Exchange traded funds are mutual funds, whose shares are traded in the market like ordinary stocks. These traded mutual funds are Index Funds, which are based on various stock indices. Some are based on leading, popular indices such as the Dow Jones or S&P 500, while others rely on less known sectoral or national averages.
Family Name – Different financial institutions issue ETFs. All ETFs issued by a given institution share a family name, or brand name.
- Merril Lynch has 17 different ETFs under the HOLDRS brand.
- iShares, Barclays Bank’s brand has over 80 different funds.
Fund Name – Each fund’s name consists of both its brand and the index it is connected to.
- Telecom HOLDRS, a fund from Merril Lynch.
- iShares Russell 2000 is issued by Barclays.
Share Name – Most of the time, a share of a fund’s name is identical to the fund’s name. The exceptions are the three leading ETFs.
In these three cases, the actual fund’s name isn’t used, and they are referred to by their unique share names.
The following section will briefly describe how the value of a mutual fund’s share is calculated. If you are interested in a more detailed analysis, please see the chapter on mutual funds in
“Fundamentals of the Stock Exchange”.