An ETF (Exchange-Traded Fund) is a type of investment fund that holds multiple underlying assets, rather than only one like a stock does. ETFs are offered on virtually every conceivable asset class from traditional investments to so-called alternative assets like commodities or currencies. ETFs are traded on exchanges, generally tracking a specific index, and can be bought and sold during market hours like a stock. ETFs generally hold a collection of stocks, bonds or other securities in one fund or have exposure to a single stock or bond through a single-security ETF. ETFs offer many benefits and, if used wisely, are an excellent vehicle to achieve an investor’s investment goals. Some of the key features of ETFs are:
- ETFs are bought and sold like a company stock during the day when the stock exchanges are open.
- ETFs can contain all types of investments, including stocks, commodities, or bonds; some offer U.S.-only holdings, while others are international.
- ETFs often have lower fees than other types of funds.
- ETFs are not mutual funds, but they combine features of a mutual fund with the ability to trade throughout the day on a national securities exchange at market prices.
