What is the basis of an ETF?

If you received shares as a gift, your basis usually is the same as the basis of the person who made the gift; ask that person for basis information. Basis in a fund set up as an open-end fund or unit investment trust (UIT) is increased by any taxable dividends that are reinvested in additional ETF shares.

What is an exchange-traded fund (ETF)?

An exchange-traded fund (ETF) is a type of pooled investment security that operates much like a mutual fund. Typically, ETFs will track a particular index, sector, commodity, or other assets, but unlike mutual funds, ETFs can be purchased or sold on a stock exchange the same way that a regular stock can.

What is a US ETF?

The first US ETF—a broad-based domestic equity fund tracking the S&P 500 index—was launched in 1993 after a fund sponsor received Securities and Exchange Commission (SEC) exemptive relief from several provisions of the Investment Company Act of 1940 that would not otherwise allow the ETF structure.

What are ETFs & how do they work?

Typically, ETFs will track a particular index, sector, commodity, or other assets, but unlike mutual funds, ETFs can be purchased or sold on a stock exchange the same way that a regular stock can. An ETF can be structured to track anything from the price of an individual commodity to a large and diverse collection of securities.