Skip directly to Accessibility Notice

ETF 101: Understanding ETFs In Simple Terms

February 18, 2020

Watch Time 1:40 MIN

ETFs can offer investors a versatile set of tools when it comes to achieving their investment goals. Understanding the basics and key attribute of ETFs is an important first step to including them in your investment portfolio.

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


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.

No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission of Van Eck Securities Corporation.

This is not an offer to buy or sell, or a solicitation of any offer to buy or sell any of the securities mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, or tax advice. Certain statements contained herein may constitute projections, forecasts and other forward looking statements, which do not reflect actual results, are valid as of the date of this communication and subject to change without notice. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. The information herein represents the opinion of the author(s), but not necessarily those of VanEck.

All investing is subject to risk, including the possible loss of the money you invest. As with any investment strategy, there is no guarantee that investment objectives will be met and investors may lose money. Diversification does not ensure a profit or protect against a loss in a declining market. Past performance is no guarantee of future results.