Retirement & Financial Planning Report

Indexing has become an increasingly popular investment strategy in recent years. If you invest in an index fund you’ll get exposure to the broad market with low management costs. A new type of index fund is gaining favor: exchange-traded funds (ETFs), which are considered to be more tax-efficient. There are at least 30 ETFs on the American Stock Exchange, tracking various indexes, and more are expected to be introduced soon. Popular ETFs include Diamonds (DIA), which tracks the Dow Jones Industrials, and Cubes (QQQ), which track the high-flying Nasdaq 100. There also are “sector spiders,” which follow industries such as technology, and 17 WEBS, each of which tracks one foreign country. All ETFs trade like stocks so they can be bought and sold through brokers.