Finance Essay Example | Topics and Well Written Essays - 3000 words - 1

Finance - Essay Example These open ended funds are still hailing the demanding curse of present age. Using the mutual fund scheme was more beneficial for the investors and was less fruitful for the manager or the body managing and investing the funds. Therefore to make more money from limited funds a newer system was stemmed into the fabric of trade. That system was to engage poor into this business by investing money in the form of blocks. This trick helped the managing body to withdraw more money out of the flow in the form of commission. On the contrary it involved less investment share which was easy to contribute by an average investors. Hence it had the characteristics of close ended mutual fund accompanied by replication of index. This system was easy to manipulate and friendly to the traders. In a nut shell the trade of funds took place in exchange of securities. It was a simple game that could be played without time limit. It had small shares than mutual funds, was more idealized and encouraged by majority of traders and investors. This scheme of investing the funds was given the name of exchange trade funds. It is the combination of index fund and close ended fund. Exchange trade system is more efficient than mutual fund system because it is easy to trade on fewer expanses and trade does not have time limits, buying and selling can be performed in same day. â€Å"ETFs have very low expense ratios, are traded intraday and are purchased from the secondary market through a broker who receives a commission†. (Rogers 108) The idea of joint or combined investment is centuries old even when there was no concept of currency. This fashion of mutual investment was started by the merchants particularly in Europe. While peeping into the past, the merchants of 17th century practiced to take their goods to the far areas where they were able to earn a handsome interest on their investment. But the urge to gain more profit forced their minds to seek some new