TY - JOUR T1 - A New Dimension of ETF Investing JF - ETFs and Indexing SP - 57 LP - 61 VL - 2003 IS - 1 AU - Sheldon Gao AU - Heather Bell Y1 - 2003/09/21 UR - http://guides.pm-research.com/content/2003/1/57.abstract N2 - ETF futures and options have not garnered a lot of attention in the past, but as ETFs become more and more widely used, their derivatives deserve some notice. This article addresses their history and development and their advantages and uses. In comparison to ETFs themselves, ETF derivatives have lower costs while offering greater flexibility and precision for the purposes of portfolio-related strategies and adjustments. They also can be used in conjunction with ETFs for hedging and arbitrage purposes. In comparison to an index derivative, an ETF derivative mirrors the ETF it is based on far more closely than any index derivative that may be based on the same index as the ETF. Additionally, ETF derivatives are settled by the physical delivery of shares of the ETFs upon which they are based, while index derivatives are cash settled. ETF futures and options represent a new frontier in ETF investment and offer a variety of opportunities and benefits to the investors who include them in their range of investment tools. ER -