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ETF is an abbreviation for Exchange Traded Funds, i.e., a fund that is traded on the Exchange as shares but with an allocation similar to funds.
ETFs are essentially index funds, which is to say they track the performance of a specific stock or bond market index or other benchmark.
The value of an ETF is directly relates to the value of the assets of which it is comprised.
ETFs are listed on an exchange; you can buy and sell them at whatever price they happen to be trading at during the day just as with stocks.
There are ETFs for large US companies, small ones, real estate investment trusts, international stocks, bonds, and even gold.
ETFs are available in most developed nations. In the US, anyone who can open a brokerage account and buy stocks will be able to buy ETFs.
ETFs' biggest plus is their low annual operating costs.
One of the most widely known ETFs is called the SPDR (Spider), which tracks the S&P 500 index and trades under the symbol SPY.
Some of the most popular ETFs are listed below with their index symbol:
- Standard & Poor's 500 Index Depository Receipts (SPY)
- Nasdaq-100 Index Tracking Stock (QQQQ)
- DIAMONDS Trust (DIA)
- iShares S&P 500 (IVV)
- Standard & Poor's MidCap 400 SPDRs (MDY)
- iShares Russell 2000 (IWM)
- iShares MSCI EAFE (EFA)
- Total Stock Market VIPERs (VTI)
- iShares SmallCap 600 (IJR)
- Consumer Services Select Sector SPDR (XLV)
See also
What are Exchange Traded Funds?
What is an Exchange Traded Fund?
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