An Exchange-Traded Fund (ETF) is a type of investment fund and exchange-traded product that is traded on stock exchanges. ETFs own financial assets such as stocks, bonds, currencies, futures contracts, and/or commodities such as gold bars. Here are some key features of ETFs:
- ETFs are a type of fund that holds multiple underlying assets, rather than only one like a stock does.
- ETFs can contain all types of investments, including stocks, commodities, or bonds; some offer U.S.-only holdings, while others are international.
- ETFs provide instant diversification by investing in many assets at once.
- ETFs are traded like a stock, and their share prices fluctuate all day as the ETF is bought and sold.
- ETFs are bought and sold during market hours, potentially lowering your risk and exposure, while helping to diversify your portfolio.
- ETFs are a popular choice for diversification because there are multiple assets within an ETF.
- ETFs often have lower fees than other types of funds.
ETFs can be a popular choice for investors who want to diversify their portfolio, as they offer a way to access a wide variety of asset classes. They are also a good option for investors who want to avoid short-term capital gains taxes.
