As investors increasingly look to ETFs as a foundation for their investment portfolios, we answer 7 key questions to consider when investing in ETFs.
An ETF (exchange traded fund) is a pooled investment vehicle with shares that can be bought or sold throughout the day on a stock exchange at the prevailing market price.
There are many types of ETFs, including those that invest in: indexes, market sector indexes, active strategies, smart beta strategies, themes, factors, physical assets (like real estate and infrastructure), among many others.
ETFs issue shares that can be traded on the stock exchanges where they are listed — each share of an ETF represents an interest in the underlying assets of the fund. Most ETFs are regulated; this provides investor protections, such as oversight by an independent board of directors, and the requirement that fund assets be held separately from the assets of the adviser, among many others.