Exchange-traded funds (ETF) like the SPDR Gold Trust (ETF) (NYSEARCA:GLD) have many similarities with regular stocks. However, even though it trades like a stock on the market, an ETF is a security that follows an index, a commodity or a basket of assets, so it has some particularities as an index fund. Because it acts like a stock on the market, but also because of the low cost and tax efficiency, ETFs can represent an interesting investment opportunity.
Owners of ETFs benefit from the diversification of an index and from the possibility to sell short, and purchase at least one share. In addition, an extra advantage is that ETFs owners bear some lower expenses compared to the average mutual fund, because buying and selling ETFs involve the same commission as paid on any regular order. Please go to Insider Monkey to see more of the Hedge Funds' 10 favorite ETFs.