Your ETFs can be used to
pledge as collateral for a securities based loan.
An ETF
- Exchange-Traded Fund
is a security that tracks an index, a commodity or a basket of assets like an
index fund, but trades like a stock on an exchange. ETFs experience price
changes throughout the day as they are bought and sold. Because it trades like a
stock, an ETF does not have its net asset value (NAV) calculated every day like
a mutual fund does.
ETFs trade all day long on the major stock market exchanges (just like regular
stocks, although ETFs are found mainly on the American Stock Exchange). "Funds"
are investing vehicles that hold dozens, hundreds, or even thousands of
companies under one umbrella unified by a particular investing theme (such as
companies that comprise the Dow or ones whose main business is in the biotech
industry).
Like any other publicly traded company, ETFs have ticker symbols (snappy ones,
in fact, like Cubes, Spiders, and Diamonds). But instead of typing "MSFT" to buy
Microsoft, for example, you enter "DIA" for the Dow Jones Industrial Trust, or
"Diamond" ETF.
By owning an ETF, you get the diversification of an index fund. Another
advantage is that the expense ratios for most ETFs are lower than those of the
average mutual fund. When buying and selling ETFs, you have to pay the same
commission to your broker that you'd pay on any regular order
