Exchange Trade Fund (ETF)

Learn how to invest in exchange trade fund (ETF). Learn what you need to know about top ETFs or index ETF.

What is Exchange Traded Fund (ETF)?

Exchange Traded Fund (ETF) is one of investment funds which invest in stocks, bonds, commodities,
money market or other funds. Most ETFs are index funds. The index ETF track an index, a commodity, bonds, or a basket of assets like an index fund. Unlike mutual funds, an ETF trades like a common stock on a stock market exchange such as NYSE, NASDAQ, and AMEX.

Investor can buy and sell ETFs throughout the day just like stocks. ETFs generally have higher daily liquidity and lower fees than mutual fund shares. This lower fees may make them an attractive alternative for individual investors.

How to Invest in Exchange Trade Fund (ETF)

Similar to stocks, you can buy ETFs from your regular brokerages. Popular brokerages to buy ETFs include:

Merrill Edge
Fidelity
TD Ameritrade
Vanguard
e*Trade
Interactive Brokers (IB)
Charles Schwab
Scottrade
TradeKing

Good of ETFs

There various advantages to invest in an Exchange Traded Fund (ETF):

Investors get the diversification of an index fund
Investors can buy as little as one share. They can sell shorts or buy on margin account.
There are no minimum deposit requirements. Please check with your brokerages for initial funding requiment.
The expense ratio fee of ETF are lower than those of the average mutual fund.
Some brokerages also offer no commission fees for buying or selling ETF.