What's an ETF?
Updated
by
Laurène
In a nutshell: ETFs are funds which are traded on a stock exchange and contain all investments of an index. This means, an ETF of the Swiss Stock Index SMI includes all 20 stocks, which are traded on the stock exchange and are included in the index. ETFs thus provide an easy and cheap way to spread your risks and invest in a bunch of stocks, bonds or other with one simple investment.
For those who are more interested in ETFs. Here in more detail:
ETF stands for an exchange-traded fund. There are more than 4000 ETFs on global stock exchanges, with new ones popping up. They are not all the same.
ETFs are available for almost every asset class out there, including stocks, bonds, commodities or currencies. They provide a great opportunity to invest in different investment categories in a cheap and comfortable way. The following list gives an overview about ETFs on the market.
The most important ones
Equity ETFs: track a particular index of listed companies like the S&P 500 or NASDAQ 100.
Bond ETFs: are based on virtually every type of bond available: Government Bonds, Corporate, Municipal, International, High Yield bond or a broad mix.
Industry ETFs: provide exposure to a particular industry, such as automobile, healthcare, or biotechnology.
Region ETFs: track specific regions or countries like Finland, EU Nordics, Japan’s Nikkei Index or Hong Kong’s Hang Seng Index
ETFs for investors with more specific needs
Commodity ETFs: track the price of a commodity, such as gold, oil, or palladium or a mixed basket of commodities
Style ETFs: are based on a defined investment style or rules e.g. based on the size of companies included large-cap or small-cap.
Inverse / Shorted ETFs: are designed to profit from a decline in the underlying market or index. When the market goes up, you lose, and when the market goes down, you win.
Actively Managed ETFs: while most ETFs are designed to track an index, actively managed ETFs are designed to outperform an index
