ETFs

Besides stocks, there are so many investment options, and ETFs investing is one of them. I think it is important to understand how ETFs work, as their values tie to performance of other assets.

• ETFs (Exchange-Traded Funds)

  • Investment pools that track assets like commodities, bonds, indices, industries, etc.

    • Ex: Index Tracking ETFs - Vanguard 500 Index Fund (VOO)

  • Can be traded multiple times during the trading day.

  • Are sold only in full shares.

  • Different from mutual funds.

• Passive ETFs

  • Track market index/sector performance —> affected by overall market’s risks.

  • Provide more investment diversification.

• Active ETFs

  • Aim to outperform market index/ sector —> affected by market volatility.

  • Give investors more flexibility.

  • Higher management fees than passive ETFs, but lower than active mutual funds.