Copy Paste Experiment: Strategies for ETFs (Exchange-Traded Funds)

An ETF, or exchange traded fund, is a marketable security that tracks an index, a commodity, bonds, or a basket of assets like an index fund. Unlike mutual funds, an ETF trades like a common stock on a stock exchange. ETFs experience price changes throughout the day as they are bought and sold. ETFs typically have higher daily liquidity and lower fees than mutual fund shares, making them an attractive alternative for individual investors.

There are many similarities between ETFs and mutual funds. Both mutual funds and ETFs hold portfolios of stocks and/or bonds and occasionally something more exotic, such as precious metals or commodities. They must adhere to the same regulations covering what they can own, how much can be concentrated in one or a few holdings, how much money they can borrow in relation to the portfolio size, and so on.

There are also many differences between ETFs and mutual funds. When you put money into a mutual fund, the transaction is with the company that manages it — the Vanguards, T. Rowe Prices and BlackRocks of the world — either directly or through a brokerage firm. Frequently there is also a minimum holding period.

By contrast, ETFs trade on exchanges, just as common stocks do, and the other side of the trade is some other investor like you, not the fund manager. You can buy and sell at any point during a trading session at whatever the price is at the moment based on market conditions, and there's no minimum holding period, read on.

Exchange-Traded Fund (ETF)

A security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange. Read More

The Key Differences Between ETFs And Mutual Funds

Given the distinctions between the two kinds of funds, which one is better for you? It depends, so read on. Read More

A Few Good ETFs to Consider for Diversification

ETFs are an excellent way to add diversification to your portfolio, but only if you choose the right ones. Read More

Top 3 ETFs for Long-Term Investors

Long-term investors may find these buy-and-hold ETFs very appealing. Read More

3 Best ETFs in a Rising Rate Environment

Get information on a list of recommended exchange-traded funds (ETFs) that investors can use in a rising interest rate environment. Read More

This is How Robo-Advisors Use ETFs

Understand how robo-advisors use exchange-traded funds (ETFs) to invest clients' money, and learn about the benefits investors get from investing this way. Read More

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