Strategies for ETFs (Exchange-Traded Funds)

Learn how exchange-traded funds (ETFs) can provide many of the benefits of a mutual fund with the flexibility of stock, and oftentimes a lower cost. ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

| Investing Basics MORE ON ETFs (EXCHANGE-TRADED FUNDS) 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 higher daily liquidity and lower fees than mutual fund shares, making them an attractive alternative for individual investors. There are many similarities between ETFs and mutual funds. Both mutual funds and ETFs hold portfolios of stocks and/or bonds and occasionally something more exotic, such as precious metals or commodities. They must adhere to the same regulations covering what they can own, how much can be concentrated in one or a few holdings, how much money they can borrow in relation to the portfolio size, and so on. There are also many differences between ETFs and mutual funds. When you put money into a mutual fund, the transaction is with the company that manages it — the Vanguards, T. Rowe Prices and BlackRocks of the world — either directly or through a brokerage firm. Frequently there is also a minimum holding period. By contrast, ETFs trade on exchanges, just as common stocks do, and the other side of the trade is some other investor like you, not the fund manager. You can buy and sell at any point during a trading session at whatever the price is at the moment based on market conditions, and there's no minimum holding period, read on. Exchange-Traded Fund (ETF) An exchange-traded fund (ETF) is a security that tracks an index, commodity, or basket of assets that resembles an index fund but trades like a stock on an exchange. Read Now » ETF vs. Mutual Fund: What's the Difference? Both mutual funds and ETFs hold portfolios of stocks and/or bonds. However, if you are considering an ETF or mutual fund, you'll need to know the differences between the two. Read Now » Why Are ETF Fees Lower Than Mutual Funds? Discover all the reasons ETFs typically have lower fees than mutual funds, including their passive management and the absence of load and 12b-1 fees. Read Now » Top 3 ETFs for Long-Term Investors Are you the sort of investor who embraces the buy-and-hold strategy? Long-term investors may find these ETFs very appealing. Read Now » CONNECT WITH INVESTOPEDIA Email sent to: geezers.mail@gmail.com To update your newsletter preferences or unsubscribe, click here. 114 West 41st St, floor 8 New York NY 10036 © 2020, Investopedia, LLC, All Rights Reserved | Privacy Policy