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This information is specific to exchange-traded fund (“ETF”) sales at Vested power by VF Securities, Inc. (member FINRA/SIPC).
You can also visit the websites sponsored by the U.S. Securities and Exchange Commission (www.sec.gov) and the Financial Industry Regulatory Authority (www.finra.org) to obtain additional educational information about ETFs.
An ETF’s prospectus contains its investment objectives, risks, charges, expenses, and other important information, and should be read and carefully considered before investing.
In general, ETF shares cannot be redeemed directly from an ETF. Rather, ETF investors buy and sell shares of ETFs that are listed on a stock exchange. The market price of ETF shares can and does vary from the value of the ETF’s actual holdings (i.e., the net asset value of the shares or its “NAV”), sometimes significantly. Purchasing an ETF at a premium to the NAV and/or selling an ETF at a discount to NAV could significantly affect the realized return earned by an investor, and such realized return could be substantially different than the return of the ETF and, if applicable, the index an ETF may seek to track.
Investing in ETFs involves risk, including the loss of principal. Certain ETFs are designed to provide investment results that generally correspond, prior to fees and expenses, to the performance of an underlying index or other benchmark. These ETFs may not be able to replicate the performance of their respective indices or benchmarks because of expenses and/or other factors. Other ETFs are actively-managed and seek to outperform a market index or target return. Similar to other actively-managed products, such as mutual funds, there is no guarantee that an actively-managed ETF will be able to achieve its objective(s). We also have a separate brochure regarding leveraged and inverse ETFs, which carry unique and significant risks.
NOTE ON DIVIDEND AND CAPITAL GAINS DISTRIBUTIONS
Domestic ETFs are usually required to distribute dividends and net realized capital gains on their holdings to shareholders. Although ETFs generally experience fewer net realized capital gains than other investment products, such gains can and do occur. Unless an ETF is held in a tax-advantaged account, shareholders will typically have to pay taxes on such income. This is true even if the ETF loses value during a given tax year. Reinvesting these distributions in your ETF does not prevent you from having to pay taxes on the distributions.