You might have heard about exchange-traded funds or ETFs, but you might not know what they are and what they can do for you. Here are a few fast facts to get you started in understanding these dynamic investment vehicles:
- ETFs combine diversification with the trading characteristics of an equity investment.
- They are 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.
- Most have limited fund manager involvement, but today many are actively managed to give investors expanded options and the added benefit of the expertise of a fund manager.
- A disclosure document called ETF Facts is now available to investors. It provides important plain-language information to investors about past performance, risks and the cost of investing.
When it comes to investing, it’s important to do your research, explore your options and plan ahead.