A less-known story is what happened to the East India Company less than a century after they became the masters of the Far East. What happened was America. By then, the company was responsible for most foreign trade from EVERYWHERE. And that included those new territories across the ocean. East India had had to borrow huge funds to support trade with America. That was already a huge problem by 1775, when the War for Independence broke out. The British government simply didn’t have the funds to bail them out, and the situation in Holland with the DUTCH East India Company was just as bad.

Enter the world’s first Mutual fund, in which investors could invest in a BASKET of enterprises, with American plantations propping up the rest. These have become the staple of the investment world. The only problem is, you can’t TRADE them.

Exchange Traded Funds are similar, but you CAN. Also, Mutual funds are actively managed by a fund manager, while ETFs are usually passively managed. Changes in their composition requires a fully transparent mechanism and often regulatory participation.

So what exactly are ETFs? Simply put – funds that own a diverse composition of assets. The selection of assets usually focuses on a defined industrial sector or asset class. We even have ETFs that will track a specific index by actually owning the same composition of shares as the index. We also have bond ETFs, industry ETFs, and so forth. You can even invest in inverse ETFs, which actually short stocks.

A recent development in ETFs has been the Exchange Traded NOTE. ETNs and ETFs are not the same. If we compare ETFs to shares, an ETN is more like a bond. ETNs do not own the assets they cover, but they can be shorted. They have maturity dates, when holders get back their investment, but they don’t get a regular coupon payment.

ETFs are swiftly becoming a popular component in retirement funds: they’re relatively stable; and they diversify FOR you by selecting a wide range of related assets.

Online, you can invest in CFDs that TRACK ETFs.