Investing 101
1:25
What Are Exchange-Traded Funds (ETFs)? | ETFs Explained
ETFs are one of the most common forms of investment out there. In this short video from Titan's Christopher Seifel, you'll learn the basics.
Video Transcript
An exchange traded fund or ETF is a pooled form of investment that is designed to track an index, sector, or commodity such as oil or gold. The SPDR Gold Shares ETF, for example, is a popular ETF you can buy that gives you access to the gold market. An ETF trades like a stock. Investors buy a share of an ETF, and can trade it on a stock exchange like any other stock, offering investors ready access to their money at just about any time since ETFs can be tradeded at any time during market hours. This is different from mutual funds, which can only be sold at the end of a trading day. ETF's tend to be more tax efficient and less expensive than mutual funds due to lower management fees.
There's also a diversification element here. ETF's give you access to a broad range of asset classes. Purchasing a single ETF share will offer you more diversification than a single stock. To gain similar diversification by purchasing the individual securities separately would be much more difficult and costly. Interesting fact, there are ETF's called inverse ETF's that allow investors to profit from a decline in the market. Like when you hear of the stock market taking a huge dip in a single day, these inverse ETF's would actually increase in value on that day.
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