What are ETFs

Have you ever wondered, what are ETFs? Maybe you are just getting into the market and have heard of them or maybe you have been trading them and want to know what you are trading.

ETF stands for Equity Traded Funds. They track a group of stocks such as an individual country or an individual industry group. So, for example if you are bullish on healthcare instead of looking for the best healthcare stock you can simply buy the ETF for the industry group.

This gives you somewhat of a diversified portfolio without having to look for many different companies. For this service they do charge a little annual fee. But that fee is normally very small and probably less than 1% of your total investment.

How To Buy Them

ETFs can be bought just like any other stock in the market. If you have a trading account you can simply enter the symbol in and click buy, and how many shares. Many also offer options which can be very helpful if you are looking to buy and sell covered calls on it or if you are looking to profit from a quick move.

Different Types of ETFs

There are 5 different Types of EFTs.

1. Investing Style, ETFs for different investing types some examples are.

ELV- Large Cap Stocks

IWF – Growth Stocks

2. Sector EFTs, which track different sectors or commodities some examples are

GLD – Tracks gold

FCG - Natural gas ETF

XLF – Tracks the Financial Sector

FAA - Airline ETF

US0 - Oil ETF

XHB – Housing

GRN - Green ETF

PHO - Invests in water

3. Broader Market ETFs, track the major INDEXS some examples are

SPY – S&P

DIA – Dow Jones

BZF - Brazil ETF

EWJ – Japanese Nikkei Index

INDY - India ETF

EWC – German index

GXC - China ETF

4. Short ETFs, these funds work the other way, When the markets go down they go up, When the markets go up they go down, some examples are

DOG – Short the Dow

5. Ultra ETFs, for traders who want to catch huge moves

Ultra ETFs give you 2xs the leverage. Some examples are

DXD – Ultra short the Dow

SSO – Ultra long the S&P

5. 3 x ETFs, for traders who still aren’t happy these ETFs give you 3x the leverage. Some examples are

FAS – 3x long financials

ERX – 3x Long Energy

BGU – 3x long large caps

6. ?... Who Knows what will happen, this ETF list could be very long in the future.

So what are ETFs? Basically another way to trade the markets.

Related Pages

Commodity ETFs to Look At

How to Invest in Commodities

Do leveraged ETFs Work?