4 fast facts about ETFs

You might have heard about exchange-traded funds (ETFs), but you might not know what they are or what they can do for you. Here are a few fast facts to help you understanding ETFs:

  1. ETFs combine the diversification of a mutual fund with the trading characteristics of a security that trades on a stock exchange.
  2. ETFs can be structured to mirror an index, commodity or currency. For instance, an ETF that mirrors the S&P 500 provides investors with exposure to all of the securities within that index at a relatively low cost.
  3. ETFs that mirror and index, commodity or currency have limited fund manager involvement. Other ETFs are actively managed to give investors expanded investment options and the expertise of a fund manager.
  4. A disclosure document called ETF Facts is available to investors. It provides important information to investors including what the ETF invests in, how risky it is, past performance, the expenses related to the ETF and who the ETF is be appropriate for.