Exchange Traded Funds (ETF) are the closest you can get, in a single security, to being able to trade "the market".
In appearance they resemble an index fund, but they trade exactly like any other stock.
Index funds don't encourage short term in-and-out trading. They call such activity "disruptive". And, truthfully, they're right. It is disruptive, distracting, and annoying to the fund portfolio manager.
The ingenious way ETFs are put together, all the in-and-out trading in the world will not disrupt anything inside the unit portfolio. In fact, they were designed to accommodate and encourage such activity. Why? Because the public wanted it, that's why.
Traders and investors wanted a vehicle that they could buy-and-hold, collect dividends, trade, buy on margin, sell short (without that outdated "up tick" rule), trade options on it, and whatever else they wanted to do with it, and did Wall Street ever deliver the goods!
Broad based indexed exchange traded funds hit the ground running and never looked back.
They have had a profound effect on the way investors and the entire investment management industry think about trading and investing the securities markets.
In fact, they have proved so popular they spawned a universe of sector ETF's on industry groups.
All the requisites of an excellent trading vehicle are present.
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