Answer the question in 2 paragraphs with 10 sentences Includ

Answer the question in 2 paragraphs with 10 sentences. Include information from three online sources but not from investopedia to answer the question and quote any information from these sources except your own words. Then include the website link of the threee sources below the 2 paragraphs.

What type of person invests in either an Exchange-Traded Fund (ETF) or a mutual fund (describe common characteristics)?

Solution

Like mutual funds, ETFs offer investors a way to pool their money in a fund that makes investments in stocks, bonds, or other assets and, in return, to receive an interest in that investment pool. Unlike mutual funds, however, ETF shares are traded on a national stock exchange and at market prices that may or may not be the same as the net asset value (“NAV”) of the shares, that is, the value of the ETF’s assets minus its liabilities divided by the number of shares outstanding.ETFs are investment companies that are similar to mutual funds with a few important differences discussed in more detail below. ETFs are organized as either open-end investment companies or unit investment trusts (“UITs”) and are regulated primarily under the Investment Company Act of 1940 (“Investment Company Act”). As a result, each ETF must prepare and make available to prospective investors a prospectus and statement of additional information that contains detailed information about the ETF’s investment objectives, investment strategies, specific risks and fees and expenses as well as other information.

Exchange-traded funds are some of the most popular and innovative new securities to hit the marketsince the introduction of the mutual fund. The first ETF was the Standard and Poor\'s Deposit Receipt (SPDR, or \"Spider\"), which was first launched in 1993. Purchasing Spiders gave investors a way to mimic the performance of the S&P 500 without having to purchase an index fund. Furthermore, because they traded like a stock, SPDRs could be bought and sold throughout the day, purchased onmargin, or even sold short.Whenever an investor purchases an ETF, he or she is basically investing in the performance of an underlying bundle of securities -- usually those representing a particular index or sector. UnitInvestment Trusts (UITs) are often organized in the same manner. However, the unusual legal structure of an ETF makes the product somewhat unique.

http://investor.gov/investing-basics/investment-products/exchange-traded-funds-etfs

https://www.credit-suisse.com/us/en/private-banking/etp-disclaimer.html

http://www.investinganswers.com/financial-dictionary/mutual-fundsetfs/exchange-traded-fund-etf-805