An ETF is exchanged-traded-fund, this can be traded like a stock, multiple times throughout the day. Contray to a mutual fund where you can only trade once daily. ETFs hold a basket of securities and allows investors to become diversified within a category and/or multiple categories.
Creating an easier way for self-investor to diversfy. Each etf has an expense ratio, which can range from 0.08% upto 1.5% and beyond. Expense ratio is the cost of owning the exchanged-traded-fund, the fee the company charges for managing it.
There are mulitple examples of well known exchange-trade-funds that produce good returns on average:
- VOO (Vanguard S&P 500 ETF) Weighted by the market-cap of each stock to a percentage.
- XLI (Industrial Select Sector SPDR Fund) Weighted by the market-cap of each stock to a percentage.
- VOOV (S&P 500 Vanguard Value Index Fund) holds assets at the same weighting.
Many funds target the same strategy so comparing returns and the expense ratio can add up through time. There are different types of etfs from bond, commodity, currency, stock, fixed income, inverse, real estate, equities, small cap, by sector, ect…
Top 10 ETFS By Net Assets
Net assets gathered from Yahoo Finance on April 29th, 2024. Notes: T means trillion, B means Billion.
- VTI (Vanguard Total Stock Market) 1.6T
- VOO (Vanguard S&P 500) 1.11T
- SPY (SPDR S&P 500 ETF Trust) 536.15B
- IVV (iShares Core S&P 500) 454.64B
- BND (Vanguard Total Bond Market Index Fund) 318.98B
- QQQ (Invesco QQQ Trust Series I) 259.27B
- VUG (Vanguard Growth) 226.52B
- VEA (Vanguard FTSE Developed Markets) 191.36B
- VTV (Vanguard Value) 170.6B
- IEFA (iShares Core MSCI EAFE) 115.06B
All of these target certain areas within the overall market. These are tools to help people become diversified and better manage the risk and volatility.
No exchange-traded-fund has guaranteed returns, this is not advise. Please talk to a financial advisor or to a CPA about what fits your situation.