Global X Innovative ETFs (Exchange Traded Funds)

 
 
 
WHAT ARE ETFs?
Exchange-Traded Funds (ETFs) provide an efficient and simple way to invest in worldwide markets. ETFs offer investors the opportunity to buy and sell an entire basket of securities with a single transaction throughout the trading day. ETFs are built like an index fund, but trade like a stock. They are generally designed to track a specific index and offer investors the advantages of lower costs and improved tax efficiency over traditional, actively-managed mutual funds. When buying and selling an ETF there will be a commissions charge to the investor.

ETFs can be an effective tool for implementing many investment strategies for all types of investors. They allow individual investors to obtain the economies of scale that large fund managers enjoy, which the average person would not be able to produce with a small amount of capital.
 
HOW DO ETFs COMPARE?
  ETFs   Stocks   Index Funds   Mutual Funds  
Intraday Liquidity
 
         
Diversification
     
 
 
Low Expenses
 
 
     
Low Investment Minimums
 
 
 
 
Daily Transparency
 
 
Possible
     
Can Sell Short
 
         
Can Buy on Margin
 
         
Can Use Limit and Stop Orders
 
         
Options Available
Possible
 
Possible
         
 
The ETF structure provides many benefits:
 
1. Diversification: Owning an ETF allows investors to hold a basket of securities and have exposure across an entire index. An ETF offers the intraday trading opportunities of a stock with the diversification of a mutual fund. Diversification primarily helps reduce volatility and also has the potential to enhance your returns.
 
2. Low Expenses: Most ETFs are index based and not actively managed. Because of this, they are less likely to carry high management fees and usually have lower annual expense ratios than other investment vehicles.
   
3. Tax Efficiency: When ETF creations and redemptions are in-kind, it substantially lessens and possibly avoids capital gain distributions. In-kind distribution transfers with institutional investors lessens the possibility of the fund from incurring capital gains as a result of shareholder trades. However, the ETF structure does not necessarily eliminate all capital gains distributions.
   
4. Flexible: Any ETF can be bought and/or sold with the same flexibility as an individual stock. This allows investors to place stop-limit orders, buy on margin, or sell short. Any of these transactions would make them subject to the same terms that would apply to individual common stocks.
   
5. Transparency: Investors will know exactly what they purchase. The holdings of ETFs are listed on a daily basis, whereas mutual funds generally release their holdings quarterly. The transparency of the ETFs' portfolios allows investors to easily obtain or hedge exposure to a specific group of securities.
   
6. Dividend Reinvestment: If your brokerage firm offers the dividend reinvestment option, dividends from the underlying securities can be reinvested in the ETF, rather than receiving cash.
   
7. Tradability: ETFs can be purchased or sold during the trading day. They are listed on an exchange, so it is easy for investors to buy or sell shares throughout the day. Because ETFs are listed, investors can obtain up-to-the-minute share prices, and trade the relevant index as though it were one single stock.
 
Diversification may not protect against market risk.

Shares of Global X Funds may be sold throughout the day on the exchange through any brokerage account. However, shares may only be redeemed directly from a Fund by Authorized Participants, in very large creation/redemption units.

Management fees associated with fund investments are not borne by investors in individual stocks or bonds.

Funds are obliged to distribute portfolio gains to shareholders by year-end. These gains may be generated due to index rebalancing, to meet diversification requirements, or due to cash creations and redemptions. Trading shares will also generate tax consequences and transaction expenses.

All regulated investment companies are obliged to distribute portfolio gains to shareholders.

This material is not intended to be tax advice. The tax consequences of dividend distributions may vary by individual taxpayer.

Please consult your tax professional or financial adviser for more information with regard to your specific situation.