ETFs, or Exchange-Traded Funds, are popular investment vehicles that combine diversified investing strategies built into index funds with the power of stocks.
An ETF (Exchange-Traded Fund) is a type of investment fund that you can buy and sell on a stock exchange, just like you would buy or sell a stock.
ETFs are designed to track the performance of a particular group of assets, such as stocks, bonds, or commodities. For example, an ETF that tracks the S&P 500 index will hold a portfolio of stocks that reflect the performance of that index.
When you buy shares of an ETF, you’re essentially buying a small piece of that portfolio. As the value of the assets in the portfolio goes up or down, the value of your shares will also go up or down.
ETFs are popular because they offer investors a convenient and low-cost way to gain exposure to a diversified portfolio of assets. They also provide a high degree of flexibility, allowing investors to buy and sell shares throughout the trading day, just like they would with individual stocks.
10 Most Popular ETFs:
- SPDR S&P 500 ETF (SPY) – This ETF tracks the S&P 500 Index, which is a benchmark for the broader US stock market.
- Invesco QQQ Trust (QQQ) – This ETF tracks the Nasdaq 100 Index, which includes the 100 largest non-financial companies listed on the Nasdaq stock exchange.
- iShares Core S&P 500 ETF (IVV) – Similar to SPY, this ETF tracks the S&P 500 Index.
- Vanguard Total Stock Market ETF (VTI) – This ETF tracks the CRSP US Total Market Index, which includes nearly all publicly traded stocks in the US.
- SPDR Dow Jones Industrial Average ETF (DIA) – This ETF tracks the Dow Jones Industrial Average, which includes 30 large-cap US companies.
- iShares Russell 2000 ETF (IWM) – This ETF tracks the Russell 2000 Index, which includes 2,000 small-cap US companies.
- Vanguard FTSE Emerging Markets ETF (VWO) – This ETF tracks the FTSE Emerging Markets Index, which includes large and mid-cap companies in emerging market countries.
- iShares MSCI EAFE ETF (EFA) – This ETF tracks the MSCI EAFE Index, which includes large and mid-cap companies in developed market countries outside of North America.
- iShares MSCI Japan ETF (EWJ) – This ETF tracks the MSCI Japan Index, which includes large and mid-cap Japanese companies.
- Invesco S&P 500 Equal Weight ETF (RSP) – This ETF tracks an equal-weighted version of the S&P 500 Index, where each company in the index has an equal weighting rather than being weighted by market capitalization.