ETFs

An ETF (Exchange-Traded Fund) is a basket of stocks that you can buy or sell through a brokerage firm on a stock exchange.

An ETF is a fund, just like index or mutual funds, however they can be bought and sold just like a company stock during the day when the stock exchanges are open.

• Market ETFs - Designed to track a particular index like the S&P 500 or NASDAQ

• Bond ETFs - Designed to provide exposure to virtually every type of bond available, US Treasury, corporate, municipal, international, high-yield etc.

• Sector and Industry ETFs - Designed to provide exposure to a particular industry, such as Technology, Industrials, or Utilities.

• Commodity ETFs - Designed to track the price of a commodity, such as gold, oil, or corn.

• Style ETFs - Designed to track an investment style or market capitalization focus, such as large-cap value or small-cap growth.

• International ETFs - Designed to track non-US markets, such as the European or Asia markets.

• Inverse ETFs - Designed to profit from a decline in the underlying market or index.

• Exchange-Traded Notes (ETNs) - Debt securities such as bonds or loans that are backed by the creditworthiness of the issuing bank, which were created to provide access to illiquid markets. They also have the added benefit of generating virtually no short-term capital gains taxes.

• Alternative Investment ETFs - Designed to allow investors to trade in alternative structures, such as volatility or gain exposure to a particular investment strategy.

• Liquidity - You can buy and sell an ETF any time of the day, unlike most mutual funds that trade at the end of the day.

• Transparency - Many ETFs are indexed based, which required to publish their holdings daily.

• Tax Efficiency - ETFs typically generate a lower level of capital gain distributions relative to actively managed mutual funds.

• Transaction Variety - Because ETFs can be traded like stocks, investors can place a variety of order types (limit orders or stop-loss orders) that can't be made with mutual funds.

• Trading Costs - If you invest small amounts frequently, there may be lower-cost alternatives investing directly in a company to lower transaction cost and fees.

• Tracking error - While ETFs generally track their underlying index well, technical issues could create discrepancies.

• Settlement dates - ETF sales are not settled for 2 days following a transaction.