Saturday, February 2, 2008

CFa Level 1 Advantages and Risks of ETFs

c. explain the advantages and risks of ETFs

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Applications

Implementing asset allocation
Diversifying sector/industry exposure
Gaining exposure to international markets
Equitizing cash
Managing cash flows
Completinng overall investment strategy
Bridging transitions in fund management
Managing portfolio risk


Risks

Market risk
Asset class/sector risk
Trading risk
Tracking error risk
Derivatives risk
Currency risk and country risk

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