ETFs are baskets of stocks or bonds that trade like regular stocks. They're usually passively managed, meaning they seek only to match the underlying benchmark index.

Frequently Asked Questions
  • What is a leveraged ETF?

    A leveraged exchange-traded fund (ETF) is a security that uses financial derivatives and debt to boost the returns of an underlying benchmark index. So while a traditional ETF may track securities of an index on a 1:1 basis, a a leveraged ETF may target a higher mark for a 2:1 or 3:1 ratio.

  • Are ETFs or mutual funds better for young investors?

    Many young or novice investors may have heard about exchange-traded funds (ETFs) or mutual funds and are wondering which may be the better option. Here are some things to keep in mind when deciding between the two investing options. First, typical mutual funds are actively managed rather than passively tracking an index, which can be an advantage. Many mutual funds also may require a minimum investment, but many brokers now offer commission-free ETFs. Generally speaking, ETFs are more tax-efficient and more liquid than mutual funds, which is also something young investors should weigh.

  • What is an exchange traded product (ETP) ?

    Exchange traded products are financial instruments that track a benchmark index or a basket of underlying securities that trade on exchanges similar to stocks and bonds that are bought and sold in the open market. Some popular ones include exchange traded notes, exchange traded funds, and other related products.

  • What is a stock exchange traded fund (ETF)?

    A stock exchange traded fund is a financial product that tracks a basket of equities, which is an investing option that helps investors diversify their investments in a specific industry or set of companies, limiting the risk of investing in a single stock. Those funds also offer a more cost-effective way to get exposure to a selection of stocks that track a specific index, industry or category of equities.

  • What is a bond ETF?

    Similar to a stock ETF, a bond exchange traded fund is a financial product that tracks a basket of debt, which is an investing option that helps investors diversify their investments in a specific industry or set of companies, limiting the risk of investing in a single bond. They can mirror bond mutual funds that have a debt portfolio of various risk profiles, from safer U.S. Treasuries to higher yielding bonds of varying maturities and risk exposure.

  • What is an inverse ETF?

    An inverse exchange traded fund is a derivative product that uses securities tied to a benchmark index to profit from a decline in value of the underlying index. Inverse ETFs are also known as short ETFs or bear ETFs since the strategy involved investing on market declines or short positions in order to profit from the strategy. Inverse ETFs typically have higher fees compared to traditional ETFs, and can lead to losses if investors calculate the market direction incorrectly.

Key Terms

Explore ETFs

Mother reading a card to daughter
How to Give an Exchange-Traded Fund (ETF) as a Gift
Colorful stock market quotes display reflected on glass
Single-Stock ETF
Custom Basket ETF
Custom Basket ETFs
Put $10,000 in the S&P 500 ETF and Wait 20 Years
Business financial and forex concept, Hipster young Woman freelancer using the technology laptop and smart phone mobile showing trading graph with the stock exchange trading graph screen background
How to Invest in the S&P 500
Senior Businessman Business Meeting Financial Presentation
Who Owns Vanguard Group?
Closeup of a winning blackjack hand and piles of chips
2 ETFs To Invest in the Gambling Industry
Midsection Businessmen Analyzing Charts on Laptop in Office
ETFs vs. Index Mutual Funds: What's the Difference?
Regulated Investment Company (RIC): Definition, Examples, Taxes
Top ETFs
Introduction to Exchange-Traded Funds (ETFs)
Advantages and Disadvantages of ETFs
401k text written on wooden block with stacked coins.
7 Low-Overhead ETFs for Your 401(k)
Advantages of Exchange-Traded Funds (ETFs)
Tracking Error: The difference between the performance of an investment and its benchmark.
Tracking Error Definition, Factors That Affect It, Example
Road signs for different investments over a newspaper
Building an All-ETF Portfolio
Abstract mirror building texture
Dissecting Leveraged ETF Returns: Explanation, Components, and Examples
How To Use a VIX ETF in Your Portfolio
Leveraged ETFs: The Potential for Bigger Gains—and Bigger Losses
Toy forklift hold letter block e to complete word fee on wood background
How Are ETF Fees Deducted?
Businessman Hand Touching on Smartphone
The Highest Yield ETFs
A boy plays video game online and sits in front of two big computer monitors.
eSports ETFs Seeking to Win Over Investors
How To Pick the Best ETF
Target-Date Funds: Advantages and Disadvantages
Investor Analyzing Stock Market Investments With Financial Dashboard, Business Intelligence (BI), and Key Performance Indicators (KPI) on Smartphone and Computer Screens
How to Choose an S&P 500 ETF
Man with his face in his hands as price of investment declines.
Why Are My Bond ETFs Losing Money and What Should I Do?
Man looking at a chart on a cell phone
Dividend ETF vs. S&P 500
Financial investment, stock market and exchange, accounting concept
How to Invest in ESG
Young adult man using smart phone to monitor market and stock trading in AI
How to Invest In AI
Businessman reading financial stock market analysis
How to Buy Fractional Shares on Webull
Close-up of woman trading stock online on mobile phone
How to Buy Fractional Shares on Fidelity
Business man trader investor analyst using mobile phone app and laptop
How to Invest in Commodities
Woman using smartphone to trade fractional shares at a coffee shop
How to Buy Fractional Shares
How to Automate Your Investing
Elegant brownstones and townhouses in the Fort Greene area of Brooklyn for Rent
Best Ways to Earn Passive Income
 Commodities
Best Commodities ETFs
Auto sale
2 Auto ETFs for Q4 2022
Small plant in the ground with two hands around it.
The Vegan ETF - All About How the VEGN Fund Works
How Do ETF Dividends Work?
Lexus RX450h retrofitted by Google for its driverless car fleet
ETFs for the Driverless Car Revolution
Preferred Stock ETFs vs. Bond ETFs: What's the Difference?
How to Navigate the Complex Landscape of ETF Discounts and Premiums
Young man trading on his laptop
Bitcoin Futures ETF: Definition, How It Works, and How to Invest
What Common ETFs Track the Banking Sector?
Crypto trader looking at charts on a laptop and phone.
How Do Cryptocurrency Exchange-Traded Funds (ETFs) Work?
How do you calculate the excess return of an ETF or indexed mutual fund?
The Rise of the Computer-Built ETF
MLP ETF vs. MLP ETN: What’s the Difference?
The Top 3 Hotel REITs of 2020 (HPT, INN)
Woman helping couple with finances
Marijuana ETFs: The Pros and Cons
Traders work on the floor of the New York Stock Exchange
3 Types of Indexing for ETF Success
3 ETFs With Tesla Driving
Customers in a store using new technology
Benefits and Risks of Thematic ETFs
LED display of stock performance
What Are Exchange-Traded Notes (ETNs), and How Do They Work?
Investment Theme Stockmarket and Finance Business Analysis Stockmarket With Digital Tablet
Stock vs. ETF: Which Should You Buy?
3 ETFs With a Large Allocation to Walmart Stock
Looking to Cut Stock Market Exposure? Try These ETFs
Unweighted Index: What it Means, How it Works, Implications
How Fee Compression Is a Blessing and a Curse for ETF Managers
Index
Closet Indexing: What it Means, How it Works, Drawbacks
How Do SPDRs, Vanguard ETFs, and iShares Differ?

ETFs