What is an ETF

An ETF, or exchange-traded fund, is a marketable security that tracks an index, a commodity, bonds, or a basket of assets like an index fund.


An ETF, or exchange-traded fund, is a marketable security that tracks an index, a commodity, bonds, or a basket of assets like an index fund.

Unlike mutual funds, an ETF trades like a common stock on a stock exchange. ETFs experience price changes throughout the day as they are bought and sold.

ETFs typically have lower fees than mutual funds and can be traded without incurring a commission.

ETFs are often heralded as the best of both worlds: the ability to trade like a stock combined with the diversification of a mutual fund. They offer investors exposure to a wide range of asset classes, including stocks, bonds, commodities, and foreign markets. And because ETFs trade on exchanges, investors can buy and sell them throughout the day, unlike mutual funds, which can only be bought or sold at the end of the trading day.

There are more than 1,500 ETFs available in the U.S., with more being created all the time. They come in all shapes and sizes, and can be used to achieve a wide variety of investment goals. For example, there are ETFs that track the S&P 500, which is perfect for investors who want to match the performance of the stock market.

There are also ETFs that focus on specific sectors, such as healthcare or technology, and there are even ETFs that invest in commodities like gold or oil.

The bottom line is that ETFs offer a lot of flexibility and choice for investors. Whether youre looking to match the market or focus on a specific sector, theres an ETF out there for you.

If you want to get started identifying ETFs that resonate with your investment goals get started for free at Investipal.

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