What is a futures ETF?

Exchange-traded funds can use futures as the assets that make up the fund. Futures ETFs give investors access to the futures market without having to trade on the futures markets. A futures contract is an agreement between a buyer and a seller based on an underlying asset.

What is futures trading and how does it work?

Futures trading requires lower margins and thus less capital in your trading account. The amount you “save” can be set aside for long-term appreciation, for example in ETFs or mutual funds. With ETFs, you are binding capital that could (perhaps) be of better use elsewhere.

What is an ETF & how does it work?

An ETF (a company) will purchase futures contracts and then offer a securitized version to investors. The ETF doesn't take possession of the underlying asset but continues to trade contracts to keep the futures ETF running. The fund will purchase contracts so that it mirrors the index that it is designed to track.

What is an exchange-traded fund (ETF)?

An exchange-traded fund ( ETF) tracks an underlying asset. The asset might be a commodity, an index, or even a currency. For ETFs to be effective, they need to correlate pretty closely to the asset they are tracking. To do that, many funds utilize derivatives.