about $100 billion in EFTs.

bondtalk.com
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