ETF 101: Understanding ETFs In Simple Terms
February 18, 2020
Watch Time 1:40 MIN
Exchange Traded Funds, or ETFs account for more than $3.4 trillion in assets under management as of December 2018-- and are only continuing to grow and be used by more investors.
But what exactly is an ETF?
An ETF -- is a collection of assets similar to a mutual fund, though unlike a mutual fund, an ETF trades on an exchange throughout the day like a stock.
ETFs are a straightforward investment vehicle that provide access to a wide variety of asset classes and strategies, offering investors the opportunity to align their exposure with their personal investment goals -- from creating a core portfolio to adding diversification or managing potential risk.
ETFs hold four key attributes:
1.Low Cost -- No minimum investment amounts and simple fee structures keep costs relatively low.
2.Tax Efficiency -- ETFs generate comparatively few taxable events, potentially resulting in lower taxes.
3.Transparency -- Daily visibility into ETF holdings and share prices, allowing for more informed asset allocation decisions.
4.Tradability and Accessibility -- Trade ETFs intraday and gain exposure to otherwise difficult to access opportunities.
Between these features and the broad range of ETFs available, ETFs may fit with almost any investment goal—potentially helping investors strengthen their portfolio.
To learn more about ETF investing visit www.vaneck.com
1As of December 2018, there were more than 2,300 ETFs available in the U.S. market alone, accounting for more than $3.4 trillion in assets under management.
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