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Describe advantages of using ETFs in portfolio management. What were some policy responses of the FED...

  1. Describe advantages of using ETFs in portfolio management.

  1. What were some policy responses of the FED during the 2008 financial crisis?
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Answer #1

There are several advantages of using ETFs in portfolio management:

1) Flexibility of trading ETFs as during market hours it can be easily being bought and sold like the equity shares in the market.

2) Diversified ETFs provide a stability to the portfolio by adding the diversification to it without taking that much risk.

3) ETFs have lower cost to customer as compared to other open ended funds which makes it more investor friendly.

4) ETFs carry tax benefit as well as it incurs tax liability only on sale of it.

Policy response of FED - The FEDs policy response was structured in nature and relates to macroeconomic environment, promoting market stability and advancing structural repair. Central bank relaxed the norms to provide quick capital to financial institutions. Also there were many monitory policy actions to do the structural repairs.

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