What is an ETF: The World of Exchange-Traded Funds 

This sections covers ETFs- investment funds that trade like stocks but are close to traditional index funds.

What is an ETF?

Exchange-Traded Funds (ETFs) are a response to higher cost mutual funds. In fact, a major difference in ETFs vs. mutual funds is that the former are cheaper to hold. ETFs mimic indices just like the index funds do, can diversify portfolios just like the mutual funds do, and trade on exchanges just like stocks. ETFs are known for their lower management fees and tax advantages. In this section we dig deeper into these attractive investment vehicles.

Since the beginning of this century, the ETF selection has grown rapidly, while many investors opted out of mutual funds and bought ETF shares. ETF investing, however, requires a bit more understanding as there are options not available with mutual funds. For example, there are leveraged as well as inverse ETFs. These carry new opportunities for profits, but are riskier at the same time. 

Getting to know how Exchange-Traded Funds work is definitely worthwhile, and there are many sources where funds can be searched with ETF screeners and where detailed information about these specific funds can be found.

Related articles on this site:

Watching over management fees paid to funds can increase returns