Our panel of experts answers your mutual fund questions. They create gizmos to catch our attention. If not, it's not worth getting sucked in. Exchange traded funds are not mutual funds, but have some similar characteristics. They actually are a basket of stocks put into a unit investment trust, a type of security registered with the Securities and Exchange Commission.
Brokers sell units to investors.
The unit investment trust can be traded daily on the stock exchanges. The annual cost runs about .20 percent. By contrast, their index mutual fund cousins cost from .30 percent to .50 percent, according to Morningstar Inc., Chicago. While expenses sure seem low on exchange traded funds, you must pay brokerage commissions when you buy or sell them. There are more than 60 different exchange traded funds.