When Is An ETF Not An ETF?

When most analysts and investors refer to the ETF industry, they frequently use the term to apply to all exchange-traded products that are traded like stocks. In reality, the landscape is not quite that simple, and the term “ETF” is used a bit too liberally. ETFs must receive an order from the SEC that gives it relief from the Investment Company Act of 1940, a piece of legislation that was designed to instill investors’ confidence in mutual funds and protect the public interest. The provisions of this act don’t allow for the ETF structure, so potential issuers are required to acquire exemptive relief before moving forward with a fund launch. Included in our comprehensive database of exchange-traded products are a number of securities that don’t meet the strict requirements of an ETF; these “ETF cousins” may look, feel, and trade like exchange-traded funds, but are actually members of a different breed [...] Click here to read the original article on ETFdb.com. Related Stories: ETN Investing: Facts And Fallacies Five Facts About HOLDRS Every ETF Investor Must Know Commodity ETFs: Know What You’re Getting Yourself Into