Exchange-Traded Fund (ETF)
A fund traded like a stock, often tracking a particular index or sector.
Detailed Description
Exchange-Traded Fund (ETF)
What are the main advantages of investing in ETFs?
The main advantages include diversification, lower expense ratios, liquidity, tax efficiency, and flexibility in trading.
How do ETFs differ from mutual funds?
ETFs are traded on exchanges like stocks in real-time, while mutual funds are bought and sold at the end of the trading day at net asset value.
What types of assets can ETFs hold?
ETFs can hold a variety of assets including stocks, bonds, commodities, and other securities.
What is tracking error in the context of ETFs?
Tracking error refers to the discrepancy between the performance of an ETF and its benchmark index.
What are some popular examples of ETFs?
Popular examples include SPDR S&P 500 ETF (SPY), iShares Russell 2000 ETF (IWM), and Vanguard Total Stock Market ETF (VTI).