Exchange traded Funds

Exchange traded Funds

ETF is an investment fund traded on the stock exchange much like stocks. An ETF holds assets such as stocks, commodities, bonds etc. Most ETFs track an index, for example S&P 500(SPY.N). ETFs may be attractive as investments because of their low costs, tax efficiency, and stock-like features.

ETFs have no redemption or performance fees, the same commission schedule applies as with trading stocks on the same stock exchanges and ETFs are tradable the same hours as the stocks.

Hedging your portfolio

When buying an ETF you can bet on the movement of an index of your choice, for example you can buy an ETF of S&P 500 or Dow Jones instead of buying all of the stocks that are in that index.

Access to exotic markets

Using ETFs you invest into regions or countries that would be very difficult or impossible otherwise.

Lower risk

ETFs are less volatile than single stocks due to the basket of different stocks that are usually in one ETF.

Lower fees

You can trade ETFs like stocks and the commissions are the same as well.

Leverage

Leveraged ETFs, are a special type of ETF that attempt to achieve returns that are more sensitive to market movements than non-leveraged ETFs. Leveraged index ETFs are often marketed as bull or bear funds. A leveraged bull ETF fund might for example attempt to achieve daily returns that are 2x or 3x more pronounced than the movement of the index.