Exchange Traded Funds (ETFs)

Exchange-Traded Funds (ETFs) are investment funds that trade on stock exchanges, similar to individual stocks. They are designed to track the performance of an index, commodity, sector, or asset class. ETFs offer diversification, liquidity, and typically lower expense ratios compared to mutual funds.

Key Features of ETFs

  1. Diversification – ETFs can hold a mix of stocks, bonds, commodities, or other assets.

  2. Liquidity – They trade throughout the day on exchanges, allowing investors to buy and sell at market prices.

  3. Lower Costs – Most ETFs have lower fees compared to actively managed mutual funds.

  4. Transparency – ETFs typically disclose their holdings daily.

Types of ETFs

  • Index ETFs – Track major indices like the S&P 500.

  • Sector ETFs – Focus on specific industries like technology or healthcare.

  • Bond ETFs – Invest in government, corporate, or municipal bonds.

  • Commodity ETFs – Track commodities like gold, silver, or oil.

  • Cryptocurrency ETFs - Invest in various cryptocurrencies.

  • Thematic ETFs – Invest based on trends like artificial intelligence or clean energy.

  • Leveraged & Inverse ETFs – Aim to amplify returns or profit from declines in a market.