As the name suggests, ETFs are a basket of securities that are traded, like individual stocks, on an exchange. Unlike regular open-end mutual funds, where one can enter or exit only at the end of the day, ETFs can be bought and sold throughout the trading day.
Investors can also hedge their positions in the market by going long and short on ETFs.
Another important feature of this product is that their shares cannot be bought from or sold back to the fund house like regular mutual funds since transactions take place in big block of units. No wonder, this means that only institutions and high net worth investors can afford to deal directly with the fund companies. The average investor will have to go through a broker to buy and sell shares. If after any partial repurchase, the minimum units are less than 250,000, such holdings could be sold only through secondary market transaction. However, the trust has kept the option to accept or pay cash in part or full while issuing or repurchasing units.