What is ETF ( Exchange traded funds )– Exchange Traded Funds

ETF (Exchange Traded Funds) – foreign exchange investment funds, securities which are traded on stock exchange, or, in other words, transparent “package”, where you can buy “whole market”, T. is. invest in all securities through a brokerage account, in the corresponding index.

ETF (Exchange traded funds )(Exchange Traded Funds) is a security, which is traded, like common stocks in the world's largest markets. The constituent parts of ETF can be securities of enterprises of any region or industry., like mutual funds. Working with ETF, trader can combine the security and smooth operation of the world's major exchanges with the ability to use a huge variety of financial conditions in different countries and regions of the world.

Exchange Traded Funds - Exchange Traded Funds (ETF)

According to the legal classification, ETFs are classified as mutual funds and fall under the same rules of the US Securities Commission. (SEC), as traditional mutual funds. but, their peculiar structure ensured the difference between the SEC requirements in terms of, concerning buying and selling. ETFs differ from mutual funds in the same way, that orders for transactions with ordinary mutual funds are carried out on the market during the daytime, but the very execution of such operations, usually, produced before the close of the market. The price assigned to them is the total value of the daily closing prices of all assets., included in this mutual fund. This is not the case with ETFs.. These funds are traded all day long, and the investor has the opportunity to fix prices for the corresponding assets at any time.

Reliability of ETFs as a stock market instrument (considering separately from the reliability of any particular asset, which they can represent) should be treated in the same way, like any certificate for the securities themselves. ETF is a much more complex instrument in terms of its content., than mutual funds. In the same time, an interesting combination of participants in a specific market, presented by brokers, financial managers and market analysts makes it easy to work with them.

If you admit, that ETFs are index funds after all, then this encourages investors to delve deeper into the philosophy of investing in indices, downplaying stock picks in favor of the overall buying or selling of a given market. And unlike most traditional index funds, investors do not need to borrow a passive "bought – hold "position. ETFs are increasingly becoming an attractive hedging instrument for day traders as well.. Both types of investors can coexist in the market, effectively strengthening everyone's position by reducing overall operating costs.

The number of ETFs is large and amounts to many hundreds. But not all of them are liquid.
Here is a list of the most popular ETFs..

What is ETF : in simple words - about the complex

ETFs originated as passive funds. They reflect the behavior of a particular financial index - stocks, bonds, real estate, Goods. They can correspond to the behavior of an asset., say, gold or oil, a specific sector of the economy (finance, extraction of raw materials, biotechnology, etc.), geographic area (Europe, Of America, Asia, Of Russia), company values ​​- large or small capitalization, short or long term bonds, as well as their credit rating. Let's say, one of the most famous ETFs - SPDR S&P 500 (тиккер SPY) repeats the movement of the S index&P 500.

Usually, the value of one ETF share rarely exceeds $100 - that is, ETFs are sufficiently accessible to a wide range of traders. They are successfully used in their work as institutional (pension funds, management companies) investors, as well as individuals. Even speculators use ETFs, buying or selling the whole market. This instrument has good liquidity and availability., which allows you to use it in different investment strategies, the simplest of which is asset allocation.

Most Popular ETFs ( Exchange traded funds )– Exchange Traded Funds

The whole world of ETF index funds on the map

Europe ETF ( Exchange traded funds )– Exchange Traded Funds

Asia ETF ( Exchange traded funds )– Exchange Traded Funds

America USA ETF ( Exchange traded funds )– Exchange Traded Funds

Information on ETFs provided by the Investment Company “DUNTONSE“

ETF types ( Exchange traded funds )– Exchange Traded Funds

For that, to effectively choose one or another ETF for trading, a novice investor or speculator needs to clearly structure an array of ETFs, represented on the stock market.
The following types of ETFs are presented on the stock market: Stock ETF, Commodity ETF, Bond ETF, Currency ETF, Index ETF, Reverse ETF, ETF with rate of change.

• • Stock ETF - security paper, which displays the dynamics of a certain set of shares. Mostly, ETF data displays a set of stocks according to a particular industry or country. It could be, for example, energy sector, industrial sector. Or ETFs may include stocks, issuers located in China.
  • Commodity ETF - ETFs, which displays the price of physical goods. These goods can be agricultural products., natural resources and also valuable metals. A commodity ETF is primarily focused on a specific commodity. At the same time, such an ETF may be based on a physical commodity., which is in a specific storage location. Also, a commodity ETF can be based on a futures contract for the corresponding commodity.. Less common ETFs that display commodity indices in their value, which, in turn, can be calculated on the basis of a variety of goods in the form of a combination of physical goods and various derivatives.
  • Bond ETF. Bonds are the underlying asset for ETFs of this type.. This, in turn, allows you to trade debt financial instruments through the stock market.
  • Currency ETF - ETFs, which displays the value of the corresponding currency. This type of trading fund provides the ability to trade currency pairs, without entering the Forex market.
  • Index ETF - ETFs, which displays the dynamics of a specific index, so close, as much as possible. Certainly, an index ETF can trade at a discount or premium to the index. But these time periods are very small, because very quickly the difference is leveled by arbitration on the part of institutional investors.
  • Reverse ETF – ETF constructed with a variety of derivatives. The purpose of this design is to form a feedback between the ETF price and the corresponding index or set of shares.. What does, if a certain index has a downward trend, then the reverse ETF will grow. And vice versa, if a certain index has a growing dynamics, then the reverse ETF will fall. This type of ETF is very often used by institutional investors., which have restrictions on trading short positions. That's why, to hedge your risks in case of market or sector falls, institutional investors can buy this type of ETF.
  • ETF with rate of change. These ETFs are based on a variety of assets. At the same time, the main feature of these funds is the presence of a certain coefficient of change of this ETF in relation to the underlying asset. This coefficient, usually, has the meaning 2 or 3. Therefore, this type of ETF can be called double or triple.. I.e, if we are considering a double ETF, then it grows twice as much, how its underlying asset is growing. And accordingly, the fall of this ETF will be twice as large as the fall of its underlying asset. These ETFs allow for more aggressive speculation, at the same time, the risks of trading with these instruments are also increased.

At the same time, a single ETF can combine the characteristics of several types, presented above. It could be, for example, index inverse ETF at odds 3. Direxion Daily S meets these characteristics&P 500 Bear 3X ETF (SPXS).

The table below shows examples of the described types of ETFs.

TOP 9 ETF of funds by popularity (capitalization)