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Showing posts from May, 2015

Major ETF Families: Vanguard Funds

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Vanguard Funds is the second-largest provider of ETFs, with over $479 billion in Assets Under Management (AUM) as of May 18, 2015. It is second only to the iShares family of funds from BlackRock, Inc.

So, Vanguard Funds is not the largest provider of ETFs. Neither was Vanguard the first provider of an ETF. According to the Wall Street Journal, that honor goes to State Street Global Advisors, with the January 22, 1993 launch of the SPDR Fund (Ticker Symbol: SPY), which tracks the Standard & Poors 500 index. Vanguard's first ETF, the Total Stock Market ETF (Ticker Symbol: VTI), was established in 2001.

Despite the fact that Vanguard is neither the first, nor currently the largest, provider of ETFs, in many ways it could be said that Vanguard is largely responsible for their development.



Profile: John C. Bogle The story of Vanguard really begins with John C. Bogle, whose pioneering efforts are largely responsible for the development of the index fund and the acceptance of passive…

Introduction to ETFs

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What Is an ETF? The acronym ETF stands for "Exchange Traded Fund." Think about that phrase carefully for a minute and, very intuitively, you are well on your way to understanding the basic character of an ETF.

When you think about things that are traded on an exchange, likely stocksand bondscome very quickly to mind. Now, think about the word "fund." Perhaps that immediately makes you think of mutual funds; entities that hold a wide variety, often referred to as a basket, of stocks and bonds.



And there you have it. Basically, an ETF is a security that trades on an exchange, just like an individual stock or bond, but in reality represents a basket of assets.

Characteristics Of an ETF This could become an extremely complicated discussion in and of itelf,…

Introduction to REITs

What Is a REIT? The initials REIT stand for Real Estate Investment Trust.

As one might quickly, and rightly, conclude from the name; a REIT is a corporate entity that invests in real estate. What makes REITs somewhat unique from other entities that might invest in real estate as part of their business is their tax status. To qualify as a REIT, a company must agree to distribute at least 90% of its earnings to its investors in the form of dividends. As a practical matter, many REITs distribute 100% of their income to investors such that they owe no corporate tax.

Characteristics of REITs You might be surprised to discover that much of the real estate you see as you move about your daily life is owned by REITs. This can include everything from downtown Manhattan office buildings to suburban outlet malls to high-quality apartment complexes to mobile home parks.

As you might imagine, REITs derive most of their income from rents on such properties. If they invest well, they may also reap …

Introduction to Bonds

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What is a Bond? A bond, as the name suggests, binds two parties--a borrower and a lender--together in a contract. While perhaps not commonly thought of in this way, a bank loan is a bond. The bank agrees to lend money to the borrower according to defined terms. These specify such things as the amount being loaned, the term of the loan, the interest rate, and the amount and frequency of payments. Since a contract is signed, there is also a promise to pay on the part of the borrower.


However, for the purposes of our discussion, the word "bond" is more typically used to describe a type of security issued by either a governmental agency or a business to raise needed funds to undertake a project. For example, a city may need to raise money to renovate school building…

Introduction to Stocks

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Author's Note: If you find my work valuable, I would deeply appreciate your taking a minute to follow me on Twitter, Google +, and/or Facebook and/or sharing a link to this article on your social media accounts.
What Is a Stock? Similar to a bond, shares of stock are typically issued by corporations to raise needed funds to undertake projects or to expand their business. Often, businesses will initially be financed either by the founders themselves or other private investors. However, as they reach a certain size and need yet more funds, they may participate in an Initial Public Offering (IPO) in which shares of the company are sold to the general public, and the stock begins to trade on a stock exchange (such as the New York Stock Exchange or NASDAQ).



Characteristics Of a Stock A share of stock represents an ownership share in the company. As such, it is perhaps the purest way to participate in a company's ultimate success or failure.

In contrast to a bond, a stock does not …