By Sheryl Nance-Nash
Posted 3:54 PM 05/20/10
The “flash crash” of May 6 was a day of reckoning of sorts for investors in exchange-traded funds.
Highlights:“ETFs are relatively new, and not as simple and straightforward as we have been lulled to believe,” says Rose Greene, a certified financial planner with Rose Greene Financial Services.
“The flash crash lasted for about 20 minutes,” explains Greene. “If you didn’t sell shares during that time then the impact was mostly neutralized very quickly and by the end of the day the market was down, but not due to the crash. On the other hand, if you were a day trader with your hands on the keyboard or had a stop loss order that was automatically triggered after it hit that price, then you might have sustained a loss.”
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An investment in Exchange Traded Funds (ETF) structured as a mutual fund or unit investment trust, involves the risk of losing money and should be considered as part of an overall program, not a complete investment program. An investment in STF’s involves additional risks: not diversified, the risks or price volatility, competitive industry pressure, international political and economi developments, possible trading halts, and index tracking errors.
Investors should consider the investment objectives, risks, charges and expenses of the investment company carefully before investing. The prospectus contains this and other important information about the investment company. You can obtain a prospectus from your financial representative. Read carefully before investing.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investments may be appropriate for you consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.
