ETF is short for Exchange-Traded Fund. It is essentially a security that tracks an index, sector, commodity, or other asset and can be traded on a stock exchange like ordinary stocks.
As an emerging investment method, ETFs combine the flexible trading features of stocks with the diversified portfolio of mutual funds, making them an increasingly popular investment choice.
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Table of Contents
How do ETFs work?
ETF providers, such as BlackRock, Vanguard, and State Street, package a basket of stocks, funds, or other financial products into a single fund designed as a trust to track the performance of those assets and set a corresponding index.
This fund is then divided into ETF shares and bought and sold on the stock market just like stocks.
In this process, the supply of ETF shares is regulated through a “creation” and “redemption” mechanism. This mechanism needs to be carried out by large professional investment institutions known as “Authorized Participants”, such as JPMorgan Chase and Merrill Lynch.
In all transactions, the ETF provider holds the underlying assets, while the investor (ETF Buyer) owns a portion of the ETF shares but does not directly hold the underlying assets of the fund.
You can trade ETFs through online brokers such as
Related: Ranking and Comparison of U.S. Brokerage Firms
How did ETFs develop?
The creation of ETFs aimed to combine the convenience of stock trading with the diversified selection advantages of mutual funds.
The first ETF was launched in the United States in 1993, known as the “Standard & Poor’s Depositary Receipts” (SPDRs). Its purpose was to provide an investment tool that could be traded in real-time on an exchange while offering the diversified investment characteristics of a fund.
The structure of ETFs can be diverse, ranging from tracking the price of a single commodity to containing a diversified portfolio of various securities, and even specific investment strategies. They are not limited to the U.S. market but can also facilitate global investments.
The price of ETFs fluctuates in real-time with market trading, allowing investors to buy and sell at any time during trading hours. This differs significantly from traditional mutual funds, which can only be traded at the market’s close each day.
In the United States, most ETFs are established as open-end funds and are regulated under the Investment Company Act of 1940. This ensures the transparency and safety of ETFs, providing investors with a more secure investment option.
What are the Characteristics of ETFs?
ETFs have significant advantages, such as low costs and diversification; however, they also have some disadvantages, such as potential liquidity issues.
Pros
Low Cost
Compared to mutual funds, ETFs charge very low annual fees. For example, the S&P 500 Index Fund (SPY) has an annual fee of only 0.09%, while VOO is even lower at just 0.03%.
Of course, some ETFs have higher fees, such as GDX, which charges 0.52%. There are also some inverse ETFs, like SQQQ and SPDN, which carry higher fees.
In comparison, mutual funds charge numerous fees, such as management fees (ranging from 0.25% to 1.5%), and commissions for buying and selling fund shares.
It is important to note that ETFs do not charge separate management fees; these costs are already embedded in the ETF’s price. On the other hand, mutual fund fees are charged separately.
When investing in ETFs, investors only need to execute one buy transaction and one sell transaction, saving on multiple transaction commissions and fees. Some brokers even offer commission-free trading on certain low-cost ETFs, further reducing investment costs.
For example, brokers like
Diversification
With ETFs, you can invest in numerous stocks within the same industry or sector in one go, or even make cross-industry and international investments.
For instance, by investing in SPY, you can invest in 500 listed companies in the United States. Similarly, with IWM, you can invest in approximately 1,950 small-cap companies in the United States.
This diversified investment model significantly reduces the risk that might be associated with investing in a single company.
Of course, based on the investor’s interests, there are ETFs focused on specific industries. For example, XLF focuses on listed companies in the U.S. financial sector, while XLE focuses on listed companies in the U.S. energy sector.
Transparency
ETFs are known for their high level of transparency. Investors can easily access the price dynamics of ETFs, which are updated in real time on the stock exchange.
Additionally, the holdings of ETFs are disclosed to the public daily, allowing investors to understand the specific composition and changes within the fund in detail.
In contrast, mutual funds are relatively weaker in terms of transparency.
Most mutual funds typically disclose their holdings to investors on a monthly or quarterly basis. This longer disclosure period can lead to information lag, making it difficult for investors to stay updated on the fund’s latest developments and risk exposure.
Low Taxes
ETFs are renowned for their tax efficiency, offering tax advantages distinct from mutual funds. In mutual funds, investors may need to pay capital gains taxes during the investment period, usually resulting from the fund manager’s trading activities.
In contrast, with ETFs, investors typically only need to pay capital gains tax when they finally sell their ETF shares. This asset reallocation mechanism allows ETFs to manage internal trades more flexibly, thus reducing the frequency of triggering capital gains taxes.
Cons
Lack of Liquidity
As with any security, investors are affected by current market prices when selling.
During periods of high market volatility, mass sell-offs of individual stocks have a greater impact on ETFs that are sold as a “basket” of securities.
Therefore, it is better to invest in popular ETFs with better liquidity, as buying and selling those ETFs is easier.
Risk of Closure
When an ETF does not have enough assets to cover its operating expenses or management costs, the fund company may decide to close the ETF.
In the event of closure, the fund company will sell all the assets held by the ETF and return the proceeds to the investors.
What are the different types of ETFs?
ETFs can be categorized based on their management style and the type of investment they target.
1. Categorized by Management Style
Passively-Managed ETFs
Passively managed ETFs are the more traditional type of ETFs. They typically track a specific benchmark asset, and the fund manager does not adjust the investment proportions daily.
These ETFs generally have lower transaction costs compared to actively managed ETFs and offer stable returns. However, they may not meet the return objectives of more aggressive investors.
Actively-Managed ETFs
An actively managed ETF involves investors actively managing the stock portfolio, engaging more in buying and selling stocks, and changing the holdings within the ETF.
These appeared after passive management ETFs and provided investors with more options for stock combinations, allowing aggressive investors to make investments based on their judgments.
Compared to passively managed ETFs, active management can potentially achieve higher returns but also incurs higher transaction fees and management costs due to a higher turnover rate.
2. Categorised by the underlying securities of the ETF
- Bond ETFs: They include U.S. Treasuries, local bonds from various states, municipal bonds, and corporate bonds;
- Commodity ETFs: They include physical commodity investment targets like crude oil, natural gas, or gold;
- Currency ETFs: They include currencies from various countries, such as the Canadian dollar, the euro, and the Japanese yen;
- Equity ETFs: They include stocks, funds, etc;
- Sector ETFs: They track specific sectors, including the 11 sectors divided in the U.S. stock market like healthcare, financials, industrials, information technology, and real estate. Sector ETFs provide investment in different company stocks within a particular industry or a cross-sector combination.
- International ETFs: They focus on all economies outside the U.S., including developed and emerging markets.
There are other ETFs, such as cybersecurity ETFs.
What is the difference between ETFs, Stocks, and Mutual Funds?
Difference Between ETFs and Stocks
The biggest difference between ETFs and stocks is the form of holding a “basket” of stocks.
Compared to purchasing individual stocks separately, ETFs sold in a “basket” form can significantly reduce expenses in terms of trading fees and broker commissions.
Since ETFs contain multiple assets, not limited to the same industry or country, they can meet investors’ needs for diversified investments, allowing for more diversified portfolio investments.
Difference Between ETFs and Mutual Funds
The biggest difference between ETFs and mutual funds is that ETFs can be traded on a stock exchange, with the same flexible trading process as stocks, making them more cost-effective and liquid.
Management fees are also an advantage of ETFs. Data from 2019 shows that the average annual management fee for equity mutual funds is 0.52%, while the average fee rate for ETFs is 0.18%.
When initially trading, ETFs significantly lower the minimum investment threshold compared to mutual funds.
What are some common ETFs?
Index ETFs
| ETF [Expense Ratio] | ETF Details | |
|---|---|---|
| S&P 500 | SPY SPDR S&P 500 ETF Trust [0.09%] | SPY tracks a market cap-weighted index of US large- and mid-cap stocks selected by the S&P Committee. |
| UPRO ProShares UltraPro S&P500 (+3X,1 Day) [0.91%] | UPRO provides 3x leveraged daily exposure to a market cap-weighted index of large-cap and mid-cap US companies selected by the S&P Committee. | |
| IVV iShares Core S&P 500 ETF [0.03%] | IVV tracks a market cap-weighted index of US large- and mid-cap stocks selected by the S&P Committee. | |
| Nasdaq | QQQ Invesco QQQ Trust [0.2%] | QQQ tracks a modified-market-cap-weighted index of 100 NASDAQ-listed stocks. |
| TQQQ ProShares UltraPro QQQ [0.86%] | TQQQ provides 3x leveraged exposure to a modified market-cap-weighted index tracking 100 of the largest non-financial firms listed on NASDAQ. | |
| Dow Jones | DIA SPDR Dow Jones Industrial Average ETF Trust [0.16%] | DIA tracks a price-weighted index of 30 large-cap US stocks, selected by the editors of the Wall Street Journal. |
| UDOW ProShares UltraPro Dow30 [0.95%] | UDOW provides 3x leveraged exposure to the price-weighted Dow Jones Industrial Average, which includes 30 of the largest US companies. | |
| Small, Mid, Large Caps | OEF iShares S&P 100 ETF [0.2%] | OEF tracks a market-cap-weighted index of 100 US large-cap companies selected by the S&P Committee. |
| MDY SPDR S&P Midcap 400 ETF Trust [0.23%] | MDY tracks a market cap-weighted index of mid-cap US companies. | |
| SLY SPDR S&P 600 Small Cap ETF [0.15%] | SLY tracks a market cap-weighted index of US small-cap stocks selected by the S&P committee. | |
| Russell | IWB iShares Russell 1000 ETF [0.15%] | IWB tracks a market-cap-weighted index of the 1000-largest US companies. |
| IWM iShares Russell 2000 ETF [0.19%] | IWM tracks a market-cap-weighted index of US small-cap stocks. The index selects stocks ranked 1,001-3,000 by market cap. | |
| IWV iShares Russell 3000 ETF [0.2%] | IWV tracks a cap-weighted index that measures the investable US equities market, covering the entire market-cap spectrum, including micro-caps. |
Sector ETFs
| ETF [Expense Ratio] | ETF Details |
|---|---|
| XLE Energy Select Sector SPDR Fund [0.1%] | XLE tracks a market-cap-weighted index of US energy companies in the S&P 500. |
| XLK Technology Select Sector SPDR Fund [0.1%] | XLK tracks an index of S&P 500 technology stocks. |
| XLP Consumer Staples Select Sector SPDR Fund [0.1%] | XLP tracks a market-cap-weighted index of consumer-staple stocks drawn from the S&P 500. |
| XLV Health Care Select Sector SPDR Fund [0.1%] | XLV tracks healthcare stocks from within the S&P 500 Index, weighted by market cap. |
| XLB Materials Select Sector SPDR Fund [0.1%] | XLB tracks a market-cap-weighted index of US basic materials companies. The fund includes only the materials components of the S&P 500. |
| XLY Consumer Discretionary Select Sector SPDR Fund [0.1%] | XLY tracks a market-cap-weighted index of consumer-discretionary stocks drawn from the S&P 500. |
| XRT SPDR S&P Retail ETF [0.35%] | XRT tracks a broad-based, equal-weighted index of stocks in the US retail industry. |
| XLC Communication Services Select Sector SPDR Fund [0.1%] | XLC tracks a market-cap-weighted index of US telecommunication and media & entertainment components of the S&P 500 index. |
| XLI Industrial Select Sector SPDR Fund [0.1%] | XLI tracks a market cap-weighted index of industrial-sector stocks drawn from the S&P 500. |
| XLRE Real Estate Select Sector SPDR Fund [0.1%] | XLRE tracks a market-cap-weighted index of REITs and real estate stocks, excluding mortgage REITs, from the S&P 500. |
| XLF Financial Select Sector SPDR Fund [0.1%] | XLF tracks an index of S&P 500 financial stocks, weighted by market cap. |
U.S. Treasury Bonds ETF
| ETF [Expense Ratio] | ETF Details |
|---|---|
| TLT iShares 20+ Year Treasury Bond ETF [0.15%] | TLT tracks a market-weighted index of debt issued by the US Treasury with remaining maturities of 20 years or more. |
| IEF iShares 7-10 Year Treasury Bond ETF [0.15%] | IEF tracks a market-value-weighted index of debt issued by the US Treasury with 7-10 years to maturity remaining. Treasury STRIPS are excluded. |
| SHY iShares 1-3 Year Treasury Bond ETF [0.15%] | SHY tracks a market-weighted index of debt issued by the US Treasury with 1-3 years remaining to maturity. Treasury STRIPS are excluded. |
| TIP iShares TIPS Bond ETF [0.19%] | TIP tracks a market-value-weighted index of US Treasury inflation-protected securities with at least one year remaining in maturity. |
| MUB iShares National Muni Bond ETF [0.07%] | SHY tracks a market-weighted index of debt issued by the US Treasury with 1-3 years remaining to maturity. Treasury STRIPS are excluded. |
| EDV Vanguard Extended Duration Treasury ETF [0.06%] | EDV is passively managed to hold a portfolio of 20- to 30-year Treasury STRIPS, which represents a single coupon or principal payment on a US Treasury security that has been stripped into separately tradable components. |
| TMF Direxion Daily 20+ Year Treasury Bull 3X Shares [1.06%] | TMF provides 3x daily exposure to a market-value-weighted index of US Treasury Bonds with over 20 years to maturity. |
Commodity ETFs
| ETF [Expense Ratio] | ETF Details | |
|---|---|---|
| Gold | GLD SPDR Gold Trust [0.4%] | GLD tracks the gold spot price, less expenses and liabilities, using gold bars held in London vaults. |
| GDX VanEck Gold Miners ETF [0.51%] | GDX tracks a market-cap-weighted index of global gold mining firms. | |
| Silver | SLV iShares Silver Trust [0.5%] | SLV tracks the silver spot price, less expenses and liabilities, using silver bullion held in London. |
| AGQ ProShares Ultra Silver [1.5%] | AGQ aims to provide twice the daily performance of an index that tracks the price of silver using leveraged exposure. | |
| Platinum | PPLT abrdn Physical Platinum Shares ETF [0.6%] | PPLT tracks the platinum spot price by holding platinum bullion. |
| PLTM GraniteShares Platinum Trust [0.5%] | PLTM aims to track the price of platinum by holding physical platinum bullion in vaults. | |
| Palladium | PALL Aberdeen Standard Physical Palladium Shares ETF [0.6%] | PALL tracks the palladium spot price, less trust expenses. |
| Copper | CPER United States Copper Index Fund [0.85%] | CPER tracks a rules-based index of copper futures contracts selected based on the shape of the copper futures curve. |
Oil | BNO United States Brent Oil Fund LP [1.02%] | BNO tracks the daily changes in the price of Brent crude oil by holding oil futures. |
| USO United States Oil Fund LP [0.81%] | USO tracks the daily changes in the price of West Texas Intermediate (WTI) light, sweet crude oil by holding oil futures. | |
| USL United States 12 Month Oil Fund LP [0.90%] | USL tracks the daily changes in the price of West Texas Intermediate (WTI) light crude oil by holding oil futures with a longer-term, 12-month rolling period. | |
| UCO ProShares Ultra Bloomberg Crude Oil [1.62%] | UNG holds near-month futures contracts in natural gas and swap contracts. | |
| DBO Invesco DB Oil Fund [0.76%] | DBO tracks the daily changes in the price of light crude oil by holding oil futures contracts. | |
| Gasoline | UGA United States Gasoline Fund LP [0.93%] | UGA holds near-month NYMEX futures contracts on reformulated gasoline blendstock for oxygen blending (RBOB) gasoline. |
| Natural Gas | UNG United States Natural Gas Fund LP [1.11%] | UNG holds near-month futures contracts in natural gas, as well as swap contracts. |
| UNL United States 12 Month Natural Gas Fund LP [0.9%] | UNL tracks the daily changes in the price of natural gas by holding natural gas futures contracts across a 12-month period. | |
| Corn | CORN Teucrium Corn Fund [1.14%] | CORN tracks an index of corn futures contracts. It reflects the performance of corn by holding Chicago Board of Trade corn futures contracts with three different expiration dates. |
| Commodity | GSG iShares S&P GSCI Commodity Indexed Trust [0.75%] | GSG uses index futures contracts to gain exposure to a production-weighted index of front-month commodities futures contracts. |
| DBC Invesco DB Commodity Index Tracking Fund [0.87%] | DBC tracks the DBIQ Optimum Yield Diversified Commodity Index Excess Return, which reflects the performance of a diversified basket of commodities futures contracts | |
| USCI United States Commodity Index Fund [1.01%] | USCI tracks the SummerHaven Dynamic Commodity Index Total Return, focusing on a broad range of commodities by holding futures contracts. | |
| CMDY iShares Bloomberg Roll Select Commodity Strategy ETF [0.28%] | CMDY tracks the Bloomberg Roll Select Commodity Index, which holds futures contracts on a broad market commodity index that is optimized for roll costs | |
| CCRV tracks the ICE BofA Commodity Enhanced Carry Index. This index comprises futures contracts on various commodities selected based on positive on-roll yield. This index comprises futures contracts on various commodities selected based on positive roll yield. | COM tracks the performance of the Bloomberg Commodity Index, which includes futures contracts on 23 physical commodities encompassing sectors like energy, grains, industrial metals, precious metals, and livestock | |
| CCRV iShares Commodity Curve Carry Strategy ETF [0.4%] | CCRV tracks the ICE BofA Commodity Enhanced Carry Index. This index comprises futures contracts on various commodities selected based on positive on-roll yield. | |
| BCD abrdn Bloomberg All Commodity Longer Dated Strategy K-1 Free ETF | BCD tracks the Bloomberg Commodity Index 3 Month Forward Index, providing exposure to a broad range of commodity markets through futures contracts. | |
| Agriculture | DBA Invesco DB Agriculture Fund [0.91%] | DBA tracks an index of 10 agricultural commodity futures contracts. It selects contracts based on the shape of the futures curve to minimize contango. |
| Energy | DBE Invesco DB Energy Fund [0.77%] | DBE tracks an index of five energy-related futures contracts. It selects contracts based on the shape of the futures curve to minimize contango. |
| RENW Harbor Energy Transition Strategy ETF [0.8%] | REWN tracks the Quantix Energy Transition Index. It provides exposure to at least 10 different commodities expected to benefit from the global transition to low-carbon and renewable energy. It provides exposure to at least 10 different commodities expected to benefit from the global transition to low-carbon and renewable energy. | |
Metal | XME SPDR S&P Metals & Mining ETF [0.35%] | XME tracks the performance of the S&P Metals & Mining Select Industry Index. This ETF includes a range of companies involved in the mining and production of metals and minerals. metals and minerals. |
| DBB Invesco DB Base Metals Fund [0.77%] | DBB tracks the DBIQ Optimum Yield Industrial Metals Index, which includes metals like aluminum, zinc, and copper by holding futures contracts of base metals. | |
| DBP Invesco DB Precious Metals Fund [0.75%] | DBP tracks the performance of the DBIQ Optimum Yield Precious Metals Index, which includes futures contracts on precious metals such as gold and silver. | |
| GLTR abrdn Physical Precious Metals Basket Shares ETF 0.6% | GLTR tracks the performance of a basket of physical precious metals, specifically gold, silver, platinum, and palladium. The fund holds these metals in physical form, with the allocation to each metal based on the proportions held by the trust. | |
| Sugar | CANE Teucrium Sugar Fund [1.14%] | CANE tracks the daily changes in the price of sugar futures. |
| Soybean | SOYB Teucrium Soybean Fund [1.91%] | SOYB tracks the daily changes in the price of soybeans by holding soybean futures contracts. |
| Wheat | WEAT Teucrium Wheat Fund [1.14%] | Weat tracks the daily price movements of wheat futures contracts. |
Currency ETFs
| ETF [Expense Ratio] | ETF Details |
|---|---|
| UUP Invesco DB U.S. Dollar Index Bullish Fund [0.78%] | UUP tracks the changes in the value of the US dollar relative to a basket of world currencies via USDX futures contracts. |
| FXA Invesco CurrencyShares Australian Dollar Trust [0.4%] | FXA tracks the changes in value of the Australian dollar (AUD) relative to the US dollar. |
| FXB Invesco CurrencyShares British Pound Sterling Trust [0.4%] | FXB delivers exposure to changes in the value of the British pound (GBP) relative to the US dollar. |
| FXC Invesco CurrencyShares Canadian Dollar Trust [0.4%] | FXC tracks the changes in value of the Canadian dollar relative to the US dollar. |
| FXE Invesco CurrencyShares Euro Trust [0.4%] | FXE tracks the changes in value of the euro relative to the US dollar. |
| FXY Invesco CurrencyShares Japanese Yen Trust [0.4%] | FXY tracks the changes in value of the Japanese yen relative to the US dollar. |
| FXF Invesco CurrencyShares Swiss Franc Trust [0.4%] | FXF tracks the changes in value of the Swiss franc relative to the US dollar. |
China-Related ETFs
| ETF Name [Fee] | ETF Details |
|---|---|
| MCHI iShares MSCI China ETF [0.58%] | MCHI tracks a market-cap-weighted index of investable Chinese shares. The fund stretches across all market-cap sizes. |
| KWEB KraneShares CSI China Internet ETF [0.69%] | KWEB tracks a market cap-weighted index composed of overseas-listed Chinese Internet companies. |
| FXI iShares Trust – China Large-Cap ETF [0.74%] | FXI tracks a market-cap-weighted index of the 50 largest Chinese stocks traded on the Hong Kong Stock Exchange. |
| GXC SPDR S&P China ETF [0.59%] | GXC tracks a broad, market-cap-weighted index of investable Chinese shares. The fund’s holdings stretch across all market-cap sizes. |
| CQQQ Invesco China Technology ETF [0.7%] | CQQQ tracks a cap-weighted index of investable Chinese technology stocks. |
| CNYA iShares MSCI China A ETF [0.6%] | CNYA tracks a market-cap-weighted index of Chinese A-share equities. |
| KBA KraneShares Bosera MSCI China A 50 Connect Index ETF [0.56%] | KBA tracks a subset of market cap-weighted large- and mid-cap Chinese equities listed in Shanghai and Shenzhen. |
Details of Some ETFs
SPY
- Full Name: SPDR S&P 500 ETF Trust
- Launched Date: January 22, 1993
- Issuer: State Street Global Advisors
- Expense Ratio: 0.09%
- Holdings: 500 to 502 stocks selected from NYSE and NASDAQ
- Fund Size: $387B (March 2022)
- Daily Volume: $47B (March 2022)
SPY was the world’s first ETF, listed on January 22, 1993. It is designed to track the S&P 500 Index and is one of today’s most heavily traded ETFs.
The top ten holdings of SPY, which collectively account for 27.88% of its total assets, are as follows:
- Apple Inc. (AAPL) – 7.52 percent
- Microsoft Corporation (MSFT) – 6.86 percent
- Amazon.com Inc. (AMZN) – 2.92 percent
- NVIDIA Corporation (NVDA) – 2.87 percent
- Meta Platforms Inc. (META) – 1.88 percent
- Alphabet Inc. class A (GOOGL) – 2.37 percent
- Alphabet Inc. class C (GOOG) – 1.98 percent
- Broadcom Inc. (AVGO) – 1.60%
- Eli Lilly and Co. (LLY) – 1.58 percent
- Berkshire Hathaway Inc. class B (BRK.B) – 1.58 percent
If you are unfamiliar with investing but wish to profit from the stock market, buying SPY directly might be the best option.
Warren Buffett once said at the 2021 Shareholders Meeting:
But for a given individual, particularly my wife, I just think that having a tiny fraction, which is all it takes for her to do very well for the rest of her life, I just– I think that the best thing to do is buy 90% in an S&P 500 index fund. But for a given individual, particularly my wife, I just think that having a tiny fraction, which is all it takes for her to do very well for the rest of her life, I just– I think that the best thing to do is buy 90% in an S&P 500 index fund. Now, the index fund people naturally have started over the time, they market more — more and more products that go to other indices and everything.
QQQ
- Full Name: Invesco QQQ Trust ETF
- Launched Date: March 10, 1999
- Issuer: Invesco
- Expense Ratio: 0.2%
- Holdings: 100 to 103 stocks in the Nasdaq non-financial sector, mainly technology stocks
- Fund Size: $174 B (March 2022)
- Daily Volume: $27 B (March 2022)
Invesco QQQ Trust only holds Nasdaq stocks from non-financial sectors. The top ten holdings, which collectively account for 52.03% of its total assets, are as follows:
- Apple (12.63%)
- Microsoft (10.12%)
- Amazon (6.74%)
- Tesla (4.05%)
- Google-C (3.95%)
- Google-A (3.74%)
- NVIDIA (3.70%)
- Meta (3.30%)
- Broadcom (1.92%)
- Costco (1.88%)
These high-tech companies make it a technology-intensive ETF and one of the largest ETFs currently available. Therefore, its liquidity is very high.
VOO
- Full Name: Vanguard S&P 500 ETF
- Launched Date: September 7, 2010
- Issuer: Vanguard
- Expense Ratio: 0.03 %
- Holdings: NYSE and NASDAQ selected 500 to 508 stocks
- Fund Size: $267 B (March 2022)
Vanguard S&P 500 ETF tracks the S&P 500 Index and is very similar to SPY. However, it includes a slightly different selection of 500 stocks. Moreover, VOO has a lower management fee (0.03% compared to SPY’s 0.09%).
Nonetheless, in terms of size and daily trading volume, SPY is more popular than VOO.
VOO was launched in 2010 by Vanguard, one of the leaders in low-cost ETF investments, and it manages assets worth hundreds of billions.
IWM
- Full Name: iShares Russell 2000 ETF
- Launched Date: May 22, 2000
- Issuer: iShares (part of BlackRock)
- Expense Ratio: 0.19%
- Tracking: Russell 2000 Index, which includes about 2,000 small-cap companies.
- Fund Size: $62.97 B (April 2024)
IWM is an ETF issued by iShares, a subsidiary of BlackRock. It primarily tracks the Russell 2000 Index, which includes approximately 2000 small-cap companies.
The top ten holdings of IWM are listed below:
- Ovintiv Inc. (OVV) – 0.44 percent
- ShockWave Medical Inc. (SWAV) – 0.34%
- Axon Enterprise Inc. (AXON) – 0.33%
- Celsius Holdings Inc. (CELH) – 0.31%
- Tandem Diabetes Care Inc. (TNDM) – 0.31%
- Insulet Corporation (PODD) – 0.31%
- SPS Commerce Inc. (SPSC) – 0.30%
- Blueprint Medicines Corporation (BPMC) – 0.30%
- The Ensign Group Inc. (ENSG) – 0.29%
- Lantheus Holdings Inc. (LNTH) – 0.29 percent
SOXX
- Full Name: iShares Semiconductor ETF
- Launched Date: July 10, 2001
- Issuer: iShares
- Expense Ratio: 0.35%
- Tracking: ICE Semiconductor Index
- Fund size: $12.77 billion (as of April 2024)
SOXX primarily invests in companies within the semiconductor industry. Its holdings include major semiconductor companies such as Broadcom, NVIDIA, Advanced Micro Devices, and Applied Materials.
The top ten holdings of SOXX are listed below:
- Broadcom (AVGO) – 9.41 percent
- NVIDIA (NVDA) – 8.43 percent
- Advanced Micro Devices (AMD) – 7.56 percent
- Applied Materials (AMAT) – 6.56%
- QUALCOMM (QCOM) – 5.86%
- Lam Research (LRCX) – 4.28%
- Taiwan Semiconductor Manufacturing (TSM) – 4.14%
- KLA (KLAC) – 4.13%
- Micron Technology (MU) – 3.86 percent
- Marvell Technology (MRVL) – 3.85 percent
GLD
- Full Name: SPDR Gold Trust
- Launch Date: November 18, 2004
- Issuer: SPDR (State Street Global Advisors)
- Expense Date: 0.40%
- Tracking: LBMA Gold Price PM
- Fund size: approximately $60 billion (as of 2024)
GLD primarily tracks the price of gold by holding physical gold, making it an important tool for investors seeking a hedge and diversified investment.
It trades like a stock, offering convenience, flexibility, high transparency, and liquidity.
GDX
- Full Name: VanEck Gold Miners ETF
- Launched Date: May 16, 2006
- Issuer: VanEck
- Expense Ratio: 0.51 %
- Tracking: NYSE Arca Gold Miners Index (GDMNTR)
- Fund Size: $15.6 B (March 2022)
VanEck Vector Gold Miners ETF is one of the largest gold miner ETFs. GDX primarily invests in leading gold mining companies globally, including those from Canada, the United States, Australia, and South Africa.
The top ten holdings of GDX, which collectively account for 69.01% of its total assets, are as follows:
- Newmont Corporation (17.45%)
- Barrick Gold Corporation (12.43%)
- Franco-Nevada Corporation (8.79%)
- Agnico Eagle Mines Limited (7.43%)
- Wheaton Precious Metals Corp (6.06%)
- Newcrest Mining Limited (4.63%)
- Gold Fields Limited Sponsored ADR (4.00%)
- AngloGold Ashanti Limited Sponsored ADR (3.00%)
- Northern Star Resources Ltd (2.63%)
- Zijin Mining Group Co., Ltd. Class H2 (0.58%)
VIXY
- Full Name: ProShares VIX Short-Term Futures ETF
- Launched Date: January 3, 2011
- Issuer: ProShares
- Expense Ratio: 0.85 %
- Tracking: S&P 500 VIX Short-Term Futures Index
- Fund size: $407 M (March 2022)
ProShares VIX Short-Term Futures ETF is a relatively unique member of the ETF field because it allows investors to profit from market volatility.
When volatility increases, the value of this ETF rises, typically moving in the opposite direction of the stock market.
However, because it must regularly fulfill derivative contracts, it depletes its own funds over time, making it suitable only for short-term investments.
IEO
- Full Name: iShares U.S. Oil & Gas Exploration & Production ETF
- Launched Date: May 1, 2006
- Issuer: Blackrock
- Expense Ratio: 0.39 %
- Holdings 50 Dow Jones Mid-America Oil & Gas stocks
- Fund Size: $720 M (March 2022)
IEO tracks stocks including ConocoPhillips (COP) and EOG Resources (EOG), which together account for more than 25% of the portfolio.
The top ten holdings of IEO, which collectively account for 68.65% of its total assets, are as follows:
- ConocoPhillips (18.76%)
- EOG Resources, Inc. (9.85%)
- Pioneer Natural Resources Company (7.77%)
- Marathon Petroleum Corporation (6.79%)
- Devon Energy Corporation (4.65%)
- Cheniere Energy, Inc. (4.64%)
- Valero Energy Corporation (4.27%)
- Hess Corporation (4.24%)
- Phillips 66 (4.12%)
- Diamondback Energy, Inc. (3.56%)
RWJ
- Full Name: Invesco S&P SmallCap 600 Revenue ETF
- Launched Date: February 22, 2008
- Issuer: Invesco
- Expense Ratio: 0.39 %
- Tracking: Dow Jones SmallCap 600 Index
- Fund Size: $760 M (March 2022)
Invesco S&P SmallCap 600 Revenue ETF consists of the 600 small-cap stocks in the S&P SmallCap 600 Index (Dow Jones SmallCap 600) and weights the stocks based on their revenue, with a single position weight cap of 5%.
The top ten holdings of RWJ, which collectively account for 68.65% of its total assets, are as follows:
- PBF Energy, Inc. Class A (3.97%)
- World Fuel Services Corporation (2.93%)
- United Natural Foods, Inc. (2.36%)
- Andersons, Inc. (1.73%)
- Group 1 Automotive, Inc. (1.37%)
- Sonic Automotive, Inc. Class A (1.35%)
- SpartanNash Company (1.33%)
- Bed Bath & Beyond Inc. (1.27%)
- Asbury Automotive Group, Inc. (1.16%)
- Community Health Systems, Inc. (1.16%)
VEU
- Full Name: Vanguard FTSE All-World ex-US ETF
- Lauched Date: March 2, 2007
- Issuer: Vanguard
- Expense Ratio: 0.07 %
- Holdings: large and mid-sized non-U.S. equities (3,315 stocks)
- Fund Size: $32 B (March 2022)
Vanguard FTSE All-World ex-US ETF is a globally focused ETF that includes approximately 2,200 company stocks from 46 countries around the world, covering both developed and emerging markets.
Its holdings include Alibaba (BABA) and the Swiss pharmaceutical company Novartis (NVS). However, it only includes companies outside the U.S. and does not include U.S. domestic companies.
FAQ
Q1: What does ETF mean?
The full name of ETF is Exchange Traded Fund (ETF). The primary purpose of its creation was to combine the convenience of stock trading with the diversified selection advantages of mutual funds, providing a superior investment option for a broad range of investors.
Q2: What is a crude oil ETF?
A crude oil ETF is a type of commodity ETF that invests in financial products such as crude oil futures or stocks of oil companies.
Q3: What is a gold ETF?
A gold ETF is an exchange-traded fund that invests in gold as its underlying asset.
Q4: What does Nasdaq ETF mean?
A Nasdaq ETF is an exchange-traded fund that tracks the Nasdaq 100 Index of U.S. stocks.
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