What are exchange traded funds (ETFs)?

Exchange-traded funds (ETFs) are a type of index funds that track a basket of securities. Mutual funds are pooled investments into bonds, securities, and other instruments that provide returns. Stocks are securities that provide returns based on performance. ETF prices can trade at a premium or at a loss to the net asset value (NAV) of the fund.

What's the difference between a mutual fund and an ETF?

Mutual funds also hold a basket of securities. However, unlike ETFs, mutual funds may have higher initial minimum investment requirements and they're only traded once per day after the markets close. There are other important differences for investors to consider as well.

What is an index ETF?

Index ETFs - Most ETFs are index funds: that is, they track the performance of an index generally by holding the same securities in the same proportions as a certain stock market index, bond market index or other economic index.

Are ETFS a good investment?

ETFs can contain all types of investments, including stocks, commodities, or bonds; some offer U.S.-only holdings, while others are international. ETFs offer low expense ratios and fewer broker commissions than buying the stocks individually. An ETF is called an exchange-traded fund because it’s traded on an exchange just like stocks are.