Learn About ETFs
Rich's Book
Exchange-Traded Funds (ETFs) are one of the most important financial developments of the last fifty years.
This book explains, in easy to understand terms, how ETFs work and the many advantages they offer compared to traditional mutual funds.
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Read the Introductory Chapter ›
What are Exchange-Traded Funds (ETFs)?
Exchange-traded funds are a smarter, more efficient way to invest. They bridge the gap between the diversification and simplicity of mutual funds and the flexibility of common stocks.
ETFs are often referred to as hybrid securities, because they contain attributes of both index mutual funds and common stocks. Like index mutual funds, each share of an ETF represents ownership in a portfolio of stocks or bonds designed to track a specific market index or benchmark. Like shares of individual stocks, ETFs are traded throughout the day on an exchange. ETFs are suitable investment vehicles for all types of portfolios, both taxable and tax-deffered, including IRAs, 529s, and 401(k) plans.
Why ETFs are such an appealing investment tool
- Index-Based Performance and Diversification
- Inter-Day Liquidity and Flexibility
- Low Internal Operating Expenses and Fees
- Tax Efficiency
- Portfolio Transparency
Types of ETFs
Exchange-traded funds allow the investor to easily diversify their portfolio by:
- Total Market - ETFs are available tracking the entire domestic equity market.
- Asset Size (Large, Mid, Small and Micro Cap) - ETFs are available tracking domestic and international stocks based on size.
- Fixed Income - ETFs are available tracking a wide-range of taxable and tax-free bond indexes.
- Asset Style (Growth vs. Value) - ETFs are available tracking domestic and international stocks by asset style.
- Country or Region - ETFs are available tracking the equity markets of specific countries or entire world regions.
- Emerging Markets - ETFs are available tracking equities in emerging markets around the globe.
- Sectors - ETFs are available tracking over 125 different economic sectors and sub-sectors
- Commodity - ETFs are available tracking different commodity based indexes.
- Speciality - ETFs are available tracking a wide-range of dividend based indexes, fundamentally weighted indexes, real estate and precious metals indexes.