ETF Education

What Is an ETF?

An exchange traded fund (ETF) is a basket of securities—such as stocks, bonds, currencies or commodities—that can be bought and sold in a single trade on an exchange. They generally track the performance of an index, may charge less fees, and offer targeted exposure to a specific market segment, such as an asset class, geography, sector, or investment theme.

In essence, ETFs are funds that trade like stocks with the diversification benefits of mutual funds. In one trade, they may offer diversified, low-cost, transparent and tax-efficient exposure to companies across the globe.

What are the Benefits of ETFs?

Understanding the benefits of ETFs is an important step toward determining whether ETFs can be an appropriate choice for your portfolio.

Targeted Exposure

Lower Expense Ratios

Increased Diversification

Tax Efficiency

Increased Transparency

The Global ETF Market

ETFs have grown exponentially since 1993 when State Street Global Advisors launched the SPDR® S&P 500 ETF Trust (SPY), the first US-listed ETF. Today, investors use ETFs to precisely meet their individual portfolio needs, from finding income and gaining broad market exposure, to lowering costs and investing in difficult-to-reach markets.